do the job. Thus, the Air Force Reserve is a full partner with the active Air Force in the Total Force. Equipment shortages are equalized so as not to create a deleterious condition on either the regular or reserve component. Units Tested QUESTION: General Crist, your statement mentions that 54 percent of the Marine Resrve units tested were fully combat ready. Are you optimistic that this percentage will increase? ANSWER: Yes I am. Thus far this Fiscal Year, 8 aviation units have been evaluated and all were fully combat ready. Evaluation of the ground units is not slated to begin until June. I am confident that increasingly effective training will reflect an improvement in the percentage of units that are fully combat ready in Fiscal Year 1982. Designations QUESTION: What is the difference between the designations "combat ready" and "deployment ready"? I note that 81 percent of the units were "deployment ready". ANSWER: "Deployment readiness" is concerned with unit preparedness to mobilize rapidly and deploy to the Station of Initial Assignment (SIA). It is tested by the Mobilization Operational Readiness Deployment Test (MORDT). The MORDT is a system set up to evaluate a unit's administrative and logistical readiness for mobilization and its emergency recall and embarkation procedures. "Combat readiness" is concerned with the ability of a unit to perform its mission in a "real world" tactical environment. It is evaluated by the Marine Corps Combat Readiness Evaluation System (MCCRES). The MCCRES is identical for the active and Reserve forces. The MCCRES itself is a system which provides approved standards of tactical performance based on assigned missions. Utilizing a standardized evaluation process and reporting system, it provides feedback to the units evaluated indicating areas of strength and weakness. SUBCOMMITTEE RECESS Senator ANDREWS. The subcommittee will stand in recess until Wednesday, May 19, at 10 a.m. when we will receive testimony on pay bonus issues. [Whereupon, at 11:45 p.m., Thursday, May 13, the subcommittee was recessed to reconvene at 10 a.m., Wednesday, May 19, 1982.] DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1983 WEDNESDAY, MAY 19, 1982 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D.C. The subcommittee met at 10 a.m., in room 1114, Everett McKinley Dirksen Senate Office Building, Hon. Ted Stevens (chairman) presiding. Present: Senators Stevens and Rudman. GENERAL ACCOUNTING OFFICE STATEMENT OF DR. KENNETH J. COFFEY, ASSOCIATE DIRECTOR (MILITARY), FEDERAL PERSONNEL AND COMPENSATION DIVISION, U.S. GENERAL ACCOUNTING OFFICE ACCOMPANIED BY: JAMES JOHNSON, STAFF, FPCD, GENERAL ACCOUNTING OFFICE PAY AND BONUS ISSUES BUDGET REQUEST Senator STEVENS. Good morning. We are here to receive testimony on military pay and bonus issues for fiscal year 1983. The budget request for military personnel is $44.9 billion, 18 percent more than last year. In addition, we will consider today the fiscal year 1982 military pay program supplemental request for $4.5 billion and $367 million, respectively. Our witnesses this morning are representatives from the Department of Defense and the General Accounting Office. Gentlemen, we have your prepared statements and they will be incorporated into the record. The General Accounting Office is here specifically to present its findings on the aviation officer continuation bonus, a $50 million program for fiscal year 1983. Accordingly, we will consider this program first. Dr. Coffey, please briefly summarize your presentation for the committee. Following that, we will turn to Dr. Korb's statement and the Department witnesses who are here. We are pleased to have you. I am sure you realize we are in session. I am sorry for the attendance again, but that is a fact of life lately. INTRODUCTION OF ASSOCIATES Mr. COFFEY. Before I summarize my statement, I would like to introduce Jim Johnson, of our staff, and Norm Roth. Both of these gentlemen have worked on this particular analysis. AVIATION OFFICER CONTINUATION BONUS PROGRAM Our analysis of the bonus program, aviation officer continuation bonus program, was initially undertaken at the request of your colleague, Senator Exon, who questioned whether the Navy and the Marine Corps have used the bonus authority as the Congress intended that it be used—that is, as a retention incentive, selectively applied where shortages of officers with critical aviation specialists exist and targeted to critical career points where bonuses could be expected to influence retention behavior. Our work highlighted eight areas of concern: CONCERNS OF BONUS PROGRAM First, we found that in implementing the bonus authority, both the Navy and the Marine Corps treated it much like long-term career pay. They designated the entire aviation community, which included several pilot and NFO specialists, a critical shortage area, making all those within the community with more than 6 and less than 16 years of aviation service eligible to receive the bonus. Generally, these are people in grades 0-3 to 0-5, captain through lieutenant colonel in the Marine Corps and from lieutenant through commander in the Navy. Based on these bonus implementing procedures, the Navy and the Marine Corps during fiscal year 1981 entered into agreements with about 6,000 aviators, at a cost of slightly more than $100 million to be paid out over 4 years. The bonuses averaged about $18,000 and ranged as high as $39,000. Second, despite the payment of bonuses to this group, we found neither the Navy nor the Marine Corps had experienced or anticipated experiencing shortages of NFO's-Navy flight officers. Third, we found that while the Marine Corps has a pilot shortage, it is concentrated at junior officer O-1 and O-2 levels, a problem more of training output deficiencies which cannot be addressed by the retention bonus program. Meanwhile, the Marines continue to pay bonuses to more senior aviators even though they have enough to meet their needs. Fourth, we found, in contrast to the Marine Corps, the Navy has had a pilot shortage at grade O-3 and 0-5 and thus in order to determine whether the bonus payments were helping the Navy to overcome this problem, we analyzed current and historic year-toyear continuation rates, the proportion of aviators who continue on serving into the next year. Our work showed that in fiscal year 1981 the bonus had improved retention among aviators with 6 to 8 years of service. This is the most critical shortage area. At the same time, however, it showed that in the ninth year and beyond the continuation rates have been and are very high and there is little room in those years of service for the bonus to improve retention. * Simply put, if continuation rates are already in the 97 and 98 percentile ranges, as they are for Navy aviators who are in the 14th and 15th year of service, the number of aviators who are convinced to stay in the service by the bonus can be quite small. Fifth, we recognized that a much more refined analysis should be done to determine whether all specific pilot specialists-jet, propeller and helicopter-should have qualified for bonus payments. In this regard, we noted that in a recent interview, Secretary Lehman stated that the retention of helicopter pilots in the Navy is even higher than the retention of NFO's, a group to which the payment of bonuses we already have questions. Sixth, we also recognized that the Navy consistently used many aviators to fill nonaviator positions, the so-called general-service positions. If these aviators were returned to aviation duty, there would be no overall shortage of aviators and no need whatever for the bonus program. Seventh, we disagree with the Navy's claim that it kept an additional 489 pilots and 110 NFO's as a direct result of the bonus program. We agree that some pilots and NFO's have remained, but in our estimate the numbers gained were slightly less than one-half of the numbers claimed. Lastly, we noted that aviators with many years of service who would almost certainly remain for the full 20-year career were receiving large retention bonuses. For example, at the extreme we noticed that two individuals, both NFO's, one with 15 and the other with 16 years of active duty service, were awarded bonuses of $24,633 and $38,990, respectively, as an incentive to remain in the service for another 4 to 5 years. This is because the Public Law allows payment of bonuses based on years of aviation service, not years of total service, and these are cases-and there are some 400 like cases-of aviators who have previously had either enlisted service or nonflying officer service. In summary then, Mr. Chairman, for the reasons stated we believe the Navy and the Marine Corps have not judiciously managed the aviation continuation bonus program. They are paying bonuses to all aviators with 6 but not more than 16 years of aviation service, regardless of whether these aviators are in aviation specialties which have critical shortages or there is a reasonable opportunity for the bonus to influence retention behavior. We believe that as a result of this across-the-board approach to managing the program, as much as $81.6 million of the $102.9 million committed during fiscal year 1981 has been and is being unnecessarily spent. If the Navy and the Marine Corps are allowed to continue their current management practices, many more millions of dollars will be unnecessarily spent in this and future fiscal years. We believe that the aivation bonus authority serves a useful purpose and should be extended beyond September 30, 1982, when it will now expire, because of the pilot shortage problem in the Navy. However, we firmly believe that any extension of the authority should be contingent on the Navy and the Marine Corps developing new implementing instructions which will pay: First, bonuses only on verification of need; second, be targeted to the specific aviation specialties where critical shortages exist; and third, selectively apply at the critical retention points early enough in the aviator's career so that payment of the bonus could reasonably be expected to influence retention behavior. COMMITTEE ACTION IN REVISING BONUS PROGRAM We recognize that the reauthorization of the bonus program is not the responsibility of your committee; nevertheless, there are options open to your committee to encourage the Navy and the Marine Corps to more judiciously manage the program and to require more thorough oversight by the Office of the Secretary of Defense. These options include placing restrictive language in the appropriation bills which will prohibit the use of funds for the payment of bonuses beyond the eighth or ninth year of active duty service, and to aviators in specific pilot and NFO specialties where shortages and retention problems have not been demonstrated. The committee could also require that the Assistant Secretary of Defense for Manpower, Reserve Affairs and Logistics annually certify the shortages claimed by the services in each pay grade are critical to the services' ability to carry out their mission and that no other more cost-effective solution to the problems can be found. Mr. Chairman, that concludes the summary of my statement. My colleagues and I will be happy to answer any questions you may have. [The prepared statement of Dr. Coffey follows:] |