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Military Personnel: DOD Needs to Establish a Strategy and Improve Transparency over Reserve and National Guard Compensation to Manage Significant Growth in Cost

GAO-07-828 Published: Jun 20, 2007. Publicly Released: Jun 20, 2007.
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The Department of Defense (DOD) has increasingly relied on reserve personnel to carry out its military operations. Congress and DOD have taken steps to enhance reserve compensation, such as improving health care benefits. Concerns exist, however, that rising compensation costs may not be sustainable in the future, especially given the nation's large and growing long-range fiscal imbalance. Under the statutory authority of the Comptroller General to conduct work on his own initiative, GAO (1) reviewed how much it has cost the federal government to compensate reserve personnel since fiscal year 2000; (2) assessed the extent to which DOD's mix of cash, noncash, and deferred compensation has helped DOD meet its human capital goals; and (3) evaluated the extent to which DOD's approach to reserve compensation provides transparency over total cost to the federal government. To address these objectives, GAO analyzed budget data and relevant legislation and also interviewed appropriate officials. GAO focused this review on part-time reservists and full-time, active guard and reserve.

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Matter for Congressional Consideration

Matter Status Comments
As future changes are considered to pay and benefits for National Guard and reserve personnel as well as veterans, Congress may wish to consider the long-term affordability and sustainability of these changes, including the long-term implications for the deficit and military readiness.
Closed – Not Implemented
Congress has not taken action.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To improve the appropriateness of the reserve compensation system and to gain transparency over total reserve compensation costs, the Secretary of Defense should establish a clear compensation strategy that includes performance measures to evaluate the efficiency of compensation in meeting recruiting and retention goals, and use the performance measures to monitor the performance of compensation and assess what mix of compensation will be most efficient in the future.
Closed – Not Implemented
DOD partially concurred with this recommendation. The Department noted it has been consistent in its compensation strategy and approach to compensation, with priority on cash compensation and emphasizing discretionary authorities to help shape and manage the force. DOD officials stated that this strategic approach has been consistently communicated to Congress in the form of both oral and written Congressional testimony. Additionally, DOD officials noted that the Department has sponsored multiple efforts to assess the overarching military personnel compensation strategy including the Defense Advisory Committee on Military Compensation (DACMC) and the 10th Quadrennial Review of Military Compensation. We acknowledge that the Department has taken actions to assess aspects of military compensation, but believe these actions do not meet the intent of the recommendation. DOD has yet to develop an explicit compensation strategy and performance measures. We maintain that this recommendation continues to have merit and is an important step that should be taken by the Department.
Department of Defense To improve the appropriateness of the reserve compensation system and to gain transparency over total reserve compensation costs, the Secretary of Defense should compile the total costs to provide reserve compensation for part-time, full-time, and mobilized reservists and communicate these costs as well as the allocation of these costs among cash, noncash, and deferred compensation to decision makers within the administration and Congress--perhaps as an annual exhibit as part of the President's budget submission to Congress.
Closed – Not Implemented
The Department of Defense agreed with the recommendation to improve transparency over the total cost for Reserve compensation but believed the Office of Management and Budget (OMB) was in the best position to provide this information considering the costs of compensation extend across multiple departments. DOD has been working with OMB to include this information in the OMB publication, Analytical Perspectives: Budget of the U.S. Government. However, in May 2010, DOD stated that in conjunction with the upcoming Eleventh Quadrennial Review of Military Compensation (QRMC), the Department is evaluating the feasibility and value of compiling a total cost of military compensation display to inform the review and for subsequent publication.

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