Military Personnel:

Guidance Needed for Any Future Conversions of Military Medical Positions to Civilian Positions

GAO-08-370R: Published: Feb 8, 2008. Publicly Released: Feb 8, 2008.

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Since September 11, 2001, the high pace of military operations has placed significant stress on U.S. operating forces. In late 2003, the Department of Defense (DOD) reported that several studies had found that tens of thousands of military personnel were performing tasks that were not military essential and that these tasks could be performed more cost effectively by civilian or private-sector contract employees. To address this matter, DOD, in fiscal year 2004, began a multiyear initiative to convert military positions, including military health care positions, to federal civilian or contract positions. Within DOD, the Office of the Under Secretary of Defense, Personnel and Readiness (USD, P&R), has overall responsibility for issuing guidance on manpower management, which includes guidance related to determining the least costly mix of military, civilian, and contract personnel. Additionally, the Under Secretary of Defense (Comptroller) (USD (C)) and the Director, Program Analysis and Evaluation (PA&E) play key roles in determining the costs of military, civilian, and contract personnel. For example, the USD(C) is responsible for developing the composite pay rates used in developing military and civilian personnel budgets and PA&E provides leadership in developing and promoting tools, data, and methods for analyzing allocation of resources. USD, P&R also has responsibility for the Defense Health Program, which provides health care to over 9 million beneficiaries--including military servicemembers and retirees and their families and survivors. This program had estimated costs of $21 billion for fiscal year 2007 and DOD officials anticipate further significant growth in these health care costs. In fact, the costs associated with the program have doubled since fiscal year 2000 due to factors such as increased enrollment, medical inflation, and implementation of the TRICARE for Life program.

While the military departments are well under way in converting almost 10,000 military medical positions to civilian positions and have generally addressed the reporting requirements of the law, Congress lacks information from the departments that would help it make decisions on current and future conversions. Although the National Defense Authorization Act for Fiscal Year 2008 places a statutory moratorium on conversions from October 1, 2007, through September 30, 2012, the accelerated growth of the Armed Forces through fiscal year 2010 and the sustained growth of the Defense Health Program will continue to tax the military health system in several areas, including manpower management. As a result, the issue of converting military medical and dental positions to civilian positions might arise again in the near future. Accordingly, we continue to believe that our previous recommendation for the departments to use a consistent, full cost methodology, like that suggested by OSD's PA&E, in any future conversion certifications has merit. Without clear guidance on the use of such a methodology, the departments would be unable to assure Congress that conversions will not increase the cost of medical care. Moreover, without clear guidance on documenting information about, for example, the departments' assessments of the potential effects of conversions on the quality of care, the departments may be unable to support their assessments. If such conversions are to be done, it will be important for Congress to receive sufficient information from the military departments to provide assurances that planned conversions will not increase cost or decrease access to care or quality of care.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD supported our recommendation to develop operating guidance that stipulates requirements to use a consistent full-cost methodology and to provide documentation to support assertions regarding the potential effects of planned conversions. DOD noted, however, that using a full-cost methodology to account for the cost of military personnel may have the consequence of making conversions even more compelling, because the cost of military manpower would be even more expensive as compared with civilian manpower. In addition, while DOD agreed that the military departments should provide the rationale for their conclusions and assertions as appropriate, it noted that there are many factors that affect quality, access to, and cost of health care, which are unrelated to military-to-civilian conversions and in many cases it is impossible to isolate the impact of conversions. On January 29, 2010, DOD issued a Directive-type Memorandum (DTM 09-007) requiring the DOD components to use the full cost of manpower when estimating and comparing the cost of civilian and military manpower--as well as, contractor manpower. Military to civilian conversions are specifically included under this memorandum and full costing will be required if and when DOD considers future military to civilian conversions in the medical community.

    Recommendation: To help ensure that the military departments provide Congress with reasonable assurances that any future conversions would not increase cost or decrease access to care or quality of care, the Secretary of Defense should direct the Under Secretary of Defense for Personnel and Readiness, in coordination with the Under Secretary of Defense, Comptroller, the Director, Program Analysis and Evaluation,the Assistant Secretary of Defense for Health Affairs, and the Service Secretaries, to develop operating guidance for the military departments to use when justifying future conversions of military medical and dental positions to civilian positions. This guidance should stipulate requirements to use a consistent full cost methodology for comparing the cost of military and civilian personnel as we had recommended in our May 2006 report and provide documentation to support assertions about the potential effects of planned conversions on medical readiness, cost, quality of care, access to care, and recruitment and retention of military medical and dental personnel.

    Agency Affected: Department of Defense


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