[Senate Hearing 114-321]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 114-321

   DEPARTMENT OF DEFENSE PERSONNEL REFORM AND STRENGTHENING THE ALL-
                            VOLUNTEER FORCE

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            DECEMBER 2, 2015

                               __________

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                      COMMITTEE ON ARMED SERVICES

                     JOHN McCAIN, Arizona, Chairman

JAMES M. INHOFE, Oklahoma            JACK REED, Rhode Island
JEFF SESSIONS, Alabama               BILL NELSON, Florida
ROGER F. WICKER, Mississippi         CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          JOE MANCHIN III, West Virginia
DEB FISCHER, Nebraska                JEANNE SHAHEEN, New Hampshire
TOM COTTON, Arkansas                 KIRSTEN E. GILLIBRAND, New York
MIKE ROUNDS, South Dakota            RICHARD BLUMENTHAL, Connecticut
JONI ERNST, Iowa                     JOE DONNELLY, Indiana
THOM TILLIS, North Carolina          MAZIE K. HIRONO, Hawaii
DAN SULLIVAN, Alaska                 TIM KAINE, Virginia
MIKE LEE, Utah                       ANGUS S. KING, JR., Maine
LINDSEY GRAHAM, South Carolina       MARTIN HEINRICH, New Mexico
TED CRUZ, Texas

                   Christian D. Brose, Staff Director

               Elizabeth L. King, Minority Staff Director

                                  (ii)

  






















                            C O N T E N T S

                               __________

                            december 2, 2015

                                                                   Page

Department of Defense Personnel Reform and Strengthening the All-
  Volunteer Force................................................     1

Chu, Hon. David S.C., President and Chief Executive Officer, 
  Institute for Defense Analysis.................................     5
Rostker, Hon. Bernard, Senior Fellow, Rand Corporation...........    11
Hale, Hon. Robert F., Fellow, Booz Allen Hamilton................    19
Roughead, Admiral Gary, USN [Ret.], Annenberg Distinguished 
  Visiting Fellow, Hoover Institution............................    26

                                 (iii)
 
   DEPARTMENT OF DEFENSE PERSONNEL REFORM AND STRENGTHENING THE ALL-
                            VOLUNTEER FORCE

                              ----------                              


                      WEDNESDAY, DECEMBER 2, 2015

                                       U.S. Senate,
                               Committee on Armed Services,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:29 a.m. in Room 
SD-G50, Dirksen Senate Office Building, Senator John McCain 
(chairman) presiding.
    Committee members present: Senators McCain, Inhofe, Ayotte, 
Fischer, Cotton, Rounds, Ernst, Tillis, Sullivan, Lee, Reed, 
McCaskill, Manchin, Shaheen, Gillibrand, Donnelly, Hirono, 
Kaine, and King.

       OPENING STATEMENT OF SENATOR JOHN McCAIN, CHAIRMAN

    Chairman McCain. Good morning. The committee meets this 
morning to continue our series of hearings focused on defense 
reform. Today, we will focus on military and civilian personnel 
reform and how to strengthen the All-Volunteer Force in the 
21st century.
    We're fortunate to have a distinguished group of witnesses 
joining us today: The Honorable David Chu, President and CEO 
[Chief Executive Officer] of the Institute for Defense Analysis 
and former Under Secretary of Defense for Personnel and 
Readiness.
    David, we have a long a relationship, and we appreciate all 
the great work that you have done.
    The Honorable Bernard Rostker, who is a RAND Corporation 
Senior Fellow, also a former Under Secretary of Defense for 
Personnel and Readiness. The Honorable Robert Hale, Booz Allen 
Hamilton Fellow and former Under Secretary of Department of 
Defense Comptroller. And Admiral Gary Roughead, USN [United 
States Navy] [Retired], Annenberg Distinguished Visiting Fellow 
at the Hoover Institution and former Chief of Naval Operation.
    Put simply, our All-Volunteer Force is the greatest 
fighting force in human history. Any consideration of personnel 
reform must begin from that basis. And all of us, the Congress 
and the Department of Defense, must take great care as we 
consider what changes are needed to ensure that our force can 
respond to the needs of a new generation of warfighters and 
meet our future challenges. Our efforts must proceed from 
rigorous factfinding and analysis. We must always ask what 
problems we are trying to solve. We must always measure any 
reform against the military's unique mission of combat 
effectiveness. And we must always remember that what works for 
the private sector or society at large may not always work best 
for our military.
    We've all heard the stories of the many excellent 
servicemembers who are choosing, or being forced, to leave the 
military for ridiculous personnel reasons. This is a real 
problem. But, it's made more complicated by the fact that so 
many talented officers and enlisted continue to fill the ranks 
of our force. All of us meet them every day across the country 
and around the world.
    The question is whether our military is able to recruit and 
retain so many excellent Americans because of its personnel 
system or in spite of it. I'm concerned that all too often it 
is the latter, as in the acquisition system and other parts of 
our defense organization. Too often, our military is losing and 
misusing talent because of an archaic military personnel 
system. Promotions are handed out according to predictable 
schedules with only secondary consideration of merit. That's 
why, even after more than a decade of service, there is 
necessarily no difference in rank among officers of the same 
age. Is it really because they all perform the same or deserve 
the same rank? Jobs in the military are assigned rather than 
chosen. To some extent, that is necessary. After all, the 
mission must always come first. But, we should ask whether we 
can better support this mission by giving servicemembers more 
of a say in their assignments.
    At the Reagan Defense Forum last month, for example, the 
Chief of Staff of the Army, General Milley, described how he 
had met a soldier who spoke six languages but had been assigned 
as a truck driver. We need truck drivers, of course, but we 
also need first-rate linguists and intelligence analysts, and 
we need a personnel system that can manage our people's talent 
accordingly. We should ask whether we should give commanders 
greater discretion to build a staff with the specialists and 
experts they need in the right positions. Commanders are better 
able to assess their needs than bureaucrats in the personnel 
system.
    Our military has always had an entrepreneurial culture that 
encourages individuals to innovate, but the military personnel 
system undermines that spirit when it mistakes upholding 
professionalism with enforcing conformity. And when high 
standards give way to a zero-defect mentality in performance 
evaluations, this discourages risk taking, truth-telling, and 
cultivation of entrepreneurial leaders.
    To strengthen the All-Volunteer Force, we must also review 
the promotion system, especially the requirements of the 
Defense Officers Personnel Management Act and the Goldwater-
Nichols reforms. Previous witnesses have expressed concern that 
the joint duty requirements that a military officer must meet 
have contributed to the growth in headquarters staff that we 
have seen in recent decades as the personnel system seeks to 
check a series of boxes that may be of little value for actual 
career development. We need to review whether this requirement 
is meaningfully enhancing the joint capabilities of the force, 
and how it can be better tailored for our 21st century force. 
The personnel system cannot be and end in itself. Similarly, we 
must ensure that our civilian personnel system is equally 
capable of recruiting and retaining the best leaders.
    Unfortunately, there is much work to do. The USAJob system, 
for example, is an abysmal failure. We are repeatedly told by 
managers that they can't hire the employees they need to fill 
mission-critical roles because they cannot hire qualified 
individuals through the USAJob system or because they cannot 
make job offers in a reasonable timeframe. The Department of 
Defense needs to devote more energy to resolving these hiring 
stalemates, not developing more--many bureaucracies that have 
so often failed before.
    Finally, a key pillar of personnel reform will continue to 
pertain to compensation. This committee has made great strides 
this year with the most sweeping reforms of our military 
retirement system in seven decades. We must bring the same 
rigorous bipartisan approach to the task of reforming the 
military health system next year. If we do nothing, the 
Congressional Budget Office projects that defense healthcare 
costs will devour about 11 percent of the defense budget in 
2028. This is staggering. Every dollar that the Department of 
Defense spends on healthcare is a dollar that can't be spent on 
training and equipping our warfighters.
    While we need to slow the growth of defense health 
spending, the primary focus of our reform efforts must be to 
create a better healthcare system for servicemembers, military 
families, and retirees by improving access to care, quality of 
care, and health outcomes. We must identify and eliminate waste 
in the military healthcare system and evaluate the 
organizational structure of the services' medical departments, 
with an eye toward making them flatter, more efficient, and 
more responsive. In some cases, we may need to eliminate some 
organizations where infrastructure--while ensuring that we 
maintain and improve medical readiness.
    With these and other reforms, we can make the military 
health system perform better for beneficiaries and more 
sustainable for the Department of Defense. It's often said that 
America's greatest military advantage is its people. That is 
not a talking point, it's a reality. We will consider input 
from all sides throughout this process, starting with our 
witnesses today.
    I thank you for your willingness to appear before the 
committee, and I look forward to your testimony.
    Senator Reed.

                 STATEMENT OF SENATOR JACK REED

    Senator Reed. Well, thank you very much, Mr. Chairman.
    Let me join you in thanking the witnesses for being here 
today, but, more importantly, for your extraordinary service to 
the Nation. You have come with great expertise and insights to 
address a very important topic.
    The committee has held a series of hearings to review the 
organizational structure of the Department. Experts have 
testified the importance of streamlining our defense 
acquisition process, reevaluating the roles and missions of the 
services, ensuring effective management of the Department, and 
in the formulation of our defense strategy and future force 
structure. But, I believe today's hearing may be among the most 
important this committee will convene during our review.
    The men and women who make up the All-Volunteer Force 
remain this committee's top concern. Any changes we recommend 
to the processes, structure, and organization of the Department 
of Defense, or to the benefits structure, will not matter if we 
don't provide the Nation with a sufficiently sized, trained, 
and equipped military of the necessary quality, of the 
character and talent to meet national defense requirements.
    To that end, Congress has, for several years, considered 
various proposals for changes in compensation and healthcare to 
slow the growth of personnel costs so that those savings could 
be redirected to buy back readiness and modernization 
shortfalls. The Department has consistently, over the past 
several decades, proposed a budget in which military personnel 
costs comprise roughly 33 percent, or a third, of that budget. 
In 1980, this third devoted to military personnel bought an 
Active Duty strength of over 2.1 million. Today, with the total 
DOD [Department of Defense] budget that is hundreds of billions 
of dollars higher, that third only buys 1.2 million Active Duty 
members. And that figure continues to fall, and will likely 
drop further if rising personnel costs are not constrained.
    In my view, hard choices will need to be made, especially 
in the budget environment we find ourselves. We made some 
difficult choices this year, as the Chairman pointed out, 
through his bipartisan leadership. They included the enactment 
of a retirement benefit for tomorrow's force. But, we need to 
do more. I am concerned, frankly, that we are pricing ourselves 
out of a military that is sufficiently sized and trained to 
accomplish national defense objectives. I look forward to any 
recommendations the witnesses may have for addressing the 
increasing personnel costs.
    With regard to the management of military personnel, it is 
time to reevaluate whether the Defense Officer Personnel 
Management System, commonly referred to as DOPMA, continues to 
meet the needs of our military services. The ``up or out'' 
promotion system is 70 years old, and, in many respects, it has 
worked, and continues to work, well. It ensures promotion 
opportunity for talented young servicemembers as they progress 
in their careers. But, it also has its weaknesses. In some 
circumstances, it requires divestiture of talent at its peak. 
It may not be the right system for highly technical 
occupations, such as cyberexperts, pilots, doctors, or special 
operators in whom we may have invested millions of dollars in 
training. It relies on a cohort- based system that may be 
outdated. Joint professional education requirements, a 
signature element of the Goldwater-Nichols legislation, may, in 
some cases, be so substantial that servicemembers have 
difficulty fitting in all the required training, joint 
assignments, and command assignments needed for professional 
development. I hope that our witnesses can, first and foremost, 
identify what problems exist within the military personnel 
management system and compensation system, and offer proposed 
solutions to these problems that Congress and the Department of 
Defense should consider to bring our military personnel up to 
date.
    I thank you all for your time, your expertise, and, most 
importantly, your great service to the Nation.
    Thank you, Mr. Chairman.
    Chairman McCain. Welcome, Dr. Chu. Thank you for appearing 
again before the committee.

STATEMENT OF HON. DAVID S.C. CHU, PRESIDENT AND CHIEF EXECUTIVE 
            OFFICER, INSTITUTE FOR DEFENSE ANALYSIS

    Dr. Chu. Mr. Chairman, thank you. It is a privilege, 
indeed, to be part of the panel this morning.
    I do have a prepared statement that I hope can be made part 
of the record.
    Chairman McCain. All prepared statements will be made part 
of the record.
    Dr. Chu. Thank you, Mr. Chairman.
    I should emphasize that the comments I make are entirely my 
own views, not necessarily the position of the institution that 
I currently serve.
    It's my belief that decisions about the issues that you and 
Senator Reed have outlined and the committee is confronting 
ultimately should be rooted in a set of choices about the kind 
of military force we want for the future 5, 10, 15, 20 years 
from now. And the characteristics of that force will 
ultimately, in my estimation, determine what kinds of personnel 
we need and how we should prepare those personnel for their 
responsibilities.
    In my estimation, one of the high-payoff, high-leverage 
opportunities lies, from both a performance and a cost 
perspective, in the decision about the mix of personnel types 
for the future. To what degree do we want to rely on Active 
Duty military personnel? What's the role of the Reserve 
components? What should be the proper level of Federal civilian 
staffing? And to what extent do we want to use civilians 
engaged through contractor arrangements of one sort or another? 
I might emphasize that those arrangements exhibit a great 
variety of characteristics, and, in some ways, we might 
usefully experiment with additional varieties of contractor 
arrangements, going forward.
    The Department today, institutionally, does not make this 
decision in a holistic manner. It decides each of--it decides 
how much of each community it desires separately. So, military 
end strength is considered at one point, civilians are a 
decentralized hiring decision left largely to the field, and so 
on and so forth. So, it does not examine the trade-offs among 
these personnel, which I think present extraordinary 
opportunities for the country.
    Looking at the likely effect of budget constraints, it's 
my--that the Department will probably choose to rely more 
heavily on Reserve components of one fashion or another, and 
perhaps look at a different role for civilians, especially 
Federal civilians.
    In managing these communities, it would be my plea that we 
move away from the implicit premise of the current systems, 
which is one-size-fits-all, as you pointed out in your opening 
statement. It's particularly true of other officer management 
system, DOPMA. My urging would be to encourage experimentation 
within the waiver authority the Department already possess 
under a declaration of national emergency and 2 years 
thereafter, although Congress could grant an additional waiver 
authority, if it so chose, and encourage its actual use. In 
fact, the Department could begin with experiments on the 
enlisted force side, because most of the enlisted force rules 
are a product of policy, not a product of statute.
    Now, as you look at the civilian management issue, in my 
estimation--and you pointed out this issue, Mr. Chairman, in 
your statements about USAJobs--most important--one of the most 
important issues is appointing authority. Department does not 
have, under Title 5 of the various Federal Civil Service 
systems, operates the latter two to appoint, and to appoint 
properly, that I think is needed in today's environment.
    In fact, Secretary Carter is fond of pointing out that, 
except for the fact that the office in which he got his first 
DOD job had extraordinary appointing authority, special 
appointing authority, he could not have been hired by the 
Department of Defense as a young academic.
    I also believe that we ought to look at investing more 
energetically in our civilian workforce. It's quite ironic, in 
the Department of Defense, on the military side, we have a 
well-established and much-admired training education system on 
the civilian side. We leave the employees' department largely 
to their own devices.
    I endorse what you underlined, Mr. Chairman, and that 
Secretary Carter has opened the door upon with his Force of the 
Future speech, and that is, a greater us of volunteers in self-
selection. Give the individual greater voice in his or her 
future assignments, further training, education, et cetera.
    On the compensation front, the Congressional Budget Office 
has long pointed out that the military system puts too much in 
deferred compensation and pays too much in kind. And we know 
that compensation is much more effective if it's in cash and 
it's up front. And the changes made by the Congress this year 
to the retirement system move in that constructive direction. 
In fact, in my estimation, they open the possibility of a much 
wider range of experience targets for the Department by skill 
area that's much more responsive to issues like the need for 
cyber personnel that Senator Reed--to which Senator Reed 
pointed.
    I do think further--a further look should be taken at how 
we treat single personnel in the military. They make up just 
under half the force. Much of their compensation is really in 
kind, because, at the junior level, especially, about one-third 
of the package is the housing allowance, and they must 
surrender that housing allowance in order to live in the 
barracks. Because we tell them to live in the barracks, we know 
from similar results that living in the barracks is not one of 
the great attractions of military service.
    On the civilian front, in compensation, I plead for a 
return to the use of pay bands to give the Department greater 
flexibility in civilian compensation so that in areas of high 
cost, high demand for certain skills, it can pay more 
competitively; in areas where there isn't the same situation, 
it could be more austere in its compensation choices.
    Whatever compensation system we select, I would urge that 
we set and honor the expectations that's established. I'm very 
concerned about the actions of the last several years in which, 
often, changes the compensation have a flavor of being 
arbitrary and driven by budget considerations. And I think it's 
important that we set a standard and keep to that standard so 
that the young people who join the American military 
establishment understand the future that they have selected, 
and are enthusiastic about that choice.
    I thank you, Mr. Chairman. I look forward to your 
questions.
    [The prepared statement of Dr. Chu follows:]

             The Prepared Statement by Dr. David S. C. Chu
   creating 21st century personnel and compensation systems for the 
                         department of defense
                              introduction
    Mr. Chairman and Members of the Committee: It is a privilege to 
participate in this morning's panel. The views I express are entirely 
my own, and should not be interpreted as reflecting any position on the 
part of the Institute for Defense Analyses.
    In my judgment, ``human capital''--people, their skills and 
esprit--lie at the heart of any successful military endeavor. Deciding 
whom you want to serve in your military establishment, how you wish to 
develop their ``capital'', and how you expect them to perform, are 
essential elements in meeting the nation's security needs. The answers 
to these questions, in turn, should derive from the future military at 
which you wish to aim, the capabilities you wish it to possess, and the 
challenges you believe it must be ready to confront.
    Those answers include basic decisions about how many actually wear 
a uniform (and are therefore governed by the laws of war), how many 
will be civilian employees of the national military establishment 
(therefore performing with the authority of the government), and how 
the private sector might provide key services on which both military 
and civilian functions depend, perhaps in a partnership arrangement. 
For each community, you will want to specify the characteristics of the 
personnel you wish to recruit, the preparation and ongoing education 
and training they should receive, and the service trajectory you expect 
them to follow.
    Grounding the human capital debate in the force you desire also 
implies it is the force characteristics that should drive personnel 
policies, not the other way around. This is especially true as today's 
evolving technology and international security environments alter US 
needs. It is the responsibility of the compensation system, broadly 
defined, to produce these desired force characteristics. A key element 
is the competitiveness of compensation, both military and civilian, 
with non-government opportunities. And from the enterprise perspective, 
there is an appropriate concern with costs.
    The ultimate cost issue, of course, is not military compensation 
alone, but what is required overall to operate the Department. 
Operating costs dominate the Department's budget requirements. They are 
driven by military equipment decisions (including the reliability of 
that equipment); by business practices (including, for example, the 
statutory floor for government depot work, and the impediments to A-76 
competitions); and by choices on the mix of active military, Reserve 
Component military, federal civilian, and contractor personnel.
                            choosing the mix
    On the last set of issues (the staffing mix), Secretary Carter 
recently called for more ``permeability''--if I understand correctly, 
to attract a wider variety of experience and backgrounds in both 
military and federal civilian personnel. He announced a series of 
initiatives to address this issue. Some of those confront what his 
Acting Under Secretary of Defense for Personnel and Readiness has 
identified, the difficulties created by the federal civilian personnel 
system, including those involving appointing authority.
    The Department faces two obstacles in considering the optimal mix 
of personnel, one a planning challenge, one institutional. The planning 
challenge is defining the structure--the nature--of the force of the 
future. The Department has struggled to meet this challenge since the 
end of the Cold War, with its initial responses a scaled-down version 
of its prior choices (Base Force, Bottom-Up Review). Besides the growth 
of Intelligence, Surveillance and Reconnaissance force elements 
(including cyber), that remains, as a generalization, the case today. 
Much of the structure is aimed at high-end, state-on-state conflict, 
for which we must be prepared, but with little devoted to the 
challenges we face immediately. The structure emphasizes the ability to 
destroy targets, not necessarily the ability to secure the political or 
political-military outcomes we desire. Securing a broader range of 
capabilities within likely budget limits may require accepting hedges 
vice full-up solutions, perhaps involving greater use of Reserve 
Component authorities (conceivably new authorities), and of civilians.
    The second obstacle is institutional. The Department's planning 
processes, as long constituted, do not adequately consider the ``total 
force'' solution space in arriving at the mix. Military personnel are 
decided and budgeted for in terms of a central account (end strength), 
and once the strength level is established, military personnel are 
``free'' to the using elements of DOD. (Conversely, they cannot easily 
trade military personnel for federal civilians or contractors.) In this 
situation, it is not surprising that in most Military Departments the 
demand for military personnel, as substantiated in various manning 
documents, exceeds the planned supply, especially for active duty 
forces.
    At the other extreme sit federal civilians. Their numbers are 
decided on a largely decentralized basis, but often restrained to 
produce budgetary savings through ceilings (notwithstanding the 
statutory provision barring such a practice outside of management 
headquarters). That leaves contracted services as the safety valve, as 
organizations strive to meet their needs with the funds available.
    Repeated analyses demonstrate that there are significant gains 
possible from a more systematic approach to deciding on the total force 
mix.
    It would be easy to paint too discouraging a picture about the 
tradeoff process, and only fair to note some of the exceptions. One 
interesting development is the Air Force's pursuit of composite units, 
staffed with a mix of active, National Guard and Reserve personnel, 
benefitting from the differing levels of service that can reasonably be 
expected from each community. Another is the long-standing Inherently 
Governmental/Commercial Activity database maintained by DOD, which 
allows you to examine military-civil tradeoffs (and whose results have 
long argued DOD could make greater use of civilians). Particular 
Secretaries of Defense have taken an interest in this issue, whether 
Secretary Rumsfeld in military-civilian trades (to conserve military 
personnel for the Long War) and in competitive sourcing (an initiative 
of the George W. Bush administration), or the in-sourcing initiative 
launched by Secretary Gates. The last two, of course, are now 
restricted by statutory restraints.
    Staffing mix issues extend beyond broad categories of personnel to 
include structural issues within each community. For example, the Army 
has long solved the conundrum of ``up or out'' in the context of a 
pilot force (high training costs, substantial payoff to experience, 
implying long cockpit tours) by staffing extensively with warrant 
officers, reserving just a few billets for (classically) commissioned 
officers who are groomed for leadership positions. Presumably, as the 
military becomes more highly technical this mechanism--or its analog, 
the Navy's Limited Duty Officer--could be used more extensively. 
Mechanisms like these might be used to strengthen the cyber force, and 
other areas such as intelligence, language and cultural expertise, 
science and technology, and acquisition.
    Indeed, as one opens the aperture on personnel types it's quite 
possible that some duties that are now thought to require officers 
could be performed by enlisted personnel, given the high aptitude and 
performance standards of the All-Volunteer Force. The current Air Force 
Chief of Staff, as you know, has speculated about their possible 
utilization to meet some piloting needs. Indeed, the Army, Navy and 
Marine Corps already use enlisted personnel to operate Unmanned Aerial 
Vehicles.
                            managing the mix
    The Committee has expressed its interest in possibly reconsidering 
provisions of the Defense Officer Personnel Management Act (DOPMA), or 
the Act in its entirety. I would urge that we first focus on the 
different results that are desired, and analyze the degree to which it 
is the statutory provisions that make it difficult to achieve those 
results, versus the manner in which the Act is implemented. If 
alternate regimes appear attractive, the Department might experiment 
with those regimes (through existing or new waiver authority, or pilot 
programs), to understand their possible unintended consequences, before 
making them permanent.
    While key elements of enlisted management parallel that for 
officers, the rules are largely driven by policy, not statute. Enlisted 
personnel, of course, constitute the vast majority of the force. 
Perhaps the management paradigm for this element should receive our 
attention first.
    The challenges of the last fifteen years have demonstrated the 
value of agility--agility at the individual level, and agility on the 
part of defense institutions. American military personnel, starting 
with the Battle of Bunker Hill, have been known for their agility. 
Could we do even better, whether via the standards we set for 
recruiting, or the manner in which we prepare the force?
    In thinking about managing the mix in a more agile fashion, the 
Department should be willing to consider hybrid vehicles--vehicles that 
embrace the strengths of the different personnel communities. Secretary 
Carter points in this direction with his emphasis on Intergovernmental 
Personnel Act appointments, but more ambitious models might also be 
considered. These include the British notion of sponsored reserves 
(contractor operations in which all personnel hold Reserve Component 
appointments, and can be shifted to a military status as theater 
circumstances require), and Government Sponsored Enterprises, where the 
government retains control but creates an entity that can operate like 
a private sector actor (the Saint Lawrence Seaway is viewed as one of 
the more successful examples, I believe).
    One issue that has not received the attention it deserves is 
strengthening the skills of existing federal civilians over the course 
of their careers. The contrast in DOD could not be more striking: 
Significant investments in further education and training for military 
personnel, very limited opportunities for civilians. Some of this 
result derives from the strictures of civil service rules, some from 
the lack of budgetary allocations to support the necessary costs. 
Greater investment in federal civilian ``human capital'' should pay 
handsome dividends in long-term performance, and in the ability to 
recruit and retain the talent that Secretary Carter is properly 
seeking.
                    military and civil compensation
    Economic principles and actual experience highlight six 
characteristics of an effective compensation system:

    --Cash compensation is more attractive than compensation in kind
    --Compensation now is more attractive than compensation later
    --Incentives for special situations (e.g., certain skills, or hard-
to-till positions) are more efficient than across-the-board solutions--
especially if implemented through a flexible versus a ``hard-wired'' 
system
    --Clarity about the incentives you're offering (and the 
compensation system as a whole) is critical
    --Expectations about future compensation importantly drive current 
results
    --Recognizing individual preferences (``volunteerism'') can produce 
a much more satisfied team, and lower long-run compensation costs

    As the Congressional Budget Office has pointed out, the military 
compensation system does not score well on these criteria. The civilian 
compensation system may be better--but not much, in my judgment.
    The current military pay system does offer the Department some 
flexibility, thanks to the considerable leeway Title 10 gives the 
Department in deciding the amounts and application of various special 
and incentive pays. But the same is not as true for federal civilians, 
because of the reliance on the General Schedule structure.
    It is also important to acknowledge that compensation includes 
more--sometimes much more--than pecuniary rewards. One of the most 
important, of course, is pride and satisfaction in serving the country. 
Recognition of such service is critical--and it is also critical to 
keep in mind the effect of all conditions of service on the willingness 
to join, the willingness to continue serving, and the enthusiasm with 
which that service is rendered. ``Conditions of service'' embraces a 
wide range of personnel and non-personnel decisions, ranging from how 
assignments are made, to the frequency of change and the length of less 
desirable or more difficult assignments, to education and training 
opportunities, to the quality (and quantity) of equipment provided, and 
to the excellence of leadership.
    An important condition of service is the individual's ability to 
influence his or her future--to choose, rather than be ``assigned''. 
Civilians enjoy considerable latitude in this regard (even if civil 
service realities can make it difficult), military personnel less so. 
The Navy's administration of
    Assignment Incentive Pay is a notable exception to this 
generalization, as are some long-standing de facto processes of the 
Reserve Components. Secretary Carter points the way to increased 
reliance on the volunteer spirit, endorsing the concept pioneered by 
the Army with its ``Green Pages'' experiment.
    For military personnel, one of the most important conditions of 
service involves the post-service transition. In our system, the 
principal responsibility for that transition lies with the Department 
of Veterans Affairs; thus its substantial resources (over $160 billion 
in fiscal year 2015) and their most effective employment should not be 
ignored in any reform agenda. (The Dole-Shalala Commission, for 
example, urged major changes that the Congress declined to adopt.) 
Within the Department of Defense's set of responsibilities, the recent 
decision to strengthen the Transition Assistance Program is worth 
noting--encouraging uniformed personnel to start thinking about their 
post-service interests early in the military career. Such early 
reflection presumably will help guide their education and training 
choices.
    The ``force of the future'' may look different from today's, 
reflecting both changing needs (think cyber), and the changing nature 
of our society (think opportunities for women, and changing views of 
what constitutes a career). As we contemplate change, however, it is 
worth reiterating that the current system sustained a successful all-
volunteer force in the concluding stage of the Cold War, in its 
immediate aftermath (including the First Persian Gulf War), and in the 
long period of armed conflict that followed the attacks of 9/11. There 
are clearly elements that have worked well, or that have adapted 
effectively.
    Perhaps the most important success was recognizing that the 
compensation ''package'' must remain competitive. Since we anticipate 
that real compensation in the private sector will grow over time, so 
will federal compensation. Those joining need to know that the 
political system will act consistently with that reality (e.g., for 
military compensation, sustaining the competitive standards set out by 
the Ninth Quadrennial Review of Military Compensation), and forbear 
from making what appear to be arbitrary changes to the trajectory of 
compensation as a source of near-term budget savings.
    A focus on the competitive status of compensation also implies that 
adjustments to military and federal civil pay packages (e.g., the pay 
tables) will not necessarily be identical. That is in sharp contrast to 
the practice of recent and earlier years, in which across-the-board 
adjustments are matched.
    Competitive compensation will not be the same for all skill areas. 
The American military system confronts this reality using its bonus 
authority. While there are bonus authorities for civilians, they are 
not widely employed by most federal agencies, and may not provide the 
same flexibility of response. Hence proposals to replace the General 
Schedule with broad pay bands for federal civilians, allowing civilian 
compensation to adjust for local and skill realities.
    Much recent attention has focused on the cost of military 
personnel. The reform of military retirement you've just adopted moves 
more of the reward ``up front'', creating not only a more efficient 
program (with some cost savings), but one that allows the Department to 
vary career length by skill area, as operational needs argue should be 
the case. The prior system encouraged a ``one size fits all'' 
mentality, with the result that some skill areas had a more senior 
force than might be optimal, while others suffered from a lack of 
needed experience, despite the Department's efforts to rebalance 
through the use of retention incentives.
    The Military Compensation and Retirement Modernization Commission, 
whose recommendations Congress considered in making its changes, also 
proposed a revised military medical benefit. While the proposed change 
would give military households more choice, and promised some 
potentially substantial savings, it would also move modestly more 
compensation to immediate cash (in the health expenditure accounts 
created), whereas the current benefit is paid entirely in kind--a 
compensation mechanism we know is less efficient.
    One issue the Commission did not address is the disparity between 
the compensation for single personnel, versus those with dependents--
perhaps five to ten percent for junior personnel, measured by Regular 
Military Compensation (RMC). Moreover, RMC imputes the ``value'' of 
living in the barracks as equal to the housing allowance foregone 
(about one third of the total); we know from survey results that 
required living in barracks housing is actually a detriment to military 
recruiting. Would overall costs increase if single personnel were paid 
at the same rate as those with dependents? Not necessarily, since there 
would be offsetting cost reductions in other elements of compensation 
(e.g., health care). Indeed, over the long run it might well reduce 
costs. Such equilibration, coupled with a revised barracks residency 
policy, amounts to a targeted (i.e., more efficient) pay change, likely 
to ease the Army's current recruiting difficulty.
                              conclusions
    The time is long past for a fundamental re-examination of the 
appropriate mix of personnel types in the military establishment, as a 
prelude to deciding what personnel management reforms may be needed for 
the future military establishment. It is the nature of the future 
military establishment that should be the starting point, guiding the 
discussion on personnel types. Perhaps this debate could unfold in the 
context of whatever national security transition plan a new 
administration adopts, particularly as it conducts its Quadrennial 
Defense Review.
    With the caveat that those choices have not been made, it may be 
useful to advance some hypotheses that could be explored in the interim 
as a basis for any immediate decisions the Committee wishes to 
consider. On the mix issue:

        It is likely that more Reserve Component and federal 
civilians will be desired, the latter requiring more flexible 
appointing and pay authorities.
        It is possible that more use of ``intermediate'' 
personnel--i.e., senior enlisted, warrants, LDOs [Limited Duty 
Officer]--will be attractive in staffing certain military needs, 
creating a viable approach to ``up or stay'' while preserving the best 
features of ``up or out'' for those being considered for senior 
leadership positions.
        It is conceivable that hybrid staffing arrangements 
will be sometimes be attractive, e.g., composite units, or Government 
Sponsored Enterprises (e.g, for the DOD overseas Kindergarten-12 school 
system).

    On compensation:

        Moving more military compensation to cash vice in kind 
should improve recruiting and retention. Likewise making more cash 
available earlier in a career would be meritorious, as the retirement 
reform just enacted permits the Department to do.
        Harnessing individual preferences to the needs of the 
organization, consistent with the spirit of Secretary Carter's 
demarche, will help restrain long-term compensation costs.
        Creating greater flexibility in setting civilian pay 
levels would allow DOD to respond better to local market conditions 
(with savings in some areas financing increases in others).
        Stabilizing expectations by adopting and honoring a 
long-run compensation strategy for both military and civilian personnel 
should help recruiting and retention--and morale.

    As these hypotheses imply, much of what's needed lies in the 
province of the Executive Branch of our government, above all to 
organize the institutional mechanisms within which good decisions can 
be made, including recommendations for statutory action where needed. 
There is no more important set of decisions, if the United States is to 
enjoy in the future as fine a military as defends us today.

    Chairman McCain. Thank you.
    Mr. Rostker.

    STATEMENT OF HON. BERNARD ROSTKER, SENIOR FELLOW, RAND 
                          CORPORATION

    Dr. Rostker. Thank you, Chairman McCain and Ranking Member 
Reed and members of this distinguished committee.
    It's my pleasure and honor to be asked to testify today on 
this very important issue. As you know, I've spent my whole 
professional life working in this area, and have often written 
about our need to reform the system, so I welcome this 
opportunity to further discuss this today.
    In many ways, the need for reform has been obscured 
because, by and large, the system we have today has produced a 
superb professional military. The problem as I see it is that 
we could have done it better, perhaps at less cost, but 
certainly, in terms of meeting the needs of our servicemembers 
and their families. Moreover, as the threat and our needed 
capabilities evolve, the only way to--of doing business in the 
future is likely to be less effective as we move--as it has 
been in the past. The trick here is to understand the current 
system, how it operates, what needs to be changed. To use an 
old cliche, we must not throw the baby out with the bath water.
    Rethinking the kind of military we want, and how to achieve 
that what some have called ``the force of the future'' is 
needed, and your hearing today is very timely.
    I've prepared a longer statement, but I want to highlight 
for you here six points that I think are critical as you move 
forward.
    The first imperative is that you look at changing the 
system. You ask what will be the impact of the experience 
profile of the force 10 and 20 years in the future. For the 
vast majority of our military workforce, the people we recruit 
today will be the journeymen we need 10 years from now and the 
leaders we need 20 years from now. While in some specific 
areas, new programs of lateral entry may provide added 
flexibility, the vast majority of military skills will still be 
in at the bottom and up through the rank.
    Second, the plain fact is that the military we build today 
must be capable of winning wars in the future. But, we don't 
know when that might be. In the aggregate, the year of service 
profile is the best indicator of the readiness of the force to 
go to war at any point of time in the future. Maintaining the 
appropriate experience profile is critical.
    Third, the key to achieving the needed experience profile 
over time is maintaining an adequate flow of people into and 
through the force over time. We have done this with the so-
called ``up or out'' promotion system. While there are many 
ways such a system can be managed, there must be a way of 
ensuring sufficient turnover to constantly revitalize the 
force. The flow out of the force should not be just at the end 
of a career. Our enlisted and officer personnel need to 
progress or leave. They must not be allowed to stagnate in 
place.
    Fourth, the one thing that distinguishes the military 
personnel system from our private sector or our government 
civilian personnel system is we have the tools needed to 
maintain the required personnel profile over time. Some have 
argued that we should institute a system that allows people to 
stay in place as long as they adequately perform in their jobs. 
The ultimate example of such a system is our current civilian 
personnel system, but I don't know anyone who thinks that that 
system has been so successful it should be the model for the 
military. For our military, if servicemembers do not advance, 
they must be sent home to make room for the next generation, 
because it is the next generation and the one that comes after 
that that will carry the fight in the future.
    Fifth, many of today's critics warn of a brain drain, 
projecting that some may claim--and they--some claim many 
bright young people will leave the military frustrated because 
of the service are not making the appropriate use of their 
talents. However, the more significant issue is the larger 
drain that is the systematic expulsion of talented officers 
who, regardless of experience and skills, who are forced out at 
30 years of service or those who leave earlier than 30 years of 
service, anticipating that they will be forced out at 30--at 
the 30-year mark, which generally equates to a chronicle--
chronological age at about 52 or in the early 50s. I've written 
extensively about this problem and, even when I was Under 
Secretary of Defense for Personnel and Readiness, tried to 
address this, but to no avail.
    Sixth, and lastly, it might seem strange to you for me to 
be arguing that we must maintain the flow of personnel through 
the military just as I'm saying that in select areas we should 
extend careers. But, I assure you that there is nothing 
contradictory in what I am proposing. Today, DOPMA gives us a 
one-size-fits-all personnel system for officers. While we can 
manage different occupational groups separately in what is 
called ``competitive categories,'' the career structure for 
each category is the same. To me, that makes no sense. Without 
arguing the merits of longer careers for the combat arms, I am 
certain that our specialty corps, such as intelligence, 
medical, chaplain, acquisition, and many more, including, in 
the future, cyber, do not need to adhere to the standard DOPMA 
structure of promotion timing, opportunity, and tenure, which 
reflects our thinking about youth and vigor in the 1940s.
    To summarize this quick overview of reforming the military 
personnel system, here are a few points that I think this 
committee should keep in mind: keep your eye on the future, 
particularly what changes will do to the experience profile of 
the force; maintain the desired experience profile over time; 
ensure adequate flow of personnel; maintain the basic concept 
of ``up or out"; be as flexible and permissive as possible to 
allow the services to better manage the assignment of people; 
and then lengthen careers beyond 30 years of service, 
particularly for specialty corps.
    Thank you for allowing me to testify before you today, and 
I look forward to your questions.
    [The prepared statement of Mr. Rostker follows:]

            The Prepared Statement by Bernard D. Rostker \1\
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    \1\ The opinions and conclusions expressed in this testimony are 
the author's alone and should not be interpreted as representing those 
of RAND or any of the sponsors of its research. This product is part of 
the RAND Corporation testimony series. RAND testimonies record 
testimony presented by RAND associates to federal, state, or local 
legislative committees; government-appointed commissions and panels; 
and private review and oversight bodies. The RAND Corporation is a 
nonprofit research organization providing objective analysis and 
effective solutions that address the challenges facing the public and 
private sectors around the world. RAND's publications do not 
necessarily reflect the opinions of its research clients and sponsors.
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      reforming the american military officer personnel system \2\
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    \2\ This testimony is available for free download at http://
www.rand.org/pubs/testimonies/CT446.html.
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    The military personnel system in place today is fundamentally the 
same one put into place after World War II, with minor modifications 
for officers provided by the passage of the Defense Officer Personnel 
Management Act of 1980, or DOPMA. Many, including myself, have argued 
that this system is outdated--reflecting industrial-age thinking in the 
information age--and point to what they see as a drain of talent. The 
fundamental problem that most can agree on is that a one-size-fits-all 
system cannot provide the range of competencies that will be needed in 
the future. However, what a new system might look like is far from 
settled.
    Recent books and magazine articles include critiques of the current 
system that call for a new regime. These publications are replete with 
stories of frustrated bright young people leaving the military because 
the services both force them into assignments that they do not think 
make appropriate use of their talents and require them to adhere to a 
rigid path of advancement that is inflexible. The favorite villain in 
this story is the so-called up-or-out promotion system. While these 
stories are individually compelling and collectively paint a bleak 
picture of the future of the American military, they generally come up 
short in describing how an alternative system might operate or how 
eliminating up-or-out might produce the desired force of the future--
or, for that matter, what the desired force of the future should even 
look like. What is needed is an understanding of the current system, 
how it operates, and what needs to be changed. To use an old cliche, we 
must not throw the baby out with the bath water.
    It is important to recognize that there are at least two places 
where talented individuals are leaving the military: There is the oft-
cited exodus of junior officers (although many talented individuals 
choose to stay), but there is also the less-cited systematic exodus of 
officers--not only those who are forced out at 30 years of commissioned 
service regardless of experience and skills, but also those who leave 
before that, anticipating that they will be forced out at 30 years of 
service. Given the way officers are commissioned through the military 
academies or through ROTC [Reserve Officer Training Corps], this 
generally equates to forcing out officers who are in their early 
fifties. It is important to note that the way we lose junior officers 
is largely because of the way the assignment system is managed, but the 
way we lose talented senior officers largely has to do with the way the 
personnel system is designed. The ability to address the retention 
problem among junior officers is largely in the hands of the services 
and the way they manage assignment; addressing the retention of senior 
officers means Congress would have to consider whether it would change 
the way careers are structured.
              procedural changes in the assignment system
    Today's critics charge that the services' central personnel 
assignment system is a failure because it neither adequately recognizes 
the special attributes an individual can bring to a job nor takes 
individual preferences into account; further, it does not provide all 
candidates an equal chance of being assigned to the positions most 
important to advancement. Critics maintain that a decentralized system 
where each candidate could self-nominate for any job and is eligible 
for all jobs would better foster the principles of talent management. 
Let's look at these claims in some detail.
                         knowing what's needed
    The military's human resource management system is actually made up 
of two complementary systems most often managed by two different 
organizations: one that focuses on job or billet requirements (most 
often referred to as the manpower system), and another that focuses on 
providing qualified people who meet the specifications laid out by the 
manpower system (most often referred to as the personnel system). The 
assignment system is the bridge between the two as it tries to put the 
right face in the right space. Any special attributes possessed by an 
individual service member--often referred to as his/her knowledge, 
skills, and abilities (KSA) or competencies--may make little difference 
in his/her assignment unless these attributes are recognized in the job 
or billet description. In a small number of cases, information about a 
service member that is not on the record but is known to senior 
personnel may be taken into account, but for the vast majority of 
officers, the match is made based upon the stated job description. 
Therefore, the first requirement for better matching the unique 
qualities of young officers is for the services to expand the range and 
improve the specificity of attributes that are included as part of a 
job description.
    Expanding job descriptions, however, is problematic, with the 
Army's recent Green-Pages proof-of-concept pilot test serving as a 
clear example. The pilot tested a largely decentralized assignment 
system, where individuals presented themselves for reassignment and 
units advertised their opening to improve matches. That was the way it 
was supposed to operate, at least. In actuality, the pilot test showed 
that units required ``a great deal of follow-up encouragement,'' and 
even with all the encouragement that resulted from this being a pilot 
test, half of the officers who participated thought that the job 
information was ``too sparse.'' There are many reasons that units fail 
to differentiate jobs adequately, but little progress can be made until 
the services better articulate what is required and what skills will be 
needed in the future. Two examples may illustrate this point. A former 
Air Force personnel chief recently recounted how he was told that the 
Air Force needed more officers with STEM (Science, Technology, 
Engineering and Math) backgrounds, at a time when there were more STEM 
qualified officers then there were billets to which they could be 
assigned. Assuming that that Air Force did, in fact, need more officers 
with STEM backgrounds, this need must be reflected in the descriptions 
of Air Force jobs to have any validity for recruiting new personnel. 
Similarly, the Army's senior commander in Europe recently discussed his 
need for more soldiers who could speak Russian and other eastern 
European languages. The system can only respond, however, if such a 
need is translated into job requirements.
                  accommodating individual preferences
    Meeting the assignment preferences of individual service members 
can be challenging, and all too often, the process appears to force 
people into assignments that they don't want. One often hears that 
there are less-desirable jobs that must be filled and the assignment 
systems must fair-share them among the entire force. But this fair-
sharing approach doesn't take service member preferences into account. 
The Navy, for example, has found a way to compensate volunteers for 
such jobs by allowing qualified sailors to bid for these jobs, with the 
winning bidder being the one willing to take the smallest cash bonus to 
fill the position. Recent research at RAND \3\ has shown that a similar 
auction system could be used to induce members to extend in place in 
overseas assignments. Nevertheless, the services have been slow in 
taking up such incentives and ideas to help them sort out the 
assignment system and gain the potential to satisfy assignment 
requirements while making service members better off by aligning 
assignments with preferences. More can be done.
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    \3\ Craig A. Bond, Jennifer Lamping Lewis, Henry Leonard, Julia 
Pollak, Christopher Guo and Bernard Rostker, Tour Lengths, Permanent 
Changes of Station, and Alternatives for Savings and Improved 
Stability, Santa Monica, Calif.: RAND Corporation, RR-1034-OSD, 2015.
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                    opening up assignments for all?
    Another often-heard complaint is that the current system does not 
consider all qualified service members for all jobs, including the most 
critical and career-enhancing jobs. But one can challenge whether the 
assignment system should do this. While I am sure there are ways to 
improve the visibility of the talents of all members of the force, the 
plain fact is there are fewer positions at the top than there are at 
the bottom. Moreover, in order to ensure that future leaders gain the 
experience they will need later in their careers, the services must 
assign critical jobs to those judged to have the best chance for 
advancement. This is done today in both a formal and informal way.
    Formally, there are critical gateway selection boards for schools, 
or for qualifying for certain positions, such as command of a ship. 
More important, however, is an informal system of mentorships where 
senior leaders (generally from a particular occupational group or 
community) ``sponsor'' junior officers, who then are given specific 
assignments to help shape their careers for advancement. I am most 
familiar with the way it works in the Navy, where leaders identify 
those young members considered among the most promising and guide their 
careers so they gain experience that will facilitate their performance 
if and when they become senior leaders. The system works well for those 
who find a sponsor, but some will be left behind. Getting into this 
group usually requires impressing a senior officer so that he will work 
the system to give his protege the best assignments, but falling out of 
this group is easy if a junior officer fails to perform as expected.
    The Army, on the other hand, traditionally has been more 
egalitarian in managing assignments. Some have argued that this better 
allows the talent to rise to the top, and is fairer about giving 
everyone a chance at critical assignments. However, research going back 
to the 1960s suggests that some very talented people leave under such a 
system because they cannot see a clear path for advancement and do not 
want to leave their careers to chance. They believe they are special 
and expect to have their careers managed accordingly.
          structural changes in the design of military careers
    For a long time, I have argued and written about the need to reform 
the career military structure by increasing the maximum years of 
service an officer might serve to 40, for the reasons I will discuss 
here. That said, I first want to sound a cautionary note by endorsing 
the fundamental principle of the up-or-out system and explaining why 
such a system is critical to ensuring the vitality and viability of our 
military personnel system for the future.
             the thirty-years-of-service career limitation
    A key feature of the officer military personnel system as laid out 
in law under the DOPMA is the 30-years-of-service cap for all officers 
who are not promoted to General or Flag rank, O-7. I am aware that 
under DOPMA, the service Secretaries can establish special continuation 
boards to extend the service of O-5 and O-6 officers beyond mandatory 
retirement for up to five years or until age 62, but this is almost 
never done. For all intents and purposes, we operate under a career cap 
of 30 years of commissioned service.
    Given that most officers come from the service academies or ROTC, 
entering college at 18 years of age and commissioned at 22 years of 
age, this means that, with the exception of those promoted to O-7, most 
career officers have left the service before age 52. This is true 
regardless of an officer's specialty because DOPMA is a one-size-fits-
all personnel system for officers. While DOPMA allows for the promotion 
of different occupational groups separately in what are called 
``competitive categories,'' the career structure for each category is 
the same. To me, this makes no sense. Without arguing the merits of 
longer careers for the combat arms, I am certain that our specialty 
corps--such as intelligence, medical, chaplains, acquisition, and many 
more, including any future cyber corps--would benefit if they were not 
compelled to adhere to the standard DOPMA structure of promotion 
timing, opportunity, and tenure. The case of intelligence corps, 
described here, illustrates why the 30-year limitation should be 
changed.
    Aside from the needs of specific occupational groups where 
experience is particularly important, a general case can be made that 
limiting careers to 30 years of commissioned service is out of line 
with efforts to broaden the experiences of officers as they progress 
through their careers. In 1987, Congress passed the Goldwater-Nicholas 
Act, which recognized the expeditionary and inherently joint nature of 
how military forces operate and established the requirement that 
officers complete the requisite joint professional military education 
and joint assignments before they could be considered for promotion to 
general or flag rank. Accordingly, officers start to be ``jointed'' 
after their tenth year of service, when they are promoted to O-4, and 
usually try to complete this over the next ten to 12 years. These are 
also the years that officers destined for leadership positions have 
their command assignments. In effect, the Goldwater-Nicholas Act added 
between four and five years of additional must-have assignments to an 
already full career and squeezed out the time officers would have spent 
on their service staffs learning how to manage the enterprise. I am 
particularly sensitive to this unexpected cost of Goldwater-Nicholas, 
having served for many years at a senior level in the Navy and Army 
secretariats. While we may have made better joint warriors, it came at 
the cost of having less-experienced uniformed managers of the services. 
This was a cost that could have been avoided if career length had been 
extended commensurate with the expanded career content resulting from 
Goldwater-Nicholas.
    This situation I describe is only going to get worse with the new 
programs recently announced by the Secretary of Defense designed to 
increase the opportunities for assignments with industry and expanded 
opportunities for advanced education. We need to ask, ``What sense does 
it make to broaden the experiences of our officer corps and then 
provide little opportunity to reap the benefits of that broadening by 
truncating careers at 30 years of commissioned service?'' In my 
judgment, it is imperative to lengthen careers to accommodate all these 
career-broadening opportunities.
    I note that the issue of career length is not new, as the following 
review of the legislative history on this issue will show. The 30-year 
career has been in place since 1947, but even back then, members of 
Congress were not comfortable with limiting careers to 30 years of 
commissioned service. Finally, knowing the Committee's concern about 
the cost of personnel, I would like to review how extending the career 
length limit might have a positive impact on reducing the overall cost 
of personnel.
     a historical view of the thirty-years-of-service career limit
    As the Senate considered the passage of the Military Personnel Act 
of 1947, some in Congress expressed concern that the new system would 
``force the retirement of officers at the height of their usefulness,'' 
and would be ``very detrimental to the best interests of the country.'' 
Sen. Guy Cordon, R-Texas, did the math and figured that ``the 
retirement of colonels after they have completed five years of service 
. . . or 30 years of service, whichever is the later . . . would mean 
that the average officer, figuring that he received his commission at 
age 22, would be forced to retire at 52 years of age.'' The record 
shows that Sen. Wayne Morse, R-Ore., concluded that he could ``not vote 
for the bill unless those objections are taken care of,'' and Sen. 
Harry Flood Byrd, D-Va., commented that this ``seems to me mighty early 
to retire a man, at 52.'' The Army countered the concerns of the three 
senators by arguing that Sen. Cordon had gotten the math wrong because

        The statement that the average officer receives his commission 
        at 22 and would be retired at 52 is in error. The average age 
        at appointment of Army officers is 25. For years to come, the 
        average officer will not reach the grade of colonel before he 
        has had 28 years of service . . . Therefore, the average age of 
        colonels will be 58 . . . The question of proper retirement 
        ages must be a compromise between the desires of the 
        individuals for longer service and the needs of the Nation for 
        a vital Army . . . Without a flow of promotions, there must be 
        stagnation. There cannot be a flow of promotions without forced 
        attrition at the top. \4\
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    \4\ Dwight Eisenhower, et al., ``Officer Personnel Act of 1947,'' 
testimony before Senate Armed Services Committee, 1947.

    Of course, it was the Army that got it wrong, but how wrong did not 
become clear until the system was in operation for some time and it 
became obvious that it was the rare officer who waited until 30 years 
of service to retire. The incentive in the new system was to take 
advantage of the reduced pension that paid immediately for voluntary 
retirements after 20 years of service and move on to start a second 
career before it was too late to do so.
    In 1954, the question of early voluntary retirements so alarmed 
Congress that an amendment to the Defense Appropriations Act of that 
year, the so-called Van Zandt amendment, limited voluntary retirements. 
It was repealed when the Officer Grade Limitation Act was passed, but 
only after Congress received assurances from the military services that 
``the privilege of voluntary retirement after completion of 20 or more 
years of service will be exercised little'' because ``the services have 
long accepted 30 years of faithful service as being the normal tour of 
duty.'' \5\ The force reductions after the Korean War saw extensive use 
of the 20-year option to draw down the force. By 1980, when DOPMA 
passed Congress, the 20-year volunteer retirement had become so common 
that it was no longer considered to be at the discretion of the 
Secretary of the Military Department, but had become a ``right'' and 
was so reflected in the new legislation.
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    \5\ ``Officer Grade Limitation Act of 1954 (H.R. 7103),'' Senate 
Committee on Armed Services hearing transcript, Washington, D.C.: 
Government Printing Office, 1954, p. 8.
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         the need for longer careers for intelligence officers
    The career area of military intelligence is a prime example of how 
today's one-size-fit-all system is not serving us well. The 
requirements for intelligence professionals, particularly the 
intelligence officers who serve in the National Intelligence Program, 
are well articulated by the Army in its description of the ``unique 
functions'' performed by the Strategic Intelligence Functional Area 
officers, attached at the end of my statement.
    Our study of the current state of military intelligence shows that 
today's military personnel system is ill-suited to produce the kind and 
number of officers needed by the intelligence community. \6\
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    \6\ Charles Nemfakos, Bernard D. Rostker, Raymond E. Conley, 
Stephanie Young, William A. Williams, Jeffrey Engstrom, Barbara 
Bicksler, Sara Beth Elson, Joseph Jenkins, Lianne Kennedy-Boudali, and 
Donald Temple, Workforce Planning in the Intelligence Community, Santa 
Monica, Calif.: RAND Corporation, RR-114-ODNI, 2013, pp.51-73.
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    Today's system is built on the paradigm of youth and vigor. It is 
not designed to produce the personnel with the kind of training and 
experiences that are required of today's intelligence professionals. 
The grade table that drives the system reflects the needs of combat 
units, not the needs of the interagency intelligence community. The 
DOPMA tenure and retirement rules truncate and terminate military 
careers just when intelligence officers have gained the experience 
necessary to make them truly productive. The best that can be said is 
that many former intelligence personnel continue to serve as government 
employees and contractors. Changing this system will require statutory 
relief to allow the services to retain personnel with demonstrated 
professional intelligence expertise and experience beyond current 
mandatory retirement dates. The best way to address this problem is to 
build a career profile based on the paradigm of ``experience and 
performance.'' Given the general structure of DOPMA and working within 
the constructs of a competitive category, this could be accomplished by 
providing grade relief, ceiling relief, and end-strength relief. Grade 
relief would allow the services to better match the service member with 
the positions that need to be filled; ceiling relief would allow 
officers who are not promoted to the grade of O-7 to serve longer than 
the current limit of 30 years of service; and end-strength relief would 
mean that if the overall requirements for intelligence officers 
exceeded those authorized today, there would be no need to reduce the 
number of officers serving in other occupations to accommodate any 
increase in the number of intelligence officers serving. All this, 
however, must be done within (and adhering to) the basic concept of up-
or-out.
           the importance of maintaining the up-or-out system
    The first imperative when considering changes to today's personnel 
system is to examine the impact on the experience profile of the force 
ten and 20 years in the future. For the vast majority of our military 
workforce, the people we recruit today will be the journeymen we need 
ten years from now and the leaders we have 20 years from now. In some 
specialty areas, new programs of lateral entry may provide added 
flexibilities, but the vast majority of military skills will still be 
acquired along the path of in-at-the-bottom-up-through-the ranks.
    The plain fact is that the military we build today must be capable 
of winning wars in the future, but we don't know when those wars might 
come. In the aggregate, the year-of-service profile is the best 
indicator of the readiness of the force to go to war at any point in 
the future. Maintaining the appropriate experience profile is critical.
    The key to achieving the desired experience profile is maintaining 
an adequate flow of people into and through the force over time. We 
have done this with the so-called up-or-out promotion system. While 
there are many ways that such a system can be managed, there must be a 
way of ensuring sufficient turnover to constantly revitalize the force. 
The flow out of the force should not be just at the end of a career. 
Our officers need to progress or leave. They must not be allowed to 
stagnate in place.
    The one thing that distinguishes a military personnel system from 
our private sector or our government civilian personnel system is we 
have had the tools and use them to maintain the required experience 
profile over time. Some have argued that we should institute a system 
that allows people to stay in place as long as they perform their job 
adequately. In fact, we have done this in the past, specifically during 
the drawdown during the early 1990s, and the result was that when we 
went to war in Afghanistan and Iraq, there were shortages of critical 
midgrade personnel; the same personnel we failed to recruit a decade 
earlier. I appreciate how hard it is to tell a young service member who 
is doing a good job today and wants nothing more than to be left alone 
to continue doing that job that he or she must advance or leave the 
service, but that is exactly what we must do to ensure that our force 
is always ready. If service members do not advance, they must be sent 
home to make room for the next generation because it is the next 
generation, and the ones that come after it, that will carry the fight 
in the future.
    Some might think it strange for me to be arguing that we must 
maintain the flow of personnel through the military just as I am 
arguing that in selected areas we should extend careers, but I assure 
you that there is nothing contradictory in what I am proposing. 
Extending careers does not negate the need to move people along in 
their careers; it means having different points in time when people 
move up or out. It means more time for people to learn their craft, 
less turnover, longer tour assignments and more ability to take 
advantage of career-broadening opportunities, including those gained 
from joint assignments, as well as outside of the military at school 
and in assignments with industry.
               controlling the cost of military personnel
    Finally, I would like to comment on the cost of military personnel. 
Military personnel cost more today than in the past because we are 
paying them better--and by the way, they have fewer complaints. I don't 
believe that we think our military personnel are being underpaid today, 
which was a concern when I last served at the Pentagon. In my judgment, 
the best way to reduce overall personnel cost in general is to increase 
the average years of service we get out of every new recruit or 
officer, even as we maintain the appropriate years-of-service 
experience profile. I do recognize that, as always, the devil is in the 
details and the general argument may not hold for all occupations. It 
depends on the costs of accession and training, and on the structure of 
pay. In general, however, selectively extending the length of careers 
to 40 years of service is likely to be cost-effective. Remember, while 
we might pay individual officers more in current military compensation, 
there are relatively few of them. Also, as was true when Congress voted 
to increase the pay of senior enlisted personnel in 2002, there is a 
very positive message sent through the force and we would expect to see 
increased retention as service members look forward to the 
possibilities of serving for a full career.
                              summarizing
    To summarize this quick overview of reforming the military 
personnel system, here are a few points to that I think this committee 
should keep in mind:

      Keep your eye on the future, particularly what any change 
will do to the experience profile of the force in the future.
      Maintain the desired experience profile over time.
      Ensure adequate flow of personnel; i.e., maintain the 
basic up-or-out concept.
      Be as flexible and permissive as possible in allowing the 
services to manage the assignment of personnel.
      Lengthen careers beyond 30 years of service, particularly 
for the specialty corps.
    [END OF TESTIMONY]
    [NEXT IS A DESCRIPTION OF ARMY STRATEGIC INTELLIGENCE]
                    army strategic intelligence \7\
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    \7\ Department of the Army, Commissioned Officer Professional 
Development and Career Management, Washington, D.C., Department of the 
Army Pamphlet 600-3, 2007. P. 251.
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        Strategic Intelligence functional area provides a focused, 
        trained corps of strategic intelligence professionals to Army 
        organizations, combatant commands, DOD, the Joint Staff, and 
        interagency communities with tailored intelligence required for 
        the development of national security policy and theater 
        strategic plans and operations. The Strategic Intelligence 
        officer acts as the premier expert on strategic and global 
        intelligence activities that accomplish U.S. strategic 
        objectives developed through unique training, education, and 
        recurring assignments at theater, national, Joint, DOD, and 
        interagency communities. The Strategic Intelligence officer 
        translates national security strategy into intelligence 
        strategies. Providing premier intelligence in a strategic 
        context, the Strategic Intelligence officer enables 
        decisionmakers and warfighters to dominate the battlespace. The 
        Strategic Intelligence officer represents Army interests at the 
        Joint and interagency communities. Strategic Intelligence 
        officers work primarily at echelons above corps worldwide. 
        [They fill positions] in intelligence units, headquarters, 
        national agencies, and unified commands. Strategic Intelligence 
        officers . . . participate in all phases of the intelligence 
        cycle. The Strategic Intelligence officer is an agile, 
        national- and theater-level and interagency expert--who leads, 
        plans, and directs all-source analysis, intelligence systems, 
        and intelligence policy and programs--supporting key 
        decisionmakers, policymakers, and warfighters in an 
        interagency, joint, coalition, and combined environment. 
        Exercising broad responsibility and authority, the Strategic 
        Intelligence officer is capable of integrating interagency 
        activities and interacting with the foreign intelligence 
        services to produce predictive strategic intelligence to advise 
        policymakers and combatant commanders to deliver overwhelming 
        advantage to our warfighters, defense planners, and national 
        security policymakers.

    Chairman McCain. Thank you.
    Mr. Hale.

 STATEMENT OF HON. ROBERT F. HALE, FELLOW, BOOZ ALLEN HAMILTON

    Dr. Hale. Well, thank you, Mr. Chairman, Senator Reed, 
members of the committee.
    I'll focus today on two broad issues: military 
compensation, or slowing its growth as free money for 
readiness, and also some selected personnel issues.
    Let me just say, I appear here as a former Comptroller and 
as an individual, not necessarily representing my current 
organization.
    Let me turn first to compensation. As a share of the total 
DOD budget, military compensation has stayed roughly constant 
since 2000. It's up a couple of percentage points, but not 
much. But, those constant percentages mask important shifts. As 
the DOD budget grew sharply after 9/11, compensation costs grew 
with it, fueled by increases in healthcare costs and also pay 
raises. As the budgets then turned down in 2010, the Department 
sought to slow the growth in military compensation. It made 
this decision not to alter, not to shoot for any particular 
percentage, but, rather, to free up funds to sustain readiness 
and modernization, but particularly readiness. And the proposed 
compensation reforms also sought to modernize the compensation 
system and make it more effective.
    Now, conventional wisdom holds that the Congress turned the 
Department down almost all of its--with regard to almost all of 
its requests. In fact, Congress approved a number of DOD 
proposals, including initiatives to slow growth and payments to 
healthcare providers, to raise care--TRICARE fees modestly, to 
reform pharmaceutical copays, and others. Congress even took 
the lead on some issues, principally military retirement 
reform.
    Taken together, these changes reduced DOD costs by about $6 
billion a year, freeing up substantial funds to help the 
Department return toward full-spectrum readiness. I think the 
Congress deserves more credit than it gets, and principal 
credit--or significant credit certainly goes to this committee.
    But, the job's not done. Further efforts to reform 
compensation and slow the growth to free up funds need to take 
into account the recruiting and retention climate, which 
obviously is tightened. But, the key candidate for future 
reform is the military healthcare system, as the Chairman said 
in his opening remarks. The current system often requires 
copays that are zero, or nearly so, which can lead to overuse 
of care. And the system's costly to administer. And also, 
despite some overuse of care, there's substantial 
underutilization in military healthcare facilities, which 
results in wasteful spending. And finally, there are access and 
quality issues.
    Congress has before it two proposals, a DOD proposal for 
several years, and then the one from the Military Compensation 
and Retirement Modernization Commission. The DOD proposal would 
certainly be the easiest to implement. It would result in some 
modernization and savings. And, I might add, more than three-
quarters of the savings in DOD proposals--in the DOD proposal 
comes not from the pockets of the beneficiaries, but from more 
selective use of care and from the reductions in the cost to 
administer the system.
    The Commission version offers beneficiaries a choice, and 
that is certainly a substantial advantage and, I think, 
warrants a careful look, but it isn't clear, at least to me, 
how the system--how the Commission proposal would maintain the 
system of military treatment facilities, which must remain in 
place, in some degree, to train future healthcare providers for 
war. And so, I think significant further work would be needed 
before you could enact the Commission proposal.
    In sum, the military personnel system has received 
substantial attention in recent years, and needs continued 
attention, but I am more concerned about the system that DOD 
manage--uses to manage its career civilian employees. Listening 
to debates over civilians, I sometimes feel like critics 
believe that the 775,000 DOD civilians mostly work at the 
Pentagon, maybe making PowerPoint slides or testimony. In fact, 
about 80 percent of them work outside
    the Washington, D.C., area, they perform many necessary 
support functions, they fix some DOD weapons, they teach 
military kids, they provide military healthcare, they manage 
bases.
    The system that recruits, retains, and manages these 
civilians has major problems. I'm not in a position to offer a 
comprehensive assessment or reforms, but let me use my 
experience in DOD to offer a couple of ideas:
    First, it takes too long to hire civilians. The Chairman 
mentioned this in his opening remarks. This committee made a 
start by granting expedited hiring authority for acquisition 
professionals. You might want to consider expanding that. One 
group that would come to my mind is professionals with 
expertise in the--and experience in the audit of financial 
statements.
    Poor performers are another issue. DOD has a small 
proportion of career civilian employees who do not perform 
well. Executives working for me spent way too long disciplining 
and, when needed, attempting to terminate members of this 
relatively small group. Most recent authorization legislation 
makes a start here, allowing performance to be considered in 
RIF [Reduction in Force] actions and expanding the probationary 
employment to 2 year--period of employment to 2 years. It is a 
good start. But, DOD and Congress might consider establishing 
review points throughout a career when poor performance can 
lead to termination. Some safeguards would be needed, but they 
have to be more streamlined than the onerous safeguards and 
lengthy proceedings that are required today.
    Let me also briefly address the requirements for civilians. 
Civilian personnel needs, in my experience, tend to be 
established job by job, making it hard to debate what numbers 
and types of civilian employees are needed in the aggregate as 
warfighting and support needs change. We have much better 
information to debate the numbers needed of the military.
    Even in the--so, I think Congress should challenge DOD to 
provide a better basis for determining, in the aggregate, the 
number and types of civilians that are needed to meet 
warfighting requirements--but, even in the absence of improved 
requirement tools, it's clear that DOD needs to reduce the size 
of its civilian workforce, but it needs to do so in a way that 
allows it to continue to meet support needs. Some key steps 
that would permit that require congressional support, including 
contentious ones, like permission to close unneeded military 
facilities where a lot of civilians work, and to downsize or 
close some military treatment facilities.
    Finally, in my view, we employ too many sticks and not 
enough carrots in dealing with our career civilians. In recent 
years, we've furloughed civilians twice, we've frozen their pay 
three times. Some in Congress criticize career civilians, 
seemingly treating them not as valued employees, but, rather, 
as symbols of a government that they believe is too large.
    DOD and Congress need to provide more rewards for good 
performance--a few more carrots, if you will. Let me suggest a 
couple of actions:
    Today, many career civil servants who are selected as 
members of the Senior Executive Service [SES] receive little or 
no increase in salary, even though their responsibilities grow 
sharply. And I might add, in my experience, it discourages good 
people from considering taking SES roles.
    Press support or reports suggest the administration is 
considering trying to increase SES pay, at least to the minimum 
level of GS-15 [General Schedule]. That would be an incremental 
step, but one I like better as an incremental step would be for 
DOD and Congress to expand the proportion of SES performers who 
are eligible for presidential rank awards, perhaps focusing on 
the awards at the meritorious level. These rank awards are made 
competitively through board selections. They offer both 
prestige and some substantial financial rewards. And what I 
like about them is that they direct the rewards to the SES 
members who are performing exceptionally well.
    Finally, DOD and Congress need to harness the power of 
praise as a way to recognize the importance of DOD's career 
civilian employees. We're very good at recognizing the 
accomplishments of the military. And that should continue.
    While I served as Comptroller, I always tried to thank the 
men and women in uniform and the civilians who support them. I 
hope more senior leaders will do that regularly. And DOD, along 
with this committee and others in Congress, could help by 
seeking opportunities to recognize the successes of civilian 
employees. Greater recognition would acknowledge the important 
role that DOD civilians play in maintaining our Nation's 
security, and it would help civilians feel that they are, 
indeed, valued employees.
    Throughout my government career, I have been privileged to 
serve with many highly capable DOD personnel, civilian and 
military. I hope the thoughts I've offered today can play a 
small role in helping these men and women who do so much to 
support our national security.
    With that, I'll stop, Mr. Chairman, and join in questions 
at the right time.
    [The prepared statement of Mr. Hale follows:]

             The Prepared Statement by Hon. Robert F. Hale
    I appreciate the opportunity to testify on Department of Defense 
(DOD) personnel issues. DOD is one of the largest employers in the 
United States, and the military compensation system is one of the most 
complex. Given this size and complexity, I cannot address all of the 
issues related to DOD personnel. Instead I will focus on two issues: 
efforts to reform and slow growth in the costs of military compensation 
and selected civilian personnel issues.
     reforming and slowing growth in costs of military compensation
    As a share of the total DOD budget, military compensation costs 
have remained roughly constant since 2000. But the constant percentages 
mask important shifts. As DOD budgets grew sharply after 9/11, 
compensation costs also grew sharply. Health care costs, especially for 
the new TRICARE for Life program, caused much of this growth. But 
substantial increases in basic pay, along with increases in basic 
allowance for housing to eliminate out-of-pocket costs, also fueled 
growth.
    Past Success in Reform and Slowing Growth. After 2010 total defense 
budgets began to decline, and DOD faced legal limits on its total 
funding put in place in 2011. In response, the Department sought to 
slow the growth in the costs of military compensation. It made that 
decision, not to alter the percentage of funding devoted to 
compensation, but rather to maintain recruiting and retention while 
freeing up funds to sustain modernization and, importantly, readiness. 
As the military ended most of its large-scale combat operations in Iraq 
and Afghanistan, regaining full-spectrum readiness required added 
funds. Proposed compensation reforms sought to help meet readiness 
needs while also modernizing the compensation system and making it more 
effective.
    Conventional wisdom holds that Congress refused most of DOD's 
requests for changes in laws needed to alter the military compensation 
system. While Congress did turn down some DOD requests, it approved a 
number of them and even took the lead on key issues. Examples of key 
enacted changes over the past five years include:
    [Questions for the record with answers supplied follow:]

      Health care changes. The Administration permitted DOD to 
use the federal ceiling price for pharmaceuticals, which substantially 
reduced DOD costs. Congress permitted DOD to use Medicare rates to 
reimburse for outpatient care and care at small hospitals. It also 
agreed to modest increases in fees for retirees who use TRICARE. 
Finally, Congress permitted DOD to restructure and increase 
pharmaceutical co-pays in ways that steered beneficiaries toward more 
cost effective approaches such as generics and mail order delivery. 
Congress even went beyond DOD requests and mandated use of mail-order 
delivery for follow-on pharmaceuticals.
      Pay raise limits. For the past three years the President 
has exercised his existing authority to limit military basic pay raises 
below the levels that would have been mandated by the private-sector 
formula. Because basic pay makes up a large share of compensation, 
these limits contributed significantly to freeing up funding for 
rediness and, to date, have permitted the military to recruit and 
retain needed personnel.
      Military retirement. This year Congress took the lead in 
reforming the military retirement system to provide military members 
with a new 401(k)-like fund that includes matching government 
contributions while also reducing the size of pensions for future 
retirees who serve 20 or more years. The changes will reduce DOD 
accrual costs for military retirement.

    Taken together, these changes reduced the DOD costs for military 
compensation by more than $6 billion a year. These savings, which will 
continue in perpetuity unless they have to be reversed to meet 
recruiting and retention needs, did not come close to offsetting the 
large reductions in DOD funding mandated by the Budget Control Act of 
2011 and other decisions. However, the compensation changes made 
available significant funds for readiness and achieved some needed 
modernization, especially for the military retirement system. 
Importantly, even after slowing growth in compensation, DOD has so far 
been able to recruit and retain needed personnel--the key goal for the 
military compensation system.
    Job Not Done. Despite these notable successes, further efforts to 
reform compensation and slow the growth of costs should be undertaken. 
DOD and Congress must proceed carefully to ensure that, in the face of 
improvements in the economy, the Department can still recruit and 
retain needed personnel. So long as that goal is met, further reform 
efforts can lead to a more effective compensation system and free up 
funds to support readiness and modernization.
    As part of these efforts, continued limits on the size of basic pay 
raises may be appropriate if the recruiting and retention climate 
permits. Limits on basic pay raises free up substantial funds, some of 
which could be used to offset the costs the compensation proposals that 
may result from the next version of the Force of the Future 
initiatives. Media reports suggest that, as part of the next tranche of 
initiatives, DOD is considering changes in the basic pay table to 
increase incentives for retention of mid-grade officers and for persons 
with specialized skills. These types of flexibility almost always make 
the military pay system more effective and should be given careful 
consideration. Changes in out-of-pocket costs for basic allowance for 
housing and reduction in the commissary subsidy may also be 
appropriate.
    The key candidate for future reform is the military health care 
system. The current system often imposes co-pays that are zero or 
nearly zero, which tends to lead to overuse of care. The system is also 
costly to administer. In the TRICARE portion of the system, the share 
of costs borne by beneficiaries has fallen well below the levels 
Congress mandated when TRICARE was established. Nor are benefit issues 
the only problem. Despite some overuse of care, there is substantial 
underutilization in military health care facilities, which results in 
wasteful spending.
    For the past several years, DOD has proposed revisions that would 
modernize the TRICARE system and make it more effective. Changes 
including combining the three major TRICARE plans into one plan and 
imposing modest co-pays when retirees and active-duty dependents seek 
treatment (care for active-duty personnel would remain free). The co-
pays are designed to reduce overuse of health care and to provide more 
incentives for use of military treatment facilities in order to improve 
utilization. Once fully implemented, the reforms proposed by DOD would 
save roughly a billion dollars a year. More than three quarters of 
these savings would result, not from greater payments by beneficiaries, 
but rather from reductions in administrative costs and more selective 
use of health care. Imposing fees for new entrants into the TRICARE for 
Life plan, along with additional changes in pharmaceutical co pays 
designed in part to steer beneficiaries toward generic medicines, would 
generate substantial additional savings.
    In its 2015 report, the Military Compensation and Retirement 
Modernization Commission recommended a much different approach to 
reform of the military health care system. The Commission approach 
would provide military personnel with an allowance for health care that 
beneficiaries could use to select from a menu of health care plans. The 
Commission's proposal offers beneficiaries a choice of health care 
plans, a significant advantage. Also, in part because the Commission 
proposed that retirees pay substantially more for health care, the 
Commission proposal saves a large amount of money--more than $6 billion 
a year once it is fully implemented, according to estimates in the 
Commission report.
    While the Commission proposal offers substantial advantages, it is 
not clear how the system of military treatment facilities, which must 
remain in place to train health care professionals for war, would be 
maintained. Significant further work is needed, perhaps along with a 
carefully designed pilot program, before the Commission plan could be 
implemented.
    In addition to some version of these reforms, Congress needs to 
permit the military services to downsize or close underutilized 
military treatment facilities so long as reasonable patient care can be 
maintained and training needs met. For their part, the military 
services need to propose appropriate downsizing as part of the overall 
effort to maintain quality health care while holding down costs. 
Finally, as it reviews the health care system, Congress needs to 
address other issues such as access to care.
    In sum, DOD and Congress have made important progress in reforming 
military compensation. This progress has freed up substantial funds 
that have been used to maintain readiness and modernization in the 
military while still allowing the services to meet recruiting and 
retention needs. Further reforms are needed, including consideration of 
changes proposed by the Force of the Future Initiatives and--
importantly--reform of the military health care system.
                   selected civilian personnel issues
    The military personnel system needs continued attention. But I am 
more concerned about problems in the system DOD uses to manage its 
career civilian employees. DOD employs about 775,000 civilians who 
provide support that is critical to the Department's ability to 
maintain national security. Listening to debates over civilians, I 
sometimes feel that critics believe that most DOD civilians work at the 
Pentagon. In fact about 80 percent of DOD civilians work outside of the 
Washington DC area. They fix some DOD weapons, run the Department's 
training ranges, and manage DOD bases. They provide health care for 
military personnel and teach their children. They also perform many 
other necessary support functions.
    The system that recruits, retains, and manages these civilian 
employees has major problems. However, compared to the military system, 
it gets much less attention in DOD and Congress. This relative 
inattention occurs in part because career civilians work in agencies 
throughout government. DOD tends to defer to the Office of Personnel 
Management and other government-wide organizations when civilian issues 
arise. DOD, however, employs about half of all career civilians in the 
federal government. Because of their numbers and their importance in 
maintaining an effective warfighting force, I believe that the 
Department needs to take a leading role in improving the civil service 
system, as does this Committee and other defense committees.
    I have neither the time nor the expertise to provide a 
comprehensive assessment of DOD's civilian personnel system and its 
problems. However, during my 12 years of service as a senior DOD 
leader, I supervised many DOD civilian employees. Based on that 
experience, several problems stand out:

      Hiring problems. It takes too long to hire career 
civilian employees. Organizations that I oversaw as DOD comptroller 
(including the Defense Contract Audit Agency and the Defense Finance 
and Accounting Service) hired numerous civilian employees--many of whom 
were just beginning their careers. These organizations lost qualified 
candidates because private-sector firms could hire much more quickly.
      Problems handling poor performers. DOD has a small 
proportion of career civilian employees who do not perform well. 
Executives working for me spent too much time disciplining and, when 
needed, attempting to terminate members of this relatively small group.
      Lack of tools to set requirements and manage pay. We have 
reasonable tools to help determine the numbers and types of military 
personnel needed to meet warfighting needs, or at least to generate 
information needed for an informed debate. We also have good tools to 
ascertain how military personnel will react to changes in compensation. 
Civilian personnel needs, however, tend to be established job by job, 
making it hard to debate what numbers and types of civilian employees 
are needed in the aggregate as warfighting and support requirements 
change. Also, we have almost no tools that permit us to judge how 
civilians will react to compensation changes.
      Too many sticks, too few carrots. In recent years we have 
furloughed civilian employees twice and frozen their pay three times. 
Some in Congress criticize career civilians, seemingly treating them 
not as valued employees but rather as symbols of a government they feel 
is too large. We also often fail to recognize the contributions that 
civilians make to meeting DOD's warfighting needs. In contrast, we 
regularly recognize the accomplishments of our military personnel.

    Because of these various problems, morale has fallen sharply among 
career civilians. Each year the Partnership for Public Service creates 
a morale index for career civilians using questions administered by the 
Office of Personnel Management during an annual survey. Between 2010 
and 2014, the index suggests that morale for the government's civilian 
employees declined by about 12 percent, even while recent improvements 
in the economy led to morale improvements among all U.S. workers.
    Employees perform best when they believe that their employer values 
their services and will treat them fairly. Today, unfortunately, I 
believe that many career civilians in DOD, and probably in other 
federal agencies, wonder whether their employer really values their 
services.
    I am not able to offer a comprehensive package of solutions to 
these and other problems affecting DOD's career civilian employees (and 
in many cases, civilian employees throughout government). I am hopeful 
that in future releases, Secretary Carter's Force of the Future 
Initiatives will include recommendations for improvements in the 
civilian personnel system. I trust that any proposals that are 
submitted to Congress will receive careful consideration.
    While I can't offer comprehensive reform, I have found during my 
government service that progress often has to occur in increments. So I 
will conclude my statement by proposing some incremental improvements 
that seem practical to me and should help improve the civilian 
personnel system.
    Congress should challenge DOD to provide a better basis for 
determining, in the aggregate, the number and types of civilians needed 
to support warfighting requirements. Requiring a one-year study by 
DOD's personnel experts, perhaps coupled with an analytic organization 
within DOD, seems to me a good place to start. In return for better 
tools, Congress should stop requiring cuts in civilian personnel that 
are proportional to military reductions. Proportional cuts rarely 
permit DOD to meet its support needs.
    Even in the absence of better tools to establish requirements, it 
is clear that DOD needs to take steps to reduce the size of its 
civilian workforce while continuing to meet support needs. Some key 
steps require Congressional support. Permitting DOD to close unneeded 
military bases, and to downsize or close some military medical 
facilities, would help DOD begin to achieve needed civilian personnel 
reductions without harming needed support activities.
    It is also clear that DOD needs to hire more younger employees. 
Today DOD civilian employees under age 35 represent less than one-fifth 
of the Department's career civilian workforce. Media and other reports 
suggest that future Force of the Future Initiatives will include 
specific initiatives to attract more millennials into the Department. I 
hope that is true and that the Department (and other agencies) can move 
in that direction. In this year's National Defense Authorization Act, 
Congress also sought to help by providing expedited hiring authority 
for civilian acquisition professionals. As I mentioned earlier, slow 
hiring is a key problem in meeting civilian personnel needs. Making 
this expedited authority available for other skilled personnel--for 
example, for those with skills and experience in the audit of financial 
statements--makes sense to me.
    Congress and DOD need to work together to help the Department deal 
with the relatively small number of poor performing civilians. The most 
recent authorization legislation, which permits DOD to take into 
account performance during employment cutbacks resulting from 
reduction-in-force (RIF) actions, represents a start. Extending the 
probationary period for new employees to two years also helps. But 
broader authority is needed. DOD and Congress might consider 
establishing periodic review points during a career when poor 
performance can lead to termination. Some safeguards would of course be 
needed to avoid politically motivated or inappropriate separations, but 
the safeguards must be sufficiently streamlined to permit terminations 
without the impossibly lengthy proceedings that are required today. I 
recognize the difficulty of making this change, but I also know it is 
needed.
    DOD and Congress also need to provide more rewards for good 
performance--a few more carrots, if you will. Let me suggest a couple 
of actions. Today many career civil servants who are selected as 
members of the Senior Executive Service (SES) receive little or no 
increase in salary, even though their responsibilities grow sharply. 
Comprehensive civilian pay reform, including pay increases for senior 
civil servants, would provide the best solution to this problem of pay 
compression. But comprehensive pay changes for senior civilians seem 
highly unlikely in the current budgetary and political climate. Press 
reports suggest that the President is considering an executive order 
that would urge increases in SES pay within existing limits. That 
action could represent an incremental step toward fixing pay 
compression. As another incremental step, DOD and Congress could expand 
the proportion of SES performers who are eligible for Presidential rank 
awards, perhaps focusing on awards at the meritorious level. These rank 
awards, which are made competitively through a process of board 
reviews, offer both prestige and substantial financial rewards to SES 
members who perform exceptionally well. The expansion should apply to 
all federal agencies, not just to DOD.
    Along with expansion, the Administration should be strongly 
encouraged to remove recent limits on the number of SES members who are 
eligible for Presidential rank awards. The Administration imposed these 
limits because of concerns about providing awards in tight budget 
times, but the limits have the unfortunate effect of reducing 
recognition and compensation for the most capable SES members.
    Finally, DOD and Congress need to harness the power of praise as a 
way to recognize the importance of DOD's career civilian employees. DOD 
and Congress are both very good at recognizing the contributions of 
military personnel at all ranks, but less good for career civilians. 
While I served as DOD Comptroller, I always tried to thank the men and 
women in the military, and the civilians who support them. I hope more 
senior leaders will do that regularly. DOD, along with this Committee 
and others in Congress, could help by seeking opportunities to 
recognize the successes of career civilian employees. Greater 
recognition would acknowledge the important role that DOD civilians 
play in maintaining our nation's security, and it would help civilians 
feel that they are valued employees.
    Throughout my government career, I have been privileged to serve 
with many highly capable DOD personnel--both civilian and military. I 
hope the thoughts I have offered today can play a small role in helping 
these men and women who do so much to support our national security.

    Chairman McCain. Thank you.
    Admiral Roughead.

   STATEMENT OF ADMIRAL GARY ROUGHEAD, USN [RET.], ANNENBERG 
       DISTINGUISHED VISITING FELLOW, HOOVER INSTITUTION

    Admiral Roughead. Mr. Chairman, Senator Reed, members of 
the committee, thank you for the opportunity to share my 
thoughts on what I consider to be the most important issue that 
needs to be confronted going into the future, and that's 
designing the total force and putting in place the policies 
that enable us to attract, recruit, and retain the talent 
that's going to be so important.
    My perspectives are based on command at sea, commanding 
both the Atlantic and the Pacific Fleets, serving as a Service 
Chief and a member of the Joint Chiefs of Staff, serving on 
combatant commander staffs and on service staffs, commanding a 
NATO striking force in the Atlantic, which is a multinational 
joint task force, and commanding a joint task force in the 
Pacific.
    Nothing that I say should be construed as criticism of the 
great young men and women who serve in our Nation's defense in 
uniform and in civilian clothes. But, I think that we're at a 
different time, when many of the policies and rules that we 
administer of this force, they were derived at a different 
time, and the times have changed, and it's time to relook at 
what those changes should be, because I believe that we're 
rapidly approaching the point of an unsustainable mix of cost, 
force balance, and lethality. And that will only get worse as 
we continue to feed the personnel costs that have been 
described by my colleagues here.
    I think it's safe to assume that significant top-line 
relief is not going to bail this out. And so, we have to look 
at what are the ways what we can adjust that. And because many 
of these policies have been implemented over time and they have 
interwoven with one another, layered on top of one another, it 
has to be looked at in its totality. Pull one lever, and you 
might get second- and third-order effects that are unintended.
    I think the real issues that I see is that, as we try to 
adjust the size of those who serve in the broad Department of 
Defense, the solution is always to go to the Active Force and 
reduce that. We, as has been mentioned, have a compensation 
system for the All-Volunteer Force that is really not tuned to 
that force. And I thank the committee for the work that they've 
done, particularly this year, to crack the door and begin the 
reform process there.
    We have a uniform promotion paradigm that tends to bleed 
expertise away from the force to fill a hierarchical promotion 
model that has been in place for decades. We are bound to a 
well-intentioned Goldwater-Nichols legislation that achieved 
the joint imperative, but has caused a bloating of our joint 
headquarters staffs in Washington and around the world. We have 
a government employee and civilian contractor ratio that is 
significantly out of balance with the fighting force that we 
field today. And our civilian personnel system values longevity 
over merit. And we have become extraordinarily disposed to 
filling our service headquarters with contractors without a 
means of really determining the number of contractors that we 
have working at any given time in these headquarters 
facilities, and whether or not that's the optimum solution.
    So, I think, as I look at it, some of the things, as we 
debate the size of the force, I believe the going-in position 
should be to hold constant the number of Active- Duty 
personnel, and work the other variables first of civilian 
employees, Guard, Reserve, and contractors.
    We should reform DOPMA and tune it in a way that we can 
adjust the time-and-service requirements and the time-and- 
grade-promotion requirements for the force, but I think it has 
to be tuned in such a way that give the services, and even 
specialties within each service, the latitude to be able to 
make the decisions to best incentivize the people that we want 
to keep. And clearly, we have to change the ``up or out'' 
policy, particularly in some of the technical areas that are 
going to only increase in competitiveness in future years. And 
the one that has been mentioned and most frequently comes to 
mind is cyber. But, if we do that, I think we'll have to put in 
place some longevity pay raises so that we can keep that 
talent, and they'll still be able to take care of their 
personal obligations that they have.
    With respect to Goldwater-Nichols, I really do believe that 
we have to maintain a legislative hammer on the Department of 
Defense with that joint forcing function, because if we don't, 
the services will likely retreat back into more tribal 
behavior. But, clearly, we have to adjust Goldwater-Nichols so 
that we cannot use it as a personnel management system, but 
really what it was intended for, and that's to improve the 
jointness of the force.
    And I do think, when we get to the general and flag officer 
ranks, we should maintain the current requirements, but I do 
believe that we can lift some of the mandated requirements on 
some of the more junior ranks within the services.
    I also believe, and jumping more to the organizational 
construct, that as we look at the role of joint commanders and 
command--and I know it's been discussed before the committee, 
the idea of the Chairman being moved from an advisory to a more 
command position--I really do believe that civilian control of 
the military is fundamental to who we are, and I maintain that 
the best approach to that is to maintain the advisory role of 
the Chairman. Nor do I believe that we should move to a general 
staff, because it is important that we have current 
operational, technical, and geopolitical experience moving in 
and out of the headquarters so that we can make better 
decisions.
    With regard to DOD civilian personnel management, returning 
to a scheme similar to the NSPS, or National Security Personnel 
System, I think is very important. I had the opportunity, when 
it was in effect, when NSPS was in effect, to implement it in 
several commands, and, within months, you could see the change: 
young people enthused, eager; where merit mattered, and not 
longevity; where they didn't have the concern about, ``If I'm 
the last one to be hired, I'm going to be the first one to 
leave, should there be any force cutbacks.'' I think that we 
really need to look at putting that back in place.
    And we have to get our arms around the contractor numbers 
within our headquarters. Right now, we can't do that. If we do 
get a number, it's normally time late. And it's a very 
amorphous thing to work with. Similar to what we have with 
headquarters authorizations for uniformed personnel, for old-
time equivalent for government civilians, I think we should set 
numbers of contractors for the headquarters, and not let that 
float, because if we go after headquarters numbers, and we drop 
uniformed government civilians, the headquarters, in my view, 
will not change in size; we'll just add more contractors into 
the mix. And the problem with that is, when a headquarters gets 
big, it makes more work for other people and for themselves, 
and it justifies its existence that way.
    So, those are some thoughts, and I look forward to your 
questions.
    [The prepared statement of Admiral Roughead follows:]

  The Prepared Statement by Admiral Gary Roughead, U.S. Navy (Retired)
    Chairman McCain, Ranking Member Reed, members of the Committee 
thank you for the opportunity to offer my thoughts on Department of 
Defense (DOD) personnel reform and strengthening the All Volunteer 
Force. I applaud and welcome the more strategic view this Committee has 
taken in assessing global security challenges and the efficacy of our 
Armed Forces today and in the future. Nothing is more important to our 
nation's security strategy than getting the force design right and 
optimizing the total personnel strategy to that design.
    In addition to command at sea I have had the privilege of being a 
Service Chief and a member of the Joint Chiefs, serving on Combatant 
Command (COCOM) and Service staffs, and commanding a NATO Striking 
Force in the Atlantic and a Joint Task Force in the Pacific. But I 
spent my life in the U.S. Navy because of the extraordinary young men 
and women who serve in it. It was my pleasure, every day, to sail and 
serve with them and there was no higher honor than to have been 
afforded the opportunity to lead them. Any comments and recommendations 
I make are not criticisms of their dedication, commitment and 
contribution to the hard and important work they do around the world.
    The fundamental question I inferred from your letter of invitation 
was: is the total DOD force optimally organized, sized and compensated 
for the security demands of today and those we will likely face in the 
future? The answer is--no. The organization and processes under which 
we operate, fight and manage the force were derived in different times. 
The world has changed. We have not and do not lack for recommended 
solutions. Numerous studies over the years have examined organization 
and processes. Many recommendations have been implemented, many have 
not. The solutions are organizationally and mechanically simple, but 
the personal impact on those who serve and have served is largely 
distasteful and the political will, in the information environment in 
which we live, more doubtful. The work you are doing at this time is 
critical because we are at a point where the current force is 
approaching an unsustainable mix of cost, force balance and lethality. 
We continue to sacrifice procurement and the necessary maintenance and 
training funds of a shrinking fighting force to feed the current 
personnel structure. One credible estimate projects that with personnel 
and operation and maintenance costs growing, as they have been at four 
and two percent respectively, those two accounts will consume 86 
percent of the allowed DOD budget by 2021 and all of it by 2024, the 
last year of the second term of the next president. As much as we all 
desire, significant topline relief is not likely. Piecemeal solutions 
will not work. A total examination and comprehensive revision of the 
manpower organization and governing personnel legislation and policies 
of the DOD is required.
    We continue to attempt to reduce manpower costs by cutting the 
number of those who are on point--active duty uniformed personnel. We 
have an all volunteer force with a compensation and benefit system that 
is not tuned to that force and a uniformed promotion paradigm that 
bleeds needed technical expertise to fulfill a one size fits all 
hierarchical promotion model. We are bound to well-intentioned and 
needed joint forcing legislation (Goldwater-Nichols) that has achieved 
the joint imperative but has ballooned headquarters' overhead. We have 
a uniformed, government service civilian and service contractor ratio 
conspicuously out of balance to our fighting force. We attempt to 
attract and retain quality new generations of government civilian 
employees with a civilian personnel system that values longevity over 
merit. We have become exceedingly disposed to headquarters service 
contractor support without knowing how many service contractors we are 
paying for and whether they are the optimum solution.
    Sizing the Force.  The number of active duty uniformed personnel 
has fluctuated since 9/11. Ground force numbers appropriately increased 
during the high demand years in Iraq in Afghanistan. Active duty Navy 
and Air Force personnel declined, but in the aggregate the total number 
of active duty personnel has not increased that much. The civilian 
workforce, after early post 9/11 growth, has remained illogically 
stable with some growth occurring within the acquisition community at a 
time when we are buying less. Reserve and Guard numbers are rarely in 
question; and, while public debates rage over reductions in active 
uniformed personnel, there is relative silence regarding the other 
components of the force. Further force reductions should begin with 
holding active uniformed numbers constant and reducing the other 
components, primarily civilian numbers.
    Compensation and Officer Promotion.  The changes to compensation 
begun by this Committee are positive and relevant to new generations 
who will serve in our military. Regarding officer promotion and 
retention, it is time to reform the Defense Officer Personnel 
Management Act (DOPMA). Time in service and time in grade promotion 
milestones should be tuned to the needs of each Service and to 
specialties within each Service. This will be key to incentivizing 
service and can make a difference in retaining quality and skill. 
Similarly, the `up or out of DOPMA' should be eliminated in skill areas 
determined by the Services. This will be particularly important in 
areas such as cyber where broad competition for talent will be intense. 
Retaining experience and skill in a niche area will be more important 
than promotion opportunity. This change will require a longevity and 
skill pay scale for those who do not promote but are committed for the 
long haul to their area of technical expertise.
    Goldwater-Nichols Legislative Reform.  Without the forcing function 
of the Goldwater-Nichols DOD Reorganization Act of 1986 we would not be 
the unmatched fighting force we are today. The joint imperative must be 
sustained; however, adherence to Goldwater-Nichols today is more 
synonymous with promotion requirements than war-fighting skill and 
experience. Those promotion requirements have caused the size of joint 
staffs (COCOM and JCS Staff) to increase in size based on assignment 
throughput rather than necessary and appropriate work. Concomitantly, 
it has reduced the attractiveness of Service staff assignments where 
expertise, experience in and the responsibility for manning, training 
and equipping of our forces reside. Joint promotion requirements for 
Flag and General officers should be retained, and Services should 
manage joint assignment strategies and incentive strategies to support 
senior leader requirements. Mandated numbers and promotion ratios 
between Service and the Joint Staff should be relaxed to best spread 
skill, talent and relevant experience among Joint and Service staffs. 
This more limited approach is consistent with addressing and tailoring 
to that which Service and joint organizations need rather than 
incentivizing all.
    Recent testimony before this committee addressed the 
responsibilities of Combatant Commanders, the Chairman of the Joint 
Chiefs of Staff and the nature of their staffs. In the case of the 
former, the trend to Joint Task Forces leading the fight has called 
into question the role of the Combatant Commander. That is a behavioral 
not an organizational problem because senior headquarters and leaders 
tend to bypass the chain of command. Combatant Commanders must command 
and be accountable for operations across the spectrum of operations, 
including combat. Their authority and accountability must be seen in 
their respective region or function as absolute and continuous. Joint 
Task Forces will remain the optimum organization for focused operations 
but the COCOM must be accountable for effects and outcomes. The tasks 
and functions of COCOM staffs should not replicate those of subordinate 
Joint Task Force or functional staffs and COCOM staffs must be sized 
for oversight not redundancy.
    Nothing speaks more to our nation's principle of civilian control 
of the military than the advisory role of our most senior uniformed 
leaders, particularly the Chairman, Joint Chiefs of Staff--that should 
not change. With regard to recent musings and proposals regarding 
creating a `General Staff,' this could potentially create an elite 
military entity that could generate outsize influence while limiting 
the infusion of recent operational, war-fighting, and technical 
experience into joint staffs in our rapidly evolving world.
    DOD Civilian Personnel Management.  Our nation is fortunate indeed 
to have dedicated men and women who are drawn to and take great pride 
in public service. As previously mentioned, the number of civilian 
personnel in the DOD must be rationalized with the number serving in 
uniform. Additionally, the management of that force should value merit 
over longevity. It was my duty and pleasure to have implemented the 
National Security Personnel System in several commands when it was in 
effect in a previous administration. The effects were quickly 
apparent--increased interest in government service, greater optimism 
regarding being rewarded more rapidly for hard work and innovation, and 
less concern for being the first to be let go if the last to come 
aboard--quality and hard work mattered.
    Staff Size and Service Contractor Accounting.  The number of people 
in an organization should be a function of work to be performed. We 
account for and control uniformed personnel and government civilian 
personnel through end strength and Full Time Equivalent (FTE) 
authorization. There is no method to account for service contractors on 
staffs; accordingly, staff size can float based on money available 
rather than work to be performed. Any count of contractors on a staff 
is vague and time late, and staffs can grow with limited control and 
awareness. Without more disciplined control in this area right-sizing 
organizations and staffs will be a mirage. While not perfect, creating 
a contractor personnel authorization at the service and joint staff 
level, i.e. CPN [contractor personnel Navy] (in the case of Navy) or 
CPA [contractor personnel Army] (Army), etc. is a way to stabilize, 
monitor and control the size of headquarters. Once stabilized and 
controlled the work of debating and defining the appropriate roles and 
mix of government civilian versus contractor can take place. Absent 
that we will continue to attempt to design an optimal total force using 
nebulous variables.

    Personnel management, especially reforming compensation and right-
sizing overhead, is hard, complex and politically challenging. My 
comments and recommendations touch on what I consider to be the major 
areas of needed reform. I am hopeful they are helpful, and I look 
forward to your questions.

    Chairman McCain. Well, thank you, Admiral.
    And, Admiral, I was just--not long ago, read a wonderful 
book called ``The Admirals'' about five-star admirals in the 
Navy in World War II. And I noticed with some interest that 
Admiral Nimitz, at one point in command, ran a ship aground. Do 
you think that's possible today?
    Admiral Roughead. Senator, I think we have some recent 
cases where we've done that, but I will tell you that the 
fitness report that was written on Admiral Nimitz after he ran 
a ship aground was on the door of my office as I walked out 
every night. And to me, I think it's important that we still 
give people the latitude to make mistakes and move on.
    Chairman McCain. Do you think that's the case?
    Admiral Roughead. I know that we have, in recent years, 
allowed some people who have made some significant mistakes or 
errors in judgment to move on.
    Chairman McCain. Dr. Rostker, you bring up a really 
fascinating--there's many aspects of this issue. I mean, it's 
really a--this is a aspect where there are many different 
facets of it, but you're advocating a--changing the current 30-
year retirement in--to 40 years, which, I think, given 
longevity and capabilities and experience and knowledge, is 
something that ought to be considered. But, what about the fact 
that there are specialties that put a premium on physical 
strength and fitness? How does this work? And I'd be interested 
in the other witnesses' view of this. This would be a huge 
change.
    Dr. Rostker. And I--I agree with you, and I think that we 
have to address the needs for each. In my state--in my oral 
statement, I made the point about not taking on the issue of 
youth and vigor in the combat arms, but I would also point out 
that all of the storied admirals of World War II would not have 
been around, they would all have been retired under our current 
personnel system.
    The issue becomes how we manage the specialty force. And 
we've heard here about Goldwater-Nichols. Goldwater- Nichols 
has, basically, added 5 years of career content to an already 
jammed career. And it has deprived the services of the talents 
of many officers who are being jointed at the time in previous 
years they would have learned how to manage the corporate 
entity. We send people to school. The Secretary is out, talking 
about new initiatives for time with industry. And yet, we're 
going to send people home when they're 52 years old in the 
acquisition corps and planning and things that don't require 
youth and vigor? Can you imagine being a corporation and saying 
to the majority of your acquisition executives, ``You've 
reached 52. Go home''? That's when they've learned their craft. 
We do that with FAOs [foreign area officers], we do that with 
the intelligence community. The hardest fill jobs in cyber are 
not the hackers, but the people who are managing hackers. But, 
we'll send them home when they reach 52--52, of course, being 
30 years from the time of commission.
    So, I think we have to break the one-size-fits-all 
paradigm, and address your concern for youth and vigor, and 
address my concern for the specialty corps as we build career 
structures that make sense for the individual skills that are 
needed for the future.
    Chairman McCain. Sometimes that could be as short--early 
age as 48----
    Dr. Rostker. It could be.
    Chairman McCain.--in some cases.
    Dr. Chu.
    Dr. Chu. I couldn't agree more with the notion that we 
ought to look at variable career lengths. And I think the 
retirement reform you enacted this last--in this current 
authorization act opens the door for the Department to begin 
moving that direction.
    DOPMA's current 30-year ceiling is an issue. There is some 
latitude in the statute to extend in order to recall people 
from retired status. But, that's not really a panacea as an 
option. Congress, in the last decade, moved to loosen some of 
the age restrictions, which is another problem. Some people 
join the military late, and so they might be the 60-year-old 
acquisition executive, and we'd still like to keep them. And I 
think those--that greater latitude is very helpful.
    But, I think, fundamentally, it--it's not about a 
particular constraint, it's about--the paradigm the Department 
follows, that everybody should look--as you said--more or less 
the same. And I think that Admiral Roughead touched on this in 
his remarks, that we're grooming all officers to be Chief of 
Staff. That's not true. Most officers are not going to be Chief 
of Staff, as is obvious from an arithmetic perspective. Many 
are wanting a fulfilling career, where they move to a middle 
management or a middle level of expertise, and they continue to 
serve in that level for a longer period of time.
    And so, my play would be to encourage variability. First, 
the Department needs to be focused on what experience mix it 
wants, by skill area, both officer and enlisted, as a guide to 
what that variability should look like. So, in some areas, 
where youth and vigor is essential, you might actually want 
somewhat shorter careers. You already have a problem with some 
people hanging on, so to speak, as we all know, as they get to 
15, 16, 17 years? service. Congress honors that with a 
sanctuary. Eighteen years of service, you get there, you have 
to really commit a crime not to get to 20 years. That's a 
mistake. The new retirement system allows you to say, ``It's 
time to leave.'' And you can take a significant prize home with 
you. But, some other people ought to stay for much longer 
periods of time, as Dr. Rostker argued. It--senior command, 
senior experience in various specialized fields--medicine is an 
example of that career track, as well. And we ought to retain 
people for longer periods of time. So, I think it's the issue 
of variability in career length that ought to receive 
attention, not necessarily just extending everyone.
    Chairman McCain. Mr. Hale, your view.
    Dr. Hale. I think it's a good idea to look carefully at 
this. I mean, it would be a far-reaching change, and it could 
have significant effects on costs and other things. But, the 
longevity trends, and, as Dr. Rostker pointed out, the idea of 
sending home experienced acquisition or financial professionals 
or others, at that matter, at ages 52 doesn't make much sense. 
And so, I think it is definitely worth looking at.
    Chairman McCain. Senator Reed.
    Senator Reed. Well, thank you very much, Mr. Chairman.
    And, gentlemen, thank you for your testimony.
    It strikes me--and it is a point Dr. Rostker made, but I 
think everyone echoed it--is that anything we do will have an 
effect about 20 years from now, when you work through the 
system, which begs the question, What will the military look 
like 20 years from now?--which leads another question, Who's 
going to tell us what it should look like? And how do we get 
that information from the Department of Defense.
    Then, to go Dr. Chu's point, this is right now very much 
fragmented and culturally distinct. You know, the Army employed 
copious numbers of warrant officers to fly helicopters in 
Vietnam because they needed them. Today, we have drone 
operations, but they have to be Air Force culture, qualified 
pilots and in the career path to move up in command squadrons 
of F-16s, et cetera. So, I think this just--I want--we'll start 
with Dr. Chu and go down--comments about, How do we, the 
Congress, get the Department to focus on the force 20 years 
from now in a coherent way across all the different services 
and components of the services?
    And, Dr. Chu?
    Dr. Chu. My suggestion would be to ask the Department, in 
its annual presentation of the President's budget request, to 
speak to why they chose the personnel mix and their cultural 
norms that are embodied in that document. So, I would start the 
conversation with, Where are you today? And why did you make 
those choices? And do you think those--and, to the Department, 
the challenge would be, Why do you think those choices are good 
for the--what the force is going to mature to look like in 5 
years, 10 years, 15 years, 20 years, et cetera? I would 
acknowledge, no one can foresee exactly what the force 
characteristics are going to be 20 years from now. And, in 
fact, I think where that conversation leads is encouragement, 
particularly under current circumstances. So, it's not like the 
Cold War, where you had known opponent and a view of how a 
conflict might unfold. We don't know. And therefore, I think 
the real issue in looking forward is, Have--Has the Department 
offered for the Congress' consideration, a reasonably rich set 
of hedging choices so that if we're wrong, as we're likely to 
be, as Secretary Gates has testified repeatedly, we have some 
backup plan, some foundation, particularly from a personnel 
perspective, which we can build?
    But, I'd start by challenging the Department to explain, 
How did you get this Active Duty figure? How did you decide the 
Reserve-component number? Is it something other than just 
history of what you did last year? What about Federal 
civilians? All right? That will set up a scramble in the 
Department, because civilian manning is largely a decentralized 
decision. There'll be some preparation time needed for people 
to give you a reasonable answer. And what about the contractor 
force, which I think, as my colleagues this morning have 
testified, is largely a safety valve for the Department. So, 
you constrain Active Duty, you constrain Reserve numbers, you 
constrain Federal civilians. What pops out, as long as people 
have money, is they hire contractors instead.
    Senator Reed. Dr. Rostker, please.
    Dr. Rostker. Well, I'd like to invoke the great American 
philosopher Yogi Berra. Yogi said, ``The future ain't want it 
used to be.'' And I think that's right.
    First, we need to put the ``p'' of planning back into PPP 
[Program Protection Plan]. We're not doing that. We're just 
programming.
    We have a good idea of what our capabilities will be, to a 
fair amount of the force, the majority of the force, because 
it's tied up in our capital stock. So, the first thing we need 
to be able to do is man our squadrons and our aircraft carriers 
and our bomber force that we're building. We know the mechanic 
needs, the pilot needs. Those projections are fairly 
straightforward. And when I talk about the experience profile, 
I'm talking about that.
    The unknown is the flexibility for dealing with ISIS 
[Islamic State of Iraq and Syria], the growth in Special Ops 
[Operations], and their flexibility is the most important 
thing. I once did a paper for the Guggenheim Institute about 
thinking about the last--the next war. And I--and everybody 
else who did papers had very specific notions about the next 
war. And I used the Yogi Berra quote.
    The thing that distinguishes the Defense Department is that 
we bet on a lot of horses. We didn't close down the cavalry 
until we knew that tanks were--we have a long history in the 
Navy of battleships and aircraft carriers fighting it out until 
we knew what was going on. And that redundancy in our services 
and within our service has proven to give us the flexibility to 
be able to adjust to the future. And flexibility is the key.
    Senator Reed. I have very little, if no, time, Dr.--Mr. 
Hale and Admiral Roughead. Any comments?
    Dr. Hale. No, I don't have anything.
    Chairman McCain. Admiral?
    Admiral Roughead. I would take a little different tack. I 
think that the ability for the Department to reform itself--I 
question that. The most significant change that's taken place 
in the U.S. military in the last 50-60 years was the creation 
of the All-Volunteer Force. It's not the technology or 
anything. It's All-Volunteer Force. That was produced by the 
Gates Commission. Thomas Gates was an opponent of the All-
Volunteer Force. He was the chairman of it. But, yet, it 
created the military we have today, which I submit is one heck 
of a military. And so, I think what we really need to do is to 
bring the same flavor of people together to really look at this 
in its totality. And there's going to have to be some china 
broken, and that normally does not happen within a bureaucracy.
    Senator Reed. Thank you very much, Admiral.
    Thank you, gentlemen.
    Chairman McCain. Senator Fischer.
    Senator Fischer. Thank you, Mr. Chairman.
    As we're looking ahead 10, 15, 20 years, and trying to do 
this planning, and comparing it to where we were when 
Goldwater-Nichols reforms were put into place, how can we--
carry on with this conversation--how can we achieve the 
flexibility without throwing out a lot of the reforms that were 
made under Goldwater-Nichols? If we look at joint duty, for 
example, and if that is needed in the future, if it's 
appropriate in the future, or does it just add on to more 
headquarters staff? How--do we form the commission, Admiral, to 
get into the weeds on every reform that's in there, and then 
figure out a way to be flexible?
    You had mentioned we need to change that ``up and out'' 
policy. And, Dr. Rostker, you had mentioned that the force must 
not be allowed to stagnate in place. But, yet, I think we're 
going to need people to remain in place longer to achieve the 
skills that they need to give them the flexibility for the 
challenges that we face in the future. You know, you can look 
at cyber. A few of you mentioned that. That's going to take 
experts, it's going to take people who can respond quickly to 
change as that environment changes.
    So, I would just ask your opinions on that, if we could 
start with you, Admiral.
    Admiral Roughead. Yes, ma'am. And I would say that, one, I 
don't think a commission similar to the Gates Commission gets 
into the aegis. I think that they can generate the design of 
the total force that will be required going into the future. 
I--but, I also believe that--particularly in Goldwater-Nichols, 
that we've constrained ourselves with some of the requirements 
that are there. By forcing the joint requirement down onto the 
major, lieutenant, commander level, what we have done is, we 
have basically said--sent the signal that staff duty is more 
important than honing your warfighting craft.
    We have also, by putting in the requirement that the 
service staffs can't promote at a rate higher than the joint 
staff, we've disincentivized people from serving on service 
staffs, where we man, train, and equip, and where most of the 
money of the Department is spent. And so, we've lost that 
talent pool and experience and expertise.
    So, I think that, in Goldwater-Nichols, we can float that 
requirement higher. But, it also, as I said, has to be done in 
conjunction with some of the other policies. The fact that we 
have may have a good cyberwarrior who is not a qualified joint 
officer, and allow that person to stay in the Navy longer, or 
in the military longer, that's okay. So, I think we have to 
look at how all of these things work together. But, I think 
that we've forced the joint requirement down too low, and we 
have disincentivized some of other priorities that I think are 
going to be important for a fighting force of the future.
    Senator Fischer. Thank you.
    Mr. Hale?
    Dr. Hale. So, I'd like to ask that you broaden your 
thoughts on Goldwater-Nichols and think about whether we need 
something analogous to that for our civilian workforce. We are 
at the other extreme with regard to the civilians. That is, 
there's not a lot of, often, moving around, especially at the 
senior levels. And I wonder if, as we think about Goldwater-
Nichols, and fixing it for the military, we want to think about 
how we engender some more rotational experience among those who 
will ultimately be our civilian leaders. Maybe, as I say, we 
need some version of Goldwater-Nichols for civilians.
    Senator Fischer. Thank you.
    Dr.----
    Dr. Rostker. The first would be to extend the career, so we 
can accommodate requirements like Goldwater-Nichols within the 
career structure. But, the notion of stagnation in place is not 
to imply that everyone needs to--that people need to advance. 
And in certain technical areas, that might be fine to stay in 
relatively the same job, but it tends to be in a particular 
technical area. We are often told of the young officer who 
says, ``I'm a great captain, and leave me to be a captain.'' 
Well, he may be a great captain when he's 30. I'm not sure 
he'll be a great captain when he's 40. Again, youth and vigor 
comes. So, he needs to either advance in his profession or 
leave. It's very hard to say to somebody who's doing well, 
``You have to go home, because we're worried about the next 
generation.'' We can't do that in the civilian world. We don't 
do that in the private sector. We must do that in the military.
    Senator Fischer. Dr. Chu.
    Dr. Chu. I'd urge we think about how we get the same 
outcomes that we like of our Goldwater-Nichols, but at a lower 
price, in terms of career content. The current--because I--as 
your question, I think, implied, there are some good points to 
what has been produced from Goldwater- Nichols. More joint 
orientation by the senior officer corps, specifically. But, our 
mechanism, as we all know, is an input-oriented one, ``You will 
take this course, you will have this assignment for a certain 
length of time, and such is the way to get there,'' which, of 
course, adds to the career content issue Dr. Rostker has 
raised.
    And so, just as a personal example, in my judgment, one of 
the most joint-oriented Army officers I encountered in my 
career in the Department was Jack Keane. General Keane would 
not qualify, under the rules. Until he was Deputy Commander of 
Joint Forces Command, he had never had a joint assignment. Of 
course, the issue is, you can't look inside the person's mind 
easily. But, I do think, if I may be presumptuous, that the 
confirmation power of the Senate is one tool to use. In other 
words, part of the examination really ought to be, what is the 
outlook of this officer on joint matters, and how has he or she 
achieved that outlook? As opposed to prescribing so much how 
the person gets there. I recognize there's the risk of 
confirmation conversion, as people have unkindly labeled some 
people's stance over the years, but I do think that might be 
one small step to try to move away from the prescriptive 
approach we use now, that you will take certain courses, you 
will have certain experiences in order to achieve this 
orientation, and to ask, in some fashion, that both the 
Department and the Congress look at people more holistically.
    Senator Fischer. Thank you.
    Thank you, Mr. Chairman.
    Chairman McCain. Senator Manchin.
    Senator Manchin. Thank you, Mr. Chairman.
    And thank all of you. I appreciate very being here.
    It's--someone coming from the civilian ranks and not being 
blessed enough to be in the military service, but now sitting 
back and watching this and trying to make sense of it, how we 
run the operations, is unbelievable. And it doesn't make any 
sense that we talk about--now we've got sequestration, we've 
had budget caps, all the different things. And you would think 
that the system, the Department of Defense being our largest 
Department in Federal Government, would be able to make 
adjustments and changes. But, it doesn't seem to come unless 
there's congressional mandates for that to happen.
    I can't get a handle on the contractors. I've tried. I've 
been here for 5 years, and I'm trying to get a handle on the 
strength of contract. The contracting forces, which we should 
look at, because I know the reduction of force. And every time 
we run into budget problems, it's always a reduction of the 
people that we depend to defend the country. And I know the 
size of the staff doesn't seem to change proportionally, when 
we should be changing. Staff seems to be constant, if not 
growing. But, contractors is just an absolutely misnomer, here. 
We've had as high--I mean, our report--I know this is not 
accurate, but in 2014 it was showing 641,000 full-time-
equivalent contractors at a cost of $131 billion. I can never 
get--I can't get that answer. I don't know why it's so hard for 
the Department of Defense to be able to tell us how many 
contractors we're paying and kind of filling slots and 
substituting and playing a kind of a movement game, here.
    And maybe--Admiral Roughead, I know you've been on the 
front line of this thing, but give me some insight on this.
    Admiral Roughead. Well, thank you, Senator. And my 
observations are exactly the same as yours, because there's no 
structure that defines the particular work, position, person 
that applies to a contractor. We have that with our uniformed 
and our government civilians. And I think that, as we look at 
our headquarters structures, that there should be an 
apportionment by billet, if you will, to use military speak, 
for those contractor positions that get done. Otherwise, what 
you find is that the money buys as many contractors as it can 
afford. And so, I think we need to do that.
    I would also say that all contractors are not created 
equal. I mean, we have some----
    Senator Manchin. Sure.
    Admiral Roughead.--contractors that are maintaining 
airplanes, and we've made the decision that that approach is 
best.
    Senator Manchin. Why can't that scenario be accomplished? 
Does it have to be a direction from Congress, legislated? Or 
can Department of Defense do that? The accountability of 
contractors.
    Admiral Roughead. I would leave whether Department of 
Defense can do that to some of my colleagues who have been in 
the Department, but----
    Senator Manchin. Okay.
    Admiral Roughead.--but, I really do think that that would 
be one way to get our arms around that.
    Senator Manchin. Dr. Rostker, if you could comment on that. 
And, Mr. Hale, I'll come right back to you.
    Dr. Rostker. The reason we have the contractors is because 
we don't account for them. We buy service. It's in the O&M 
[Operations and Maintenance] budget. It's just dollars. And it 
purely comes back to the Comptroller's shop, in terms of 
controlling those contracts that are used to purchase the 
services of people.
    The Congress, it--has said we want to have a limit on the 
size of headquarters. We want to have a limit on the number of 
civilians.
    Senator Manchin. Yeah.
    Dr. Rostker. And then, the headquarters go out and hire 
contractors, and they sit behind the same desk that a civilian 
sat behind. I would suggest they have loyalties that are not 
necessarily in line with those of the government, like 
maintaining the contract. And so, we can go to the American 
people--you can go to the American people and say, ``We're 
controlling government. We've limited the number of 
civilians.''
    Senator Manchin. Yeah.
    Dr. Rostker. But----
    Senator Manchin. Mr. Hale.
    Dr. Rostker.--we haven't.
    Dr. Hale. So, it's harder than it--than you'll think to 
count contractors. If you do a firm fixed-price contract--many 
of them are now--there is no responsibility on the part of the 
contractor to tell you how many people are doing it. They just 
have a job, they get the job done.
    In response to congressional requirements, DOD is inserting 
clauses in many of its contracts, directing the contractor to 
estimate the number of full-time-equivalent people. But, it 
takes time, and that's why you're not seeing this data.
    The way to control it, in my view, is, you control military 
and Federal civilians by billets or by FTEs [Full-time 
Equivalents]. You control the contractors by limits on the 
operation-and- maintenance funding. And that allows the 
Department the flexibility to use firm fixed-price contracts, 
when they make sense and we want to have that.
    Senator Manchin. The hardest thing that I had--and I'll 
finish up with this--the hardest that I had is that, basically, 
we had contractors of--fighting, basically, on the front lines. 
I know that people said that didn't happen, but we--I know that 
happens. And I know that they're hired, and they go in to 
force. They seem like--at 10 years, they come out of the 
military, they retire from the military and take a pay three to 
four times higher. That didn't make any sense to me. You can't 
justify that. You can't sell it back home. And we keep talking 
about reduction of forces, and we're coming back, paying three 
to four times more for the same person that we reduced--or 
reducted, and put them back into the private sector and on a 
contract. How do we stop--is there any way to stop that from 
happening?
    Dr. Chu?
    Dr. Chu. I think, ultimately, as my colleagues have 
implied, the contracts are a safety valve. And the real issue 
is what you're asking the Department to do. So, let's take the 
headquarters issue. Without in any way being cheeky here, the 
office I formerly held, a major activity was answering 
congressional correspondence. Many of these letters were--
required a significant research project. Someone had to do that 
work. If you place a limit on how many Federal civilians can be 
employed, the solution, as Dr. Rostker says, is the office uses 
the funds at its disposal to hire contractors to help with that 
task.
    So, I think the ultimate break on excessive contractor 
employment, to the extent it is, indeed, excessive, is the 
issue of what the Department's being asked to--what function 
it's being asked to perform and perhaps the too- tight limits 
on the resource inputs it might more usefully employ for that 
purpose--Active Duty personnel, I think, in the case in point 
that you were citing. You're--you are going to get situations 
where people who leave the military will have a skill set 
that's very valuable in the private sector, perhaps serving the 
Department of Defense. But, to me, that's--that's just a signal 
that there's an excess demand for that skill and that we've 
suppressed meeting that demand with Federal civilians and 
Active Duty or Reserve-com personnel, and it pops out in a 
contract. The contractor, eager to--service, as Mr. Hale said, 
offers a very significant salary to the--so, it's the safety-
valve issue and the question of the burdens of the Department 
and its business practice, I think, that is ultimately the 
break on the situation that you are--that--with which you are 
concerned.
    Senator Manchin. Thank you very much.
    I'm sorry.
    Dr. Hale. Can I just add, very briefly, one of the wartime 
problems that you raised occurs because we place limits on the 
number of troops that can be in--and that causes the Department 
to turn to contractors.
    Senator Manchin. That doesn't make any sense all, but I 
appreciate your answers.
    Chairman McCain. Senator Ernst.
    Senator Ernst. Thank you, Mr. Chair.
    And thank you, gentlemen, for being here today.
    Mr.--or, Dr. Rostker, if we could start with you, I know 
that you are well aware of the heavy deployment schedule that 
we have had over the past 14 years or so. Many members have 
mobilized, they have deployed, time after time after time, and 
we still continue to do that with a number of our SOCOM 
[Special Operations Command] units, as well. What can we do for 
those that are in more of the--well, I've met a lot of Active 
Duty soldiers. Many of them have deployed over and over again. 
But, then we also have that group that seems to be in the type 
of unit that is maybe a training environment. They have spent a 
career in those types of positions where they haven't deployed. 
How can we make sure that we are offering the same 
opportunities for everyone across the board? Because, of 
course, when you look at promotions and advancements, we want 
to make sure that everybody has opportunity for that, even 
broadening and strategic-type assignments. What can we do about 
that to even the playing field?
    Dr. Rostker. Well, there is a--deployments are by units, 
obviously, but also by skill sets. And so, there are certain 
skill sets that will not deploy. Generally, it has been to the 
advantage of servicemembers to deploy, because those 
considerations come into promotion boards and through the so-
called ``up or out'' system. There are rewards. But, it will 
not necessarily fall evenly, depending upon the particular 
occupations that people have.
    I think the broad question is also, what do we do for the 
servicemembers and their families for those who are deploying 
quite often? And this is really a unique and new problem for 
the Department of Defense.
    Senator Ernst. Yes.
    Dr. Rostker. We've never fought a war with this kind of 
rotation. And, as you say, the 14 years is the longest in our 
history. And we really do need to come to grips with what our 
services are, not only to the servicemember, but particularly 
to the family.
    Senator Ernst. We have such a heavy rotation of deployments 
with certain types of MOSs [Military Occupational Specialties] 
or occupational skills, and maybe not others, but we need to 
make sure that there is plenty of opportunity for everyone to 
take advantage of those types of positions.
    Admiral, of course, as we look at opportunities, there are 
a lot of different thoughts in this area, but I am a little bit 
concerned that the Department is really trying to mold our 
officers and even some of our senior NCOs [Non-Commissioned 
Offices] to aspire to be an intern at Facebook or Google. And 
those are great organizations, but with these types of 
assignments, they're lucrative, but we would rather see them 
being a platoon leader or a company commander or a first 
sergeant. And what impact will the Department's efforts to 
place a greater emphasis or priority on these nontraditional 
broadening assignments--what impact will that have, then, to 
our force readiness, to actually win that next war?
    Admiral Roughead. Yes, ma'am. Thank you for the question.
    Before I get to it, I'd like to just comment on the 
deployment piece. As----
    Senator Ernst. Thank you. Please.
    Admiral Roughead. As you know, the Navy has been deploying 
for centuries. And I think it's important that, as we look to 
the future employment of the force, that the model that's used 
take into account the types of deployments. And not everyone 
will be going, because--as Dr. Rostker said, because of 
specialties and other considerations. But, I think that the--
that, you know, it took the Navy awhile to define the 
deployment and readiness models. And I think we have to look at 
that in that particular service.
    With regard to some of the fellowship opportunities that 
have been announced recently, my sense is that those are in 
very small numbers. And I do think that there may be some value 
in certain areas where people can go off, see how things are 
done differently than within the Department of Defense, and 
then come back in. But, again, I--you know, is this something 
that will stack on top of the joint requirement, the 
operational requirement, the educational requirement? And so, 
my sense would be, you know, would that be something that you 
would consider as a joint credit and then someone who would 
come back in?
    Senator Ernst. And definitely something that we should keep 
an eye on. So----
    Admiral Roughead. In limited numbers.
    Senator Ernst. In limited numbers, that's absolutely 
correct. Thank you, Admiral.
    Thank you, Mr. Chair.
    Chairman McCain. Senator McCaskill.
    Senator McCaskill. Thank you, Mr. Chairman.
    Just to underline some of the concerns of my colleagues. 
Senator Manchin, on contractors. I have obviously spent a lot 
of time, as Mr. Hale knows, on this subject in the time I've 
been here. And one of the most surreal experiences was when I 
discovered, one day, that the person testifying in front of me 
about contracting had hired a contractor to prepare them for 
the hearing. And that's when I realized, okay, this has gotten 
a little out of control.
    It's not that contractors are bad. It's not that 
contractors aren't needed. As you indicated, Admiral Roughead, 
there are many places that we're using contractors that it's 
saving us money. They're performing functions well at a lower 
cost. But, the problem is, there's so little transparency that 
oversight is nearly impossible unless you have the tenacity of 
a bulldog that's very, very rabid. And--because you can't find 
them. You can't--it's amorphous. You can't figure out whether 
the contracting activity is justified or whether it's a safety 
valve. I mean, I think Dr. Chu just admitted they hired 
contractors to answer congressional letters. You know, I'm not 
sure that--we need to know this. We need to understand when 
contractors are being utilized. So, I think your idea for an 
authorization level on contractors is a valid one, and I would 
like to see any response that any of you have for the record on 
that, going forward.
    [The information referred to follows:]

    Dr. Robert Hale. It is reasonable to consider a cap on contractors 
in the authorization legislation. The cap should be in dollar terms 
since some contracts, especially fixed-price contracts, do not specify 
the number of contractors. Importantly, before establishing a cap, the 
Committee should discuss with the Department of Defense what data can 
be made available. A cap would only be meaningful if the Department can 
supply data that are consistent and accurate, both for use in setting 
the cap and in measuring compliance.
    More broadly, the Committee should consider changes that would 
reduce the use of contractors in cases where government employees 
(especially civilian employees) should be used. Contractors are 
sometimes employed because they can be put in place more quickly than 
government civilians. OPM is working to speed up hiring, an effort that 
the Committee should support and monitor. Contractors are also 
sometimes used because, compared with a government civilian employee, a 
contractor can be terminated much more quickly. As I indicated in my 
testimony, DOD needs authority to terminate poorly performing 
government civilians more quickly while still preserving protections 
against misuse of the civil service.

    Admiral Roughead. Just to underline some of the concerns of my 
colleagues, Senator Manchin on contractors. I have obviously spent a 
lot of time as Mr. Hill knows, on the subject from the time I have been 
here. And one of the most surreal experiences was when I discovered one 
day that the person testifying in front of me about contracting had 
hired a contractor to prepare them for the hearing. And that is when I 
realized okay, this has gotten a little out of control. It is not that 
contractors are bad. It is not the contractors aren't needed as you 
indicated Admiral Roughead, they're many places that were using 
contractors that it's saving us money. They are performing functions 
well at a lower cost. But the problem is, there is so little 
transparency that oversight is nearly impossible unless you have the 
tenacity of a bulldog that's very, very rabid. And because you cannot 
find them. You can't--it's amorphous. You cannot figure out whether the 
contracting activity is justified or whether it's a safety valve. I 
mean, Dr. Chu just admitted they hired contractors to answer 
congressional letters. I'm not sure that--we need to know this. We need 
to understand when contractors are being utilized. So I think your idea 
for an authorization level on contractors is a valid one and I would 
like to see any response that any of you have for the record on that 
going forward.



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    Senator McCaskill. I want to talk a little bit about what 
we have come to refer in this committee in the last several 
hearings as the deputy deputy dog syndrome. That is, in the 
civilian force, the springing up like mushrooms at a certain 
time of year of a new deputy to the deputy to the deputy. And 
where is that coming from? Why is there this seem-to-be growth 
of people with titles? Is it just the need for titles, in terms 
of, you know, how you're viewed within the civilian force--the 
civilian workforce at the Pentagon? Is there really a need for 
all these many, many layers of personnel that seemingly have 
some kind of authority over someone else? Has this thing gotten 
too layered? I mean, it appears to me it's gotten too layered, 
but I would love your take on that.
    Dr. Rostker?
    Dr. Rostker. We have a whole layer in the Defense 
Department that never existed when I came to town. We had 
Assistant Secretaries reporting to the Secretary of Defense. 
Today, we have Assistant Secretaries reporting to Deputy 
Secretaries to Under Secretaries who report to the Secretary of 
Defense. So, the whole Department has grown at least one layer.
    Senator McCaskill. And why?
    Dr. Rostker. The desire to do coordination. So, in the area 
of personnel, we have an Under Secretary and then we have a 
series of Assistant Secretaries. At one point in time, those 
Assistant Secretaries were all Deputy Assistant Secretaries, 
and the Assistant Secretary have--we've just mushroomed the 
whole--my judgment, the whole Department up one layer. And it 
just grew out of hand.
    Senator McCaskill. How can you--how can we crank that back?
    Do you have any ideas, Mr. Hale? How could we, from--as 
overseers, as--in an oversight capacity, trying to get a handle 
on the way we're using resources, how do we stop that?
    Dr. Hale. Well, let me just start by saying, for the 
record, that the organization I ran, I think, was, by Pentagon 
standards, relatively flat. There were no Assistant Secretaries 
in that Comptroller's shop. But, I understand your concern. I 
mean, you've tried to put limits on headquarters. That makes 
sense to me. I think, in the end, you're going to have to let 
the Department decide how to organize that more limited 
numbers, that what I would appeal to you when you're trying to 
do this, too, is to try to reduce the workload, the sunsetting 
of reports, is an excellent idea. We----
    Senator McCaskill. Right.
    Dr. Rostker.--spent a lot of time preparing reports. But, 
if we're going to reduce the size of the headquarters, at least 
in my experience, people over there were working hard, for the 
most part. There were a few slackers, but, for the most part. 
We've got to reduce the demand on them. Some of that's 
Congress, but some of it is internal, as well.
    In the end, Senator McCaskill, I think you've got to let 
the Department figure out how to organize itself within those 
more limited numbers. Hopefully, the more limited numbers will 
engender some reduction in the concerns that you're 
expressing----
    Senator McCaskill. Okay.
    Dr. Rostker.--about hierarchy.
    Senator McCaskill. Okay.
    I'm out of time. I would, at some point, like to have some 
input from this expertise that's presented here today on 
acquisition force, the notion that the folks that rotate out of 
there every year and a half are really--were being outgunned by 
the people who are buying--who are selling stuff to us. Big 
time, we're being outgunned, because there's not the buildup of 
expertise in acquisitions that you're going to have to have at 
the leadership level. And it's like the special corps you 
talked about, Dr. Rostker. There are certain functions within 
the military that we need not put one-size-fits-all. Because I 
think acquisitions is a great example of where we've wasted a 
lot of money because we didn't have the expertise there we 
needed.
    Thank you, Mr. Chairman.
    Chairman McCain. Isn't it also true that every time there 
is a crisis or a problem, we create another bureaucracy and, in 
some cases, an entire command that--as a solution? And I don't 
think that's necessarily the long- term solution.
    Senator Lee.
    Senator Lee. Thank you, Mr. Chairman.
    And thanks, to all of you, for the insightful testimony 
that you've offered this morning.
    As we've already discussed, there are a lot of benefits to 
our country that come from having an All-Volunteer Force. We 
also know that it's not a perfect system. And I'd like to take 
a few minutes to address some of the criticisms and some of--
what some have characterized as the unintended consequences of 
having an All-Volunteer Force, and perhaps ask some of our 
witnesses about possible drawbacks to the All-Volunteer Force 
and what can be done to address those.
    Now, some have argued that the All-Volunteer Force creates 
a circumstance in which the burdens--the risks and the real-
world consequences of war disproportionately affect members of 
the military and their families, while the vast majority of the 
public is largely shielded from the really awful effects of 
war. General Stanley McChrystal has made this point with 
respect to the wars in Iraq and Afghanistan.
    Now, some critics take the argument even a step further 
than this and say that if these burdens were extended more 
evenly across the population, the United States would be far 
more cautious in determining when, whether, and how to engage 
in any type of armed conflict overseas.
    So, Secretary Chu and Secretary Rostker, let's start with 
you. Can you comment on these criticisms and on the long-term 
conflicts, or consequences, rather, of an All- Volunteer Force? 
And then, Admiral Roughead, can you comment on the potential 
negative impacts of having our military actions being initiated 
and executed by roughly 1 percent of the United States 
population, a population that consists of decisionmakers in 
Washington, D.C., and servicemembers, who tend to be stationed 
at our Nation's military bases?
    Dr. Chu. Senator, thank you. It's an important issue.
    I do think that we should keep in mind that the 1 percent, 
the small fraction of the country that serves, is really a 
function of two key elements. First, what's the size of the 
military, Active Duty especially, that we maintain? Much 
smaller now, relative to our population base, than was true 20, 
40, 60, 80 years ago. Second, what's the size of the population 
cohort that would ordinarily be looked at for military service?
    One reason the draft was needed, I would argue, in the 
'50s, is, in fact, the United States, given it was an all--
essentially an all-male force, needed almost every able- bodied 
young male to serve. It's just a function of the small birth 
cohorts in the 1930s during the Great Depression. So, I would 
observe that it's--for the size military maintained today, 
given the size of our population, it's always going to be true 
that only a small fraction see military service.
    To the question you raise about ``Should the country be 
more involved with that serve as an important element in the 
national discussion of whether we should or should not commit 
forces?''--I'd observe that we did involve the country, in the 
last 15 years, in a significant way, because we mobilized the 
Reserves. The Reserves really are a cross- section of the 
United States, and touch every community in the country, every 
State in the Union. And so, while it's not quite the same as 
the old draft model that some put up, it does involve the 
country in that. And I think it's a great tribute to the people 
who volunteered for the service, that they answered that call. 
The Reserves served with extraordinary performance levels in 
this last long conflict, which continues to this day.
    Senator Lee. And so, for that reason, in the future, 
continuing to rely, or perhaps expanding our reliance, upon 
Guard and Reserve units could have that effect, that--the 
effect of distributing more broadly the people who were 
involved.
    Dr. Chu. In my judgment, yes, sir.
    Senator Lee. Okay.
    Dr. Rostker. I don't know whether you know, Senator, but 
I'm a former Director of the Selective Service System, and have 
dealt with the questions you've asked, literally for decades.
    The fundamental question that led to the reform of 
Selective Service in 1970 is, ``Who serves when not all 
serve?'' And that deals with the issues that Dr. Chu talked 
about, the size of the military and the cohorts that support 
it. The notion that a sizable portion of the country will be 
involved in the military, given the size of the military and 
the technology of the military, is just not realistic.
    The second is the nature of today's military. It's not a 
matter of giving a soldier a rifle and 6 weeks of training, and 
shipping him over--or her--now her--overseas, but a very 
technical force that requires a great deal of schooling and 
skill and knowledge. And we've talked about preserving and 
managing that talent. Are we to turn that talent off and throw 
that talent away just to create the opportunity to bring more 
unskilled people into sharing in the experience of the 
military? I think the use of the Reserves talks to the 
involvement of the community. But, the fundamental issue is the 
size of the population and the size of the military that we 
have today.
    Senator Lee. Admiral?
    Admiral Roughead. Yes, sir. I echo some of what's been said 
here. And I think that what we'll find as we go into the 
future, particularly with the force levels that are deployed 
now, especially on our ground forces, the--that number of Guard 
and Reserve will come down significantly, so we're going to 
lose that connectivity into society.
    I think the other thing that's happening is that we're, in 
a way, moving from an All-Volunteer Force to what I would call 
an All-Professional Force, that the number of people serving in 
the military today who have relatives who have been in the 
military is going up. And so, are we going to end up with a 
military that is more removed from society?
    I--on the broader issue of voluntarism, I'm a proponent of 
a national service, but how do you devise a plan that's 
equitable and that some people get to go in the military and go 
in harm's way, and other people go off and do things in the 
homeland that are perhaps a little more benign? And I don't 
know how you get to that. But, I do think that there's a need 
for a commitment to national service.
    Senator Lee. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman McCain. Senator Hirono.
    Senator Hirono. Thank you, Mr. Chairman.
    I'd like to paraphrase something you said, Admiral, the--
when you acknowledged that the All-Voluntary---Volunteer Army 
was, I think, the single biggest change to the military. Can 
you think of another change that could have this kind of a 
profound impact on the military? Could it be the number of 
women who are serving in the military, or some other example of 
something coming down the pike that would result in a profound 
change to the military?
    Admiral Roughead. I think that the example that you cited, 
women serving in the military, will transform the military, but 
it will not be the change in the total model that we're using. 
I really do think that there may be an opportunity, however, as 
was mentioned here--How do you fuse and how do you design the 
government civilian force and the military force that can 
better share in responsibilities, particularly in the 
headquarters areas? And I think a redesign in the aggregate may 
approach the monumental change that occurred with the All-
Volunteer Force. And I think it's time to take a look at that.
    Senator Hirono. Mr. Rostker, you noted that flexibility was 
of--I think you used the words ``the most critical'' or a key 
component to what we ought to be instilling in the military. 
Can you give an example, perhaps, of where you see flexibility 
not existing? And how would we ensure flexibility in a system, 
a department that is massive and is still operating under old 
paradigms in many, if not in most, cases?
    Dr. Rostker. I think the most important issue in 
flexibility is to manage the individual skill sets, the 
careers, in ways that make sense for that career. And I would 
do that by removing the statutory limit of 30 years of 
commissioned service and let that be determined by the needs of 
the individual service. We heard about the acquisition corps. 
And we have the same issues in the intelligence area. We have 
the same issues in the chaplains corps and the like. And that 
would give us the flexibility to use people to the maximum 
extent.
    Senator Hirono. I think this panel has made a really strong 
case for looking at DOPMA and the fact that it really doesn't 
make sense to use a one-size-fits-all and everybody leaves at 
age 52, where--but, actually, people make decisions to leave 
much sooner than at age 52. Don't they make decisions earlier 
and--when they see that, if they're going to have to leave at 
52, they're going to decide at a much earlier age to leave.
    Dr. Rostker. Absolutely. I can remember a young JAG [Judge 
Advocate General] officer who was--came to me at 20 years of 
service. He had a wonderful career. He was looking forward. Was 
in the congressional legislation--legislative office and said 
he was given the opportunity to lead one of the military 
service organizations, but he really wanted to stay in the 
Navy. And I said, ``You can't stay in the Navy. The--we cannot 
offer you more than the possibility of 10 more years of 
service, and then you will not be in your early 40s, you'll be 
in your 50s.'' Chances of making admiral--there are two 
admirals--were not--you couldn't take that to the bank. And so, 
I had to counsel him to leave. He would not have left if he saw 
the full career that he could have aspired to, even if he did 
not make flag.
    Senator Hirono. So, the changes to DOPMA should be made at 
the congressional level? Is that----
    Dr. Rostker. That provision would have to be made at the 
congressional level. There is a provision today that the 
Secretaries in military departments could institute special 
boards and the like. But, I think we need to tell the managers 
of the Department that each of the competitive categories, each 
of these occupational groups, should have a career structure 
that makes sense for that group. We allow them to compete 
against each other in the competitive category, but within the 
limits of the DOPMA career structure. We should open up that 
career structure.
    Senator Hirono. As I said, I think you all have made such a 
strong case for making those kinds of appropriate changes to 
DOPMA that I certainly hope that this committee will follow 
through.
    Thank you very much. I yield back.
    Chairman McCain. Senator Rounds.
    Senator Rounds. Thank you, Mr. Chairman.
    Gentlemen, thank you for your service, and thank you for 
being here with us today.
    Just a real quick down-the-line response, please, on this. 
Do you see Goldwater-Nichols jointness requirements as an aid 
or an obstacle to the system itself right now? And if it's an 
obstacle, how would you make it better?
    Dr. Chu?
    Dr. Chu. I think it is both, unfortunately, so it has a 
very good feature, which is to encourage a joint experience, 
especially for those who aspire to more senior positions. It 
has improved the quality of headquarters staffs. I saw that 
when I served in the Department in the late 1980s and it was 
first instituted. At the same time, as I suggested, it's a bit 
too mechanistic and too much oriented through the inputs that 
we think will provide a joint orientation, and not concerned 
enough with whether the outcomes are the ones that we want.
    And I think I would move to more flexibility about how you 
can decide that someone has achieved the experience level that 
you'd like to see that produces the kind of joint orientation 
we'd like to have.
    Senator Rounds. Dr. Rostker?
    Dr. Rostker. I think Dr. Chu is probably right, but I saw 
the negative sides of Goldwater-Nichols. I spent most of the 
'90s on--in service secretariat as the Assistant Secretary of 
the Navy for 6 years and then as Under Secretary of the Army. 
And I saw officers coming into senior ranks who had never 
served on the service staffs. And the model before that was to, 
in fact, serve on the service staff so that great admirals, 
like Carl Trost or Mike Boorda had served to learn their craft 
of managing the enterprise. And managing the business of the 
Navy is not going to be done in the joint arena, it's going to 
be done in the Navy. And the--that next generation spent their 
time being jointed. And then, when it came back to serve on the 
service staffs, they largely did not have that experience.
    I could adjust that, if you give me that 5 more years of 
career content, so they could do both. But, the impact of 
Goldwater-Nichols, because of its statutory requirements, was 
to force out this very valuable time that was spent on the 
service staffs. They still did their sea time, but they did not 
do their service management time, which was so critical for the 
future.
    Senator Rounds. Mr. Hale?
    Dr. Hale. So, I would not get rid of Goldwater-Nichols or 
the joint requirement. I fear, as Admiral Roughead said, a 
return to the tribal approach. But, more flexibility does sound 
like it is appropriate.
    I'll reiterate what I said earlier. I think the civilian 
system worries me more, and we may need some analog to the 
Goldwater-Nichols approach to demand some more rotational 
experience for those who will be our civilian leaders. Perhaps 
we can learn from the experience of the military and avoid the 
adverse consequences. But, it did change behavior, and I think 
some kind of effort on the civilian side would change behavior, 
also, and it needs to happen.
    Senator Rounds. Admiral?
    Admiral Roughead. Yes, sir. As I've mentioned, I really do 
believe that we have to keep the joint imperative on the force. 
It needs to be reinforced at a more senior level. And by 
lifting some of the mandated requirements in the junior ranks, 
I think that we can rebalance the competencies in the service 
staffs.
    You know, we talk a lot about acquisition reform, but a lot 
of how we enter into the acquisition process deals with setting 
requirements and budget decisions and things like that. And by 
forcing in more people earlier into the joint structure, we're 
not building those repetitive tours that give the people the 
experience and the knowledge to really take on some of the hard 
things of acquisition and man training and equipping.
    And so, I think there are some levers that can be pulled to 
adjust the Goldwater-Nichols requirements, but then it also 
needs to be done in conjunction with DOPMA. Because if you 
don't adjust some of these other constraints that you have in 
DOPMA, then I think you're going to impose some new problems 
that you have.
    So, as this is looked at, my recommendation is: look at 
Goldwater-Nichols, look at DOPMA, look at the civilian force, 
and how do you blend them together to get the design that will 
be good for the next couple of decades. And I would submit, 
after 20 or 30 years, it's probably going to be time to take a 
relook again, because times will change.
    Senator Rounds. Thank you, Mr. Chairman.
    Chairman McCain. Senator King.
    Senator King. Thank you, Mr. Chair.
    I'd like to follow up on that exact point, Admiral, thank 
you. That was a very succinct statement.
    Tour lengths. A mundane question. I had the opportunity to 
interview or to chat with General Dunford as he was leaving 
Afghanistan a couple of years ago, and I was overwhelmed by his 
level of expertise and knowledge. He knew everything about 
Afghanistan, and yet he was leaving after 18 months. And I 
thought, nowhere in the public sector would you do something 
like this, take this amount of expertise and knowledge and say, 
``Okay, time's up, you've got to go up to Sheboygan.''
    Talk to me, Mr. Rostker, about tour lengths. Could we--and 
how much money could we save if we just made tours 4 years 
instead of 3 years? I mean, the cost of moving people, is it--
are we--is this a remnant of a prior manner of thinking? Is 
there--are there ways to adjust this, both to save money and 
also to maintain expertise?
    Dr. Rostker. If you made that change, you'd get an 
immediate savings, and it would set back into a steady- state, 
and you really would not get that much savings, because the 
force is still built on some notion of rotation.
    Tour lengths should be handled in the same way that Dr. 
Chu's talked about, as increasing the opportunity for people to 
volunteer. We just finished a study for the Defense Department 
in which we posed the question, Would people be willing to 
extend their tours overseas? And only about 40 percent of the 
population said they would. And then we asked the next 
question, If you had a financial incentive, would you be 
willing? And we varied the financial incentive so we could 
understand what was going on. And, for very little--relatively 
little money, we could get up to 60 to 70 percent of the people 
to extend their tours.
    So, we can use tools to better manage the Department and 
have people make voluntary decisions rather than force them to 
say, ``Well, now you're here and we're going to give you 
another 4--another year, even if it's a bad place.'' Let people 
have the opportunity to stay, and let's use reasonable 
financial incentives to encourage them, where that makes sense. 
And I call your attention to the Navy's outstanding program to 
allow this, in initial assignments, to fill hard-to-fill areas. 
We're not making use of those kinds of incentives.
    Senator King. Dr. Chu, slightly changing the focus: force 
structure in the 21st century. And we've--been a lot of talk 
about contractors and civilians. But, it seems to me that the--
what we ought to be doing is having warfighters be warfighters. 
And if that's what they're trained for, and it's very expensive 
to train them, then the other functions, whether it's 
maintaining the aircraft or serving the meals, should be done 
by somebody other than uniformed personnel who have that 
expensive and extensive training.
    Dr. Chu. Sir, I couldn't agree with you more. And that 
actually was an initiative of the--one of the Secretaries I had 
the privilege of serving was Secretary Rumsfeld--worked hard on 
looking at which functions should be carried by military 
personnel, which are our most expensive asset, pure dollars-
and-cents perspective, and which ought to be performed by 
civilians. And interesting, the Department made--and, in fact, 
he succeeded in converting about 50,000 slots. So, the military 
numbers weren't up because of these in the war, but he did 
convert about 50,000 billets from military to civilian status, 
which could be either Federal civilians or contractors, 
depending upon the nature of the task.
    Interestingly, the government does--Department does 
maintain a database on this matter. This--inherently a 
governmental commercial activity database, which can serve as a 
guide and does argue that there's a number of positions to 
which we could use civilian personnel, whether those are 
Federal civilians or contractors. So, I think there's more to 
be had, there. And I think that's an important--as I argue in 
my testimony, it's important source of both performance 
improvement and cost savings for the Department. Choose the 
right mix of personnel for the task at hand.
    Senator King. And as long as the contractors are managed 
properly, that's one--one of the long-term bears in the room 
here long-term personnel costs and the tail costs, in terms of 
healthcare and pensions. If you manage contractors properly, 
they bear that risk, and not the taxpayers.
    Dr. Chu. Yes, sir. And I think that's one of the issues in 
thinking about Federal civilians versus contractors--and back 
to the issue of low performers on the Federal Civil Service. 
One of the reason entities within DOD and other government 
agencies find contractors so attractive, in my judgment, is 
they can turn the contract on and off. If the need diminishes, 
you can stop the activity. It's much harder to do that under 
the U.S. Federal Civil Service practices, not necessarily the 
statutes, but the way they are implemented. And I think that's 
one of the issues that the committee might usefully address.
    Senator King. Thank you.
    Thank you, Mr. Chairman.
    Chairman McCain. Senator Kaine.
    Senator Kaine. Thank you, Mr. Chair.
    And thanks, to the witnesses.
    I have a--one question about recruiting and one kind of 
about structural issues during the tenure of someone's service.
    On the recruiting side, there was an Economist article in 
late October, and the title was ``Who Will Fight the Next 
War?'' And it was about difficulties in recruiting young people 
into military careers. You know, even with only 1 percent 
serving, so the number may be small relative to the general 
population, there's been some challenges recently--I think 
mostly--most of the publicity has been around the Army. But, 
you know, you take the cohort of young people you're trying to 
recruit, and you put out anybody who is, you know, barred 
either because of academic misperformance or a felony or poor 
physical conditioning, then you really whittle down the 
available core. And then that available core has other 
opportunities, too.
    Obviously, better pay is one recruiting mechanism. But, as 
you think about the recruiting needs, you know, the--we want to 
continue to bring in the best and the brightest for the very 
long term. What advice would you have for us as we think about 
things to do, separate from the salary side? Because we can 
figure that out. But, what are things that make the career an 
attractive one that, from that available component of young 
people, would get more to say, ``I want to make a military 
career''?
    Dr. Chu. I'll be delighted to start. I think I'd come back 
to something that Mr. Hale emphasized, which is how the country 
values the service of the individual. One of the things I 
thought was very interesting in the surveys--the Department 
does those surveys of young people's attitudes, as you know, 
the surveys in the early part of the century--is that the 
reasons cited for being interested in the military changed from 
what had been true 10-20 years earlier, which had focused, in 
that earlier period, on learning a skill. And it may sound a 
little bit old- fashioned, but a good deal of the responses 
focused on patriotic values of one sort or another. And so, I 
think the way the country honors the service of the individual 
and speaks to service as being a calling that is part of your 
duty as a citizen, as opposed to something that is something 
somebody else does, which is too much, I think, part of the 
current American conversation, I think that is of enormous help 
to the Department's recruiting apparatus.
    Admiral Roughead. Senator, I----
    Senator Kaine. Admiral Roughead.
    Admiral Roughead.--as I looked at the future, the thing I 
watched most were the economic predictions, because that's 
what's really going to drive your recruiting. And compensation 
is important, but it really is the total compensation. And how 
do you deal, particularly with the force now that is more 
married than when I came in--that's a significant component 
that has to be taken into account.
    But, with regard to the positive experience, the one thing 
that we discount--and I've been through this cycle in my 
career--that when you take away the means for a young 
professional to properly maintain their equipment, to have the 
resources to go out and do the things that they enjoy doing, 
whether it's flying or being out on a submarine, or whatever, 
that is huge. And, as we struggle with the departmental costs, 
and as we come down on those operation and maintenance funds 
that allow for proper maintenance and pride in what they do, 
the opportunity to do what they love to do, cutting those funds 
is going to have a significant impact. When those go up, you 
can see the attitude of the force change, because they're given 
the tools and the means to do that which they came in the 
military to do.
    Senator Kaine. Just to close the circle on that, I want to 
make sure I understand your point. So, if we're dealing with 
budget caps or a tough budget environment, we've tended to--
while we can't take it all out of personnel, and if we did, 
we'd have to grandfather it, and we'd only see the savings way 
down the road. And we can't cancel weapons acquisitions 
midstream, so we tend to take it out of readiness and O&M 
expenses and, you know, decrease the number of flying hours 
that are available to people who want to be aviators or 
decreasing the training that's available for people who want to 
do that, and then that becomes kind of a demoralization factor 
that either will make people not come in or maybe more likely, 
when they're in, make then decide to hasten their departure.
    Admiral Roughead. Yes, sir. And I go back in my earlier 
days in the Navy when I had young sailors bringing their own 
tools from home to maintain the equipment that they were 
responsible for. When that changed, things changed 
dramatically. And I--and so, this O&M dimension is more than 
just how many ships you have deployed or how many airplanes 
you're flying. It's much, much more substantial than that.
    Dr. Hale. Senator----
    Senator Kaine. Please, Mr. Hale.
    Dr. Hale.--Kaine, at least in the last 5 years, we've 
actually cut back primarily in the procurement areas to meet 
the budget caps, in that services have tended to try to 
maintain the operation and maintenance funding, I think, 
because of the readiness concerns. Moreover, as I said in my 
testimony, I mean, the Congress has made some changes, or 
allowed changes to be made, in compensation that have freed up 
funding, and, depending on the recruiting climate, some modest 
additions to that may be appropriate. Because, as Admiral 
Roughead said, it's not just the money, it's whether or not you 
are trained, you feel you can actually operate. That's maybe 
particularly true with the Reserves. Ironically, I think we 
used the Reserves heavily--and I take my hat off to them--over 
the last 14 years. I worry that we'll use them a lot less now, 
and they want to be used in militarily meaningful ways--not all 
the time, but occasionally. So, the services, I think, are 
pushing hard to keep the O&M budgets up, and the Congress needs 
to help them, where that's appropriate.
    Senator Kaine. Thank you. I had a second question dealing 
with the use of kind of a specialist designation, which I know 
services have used to try to provide non-career--non-
traditional, non-up-or-out career paths, but I think I'll ask 
that one for the record, since I'm over time.
    Thank you, Mr. Chair.
    Chairman McCain. Go ahead.
    Senator Kaine. Well, I just--if I could on that, several of 
the military services have had a fairly extensive rank 
structure known as ``specialists'' that went beyond the current 
system, not so much ``up or out,'' for the recruiting of 
specific technical skills. Is that something that's still done? 
Should it be done more? Does that provide some of the 
flexibility that a number of you have talked about in your 
testimony?
    Dr. Chu. Yes, absolutely. The classic case, in my judgment, 
is the Army use of warrants for helicopter pilots. So, you can 
aspire to a long career at the flight controls. It has a small 
cadre of what we call--classically have called ``commissioned 
officers'' who are prepared for the more senior 
responsibilities in the enterprise. The Navy has used limited 
duty officers for some elements of that. We have that in the 
professions. So, the judge advocate generals corps, although--
except for what Dr. Rostker said about promotion 
opportunities--career limits--but, for doctors, chaplains, 
health professional service kinds, we have carved out somewhat 
different paradigms over time. The Navy's supply corps is 
another example of that approach.
    So, there are other ways to do this. They may not be used 
as aggressively and as immediately when a new issue like cyber 
comes up. So, cyber comes up, we immediately turn to the line 
structure as our model, not to these other opportunities as a 
way to proceed, including, I might emphasize, back to Senator 
King's question, Federal civilians who could hold Reserve 
appointments if that becomes an important issue from a Law of 
War perspective.
    Senator Kaine. Thank you, Mr. Chair.
    Thanks, to the witnesses.
    Chairman McCain. Senator Gillibrand.
    Senator Gillibrand. Thank you, Mr. Chairman.
    On January 24th, 2013, the Secretary--then Secretary of 
Defense Leon Panetta announced the repeal of the Combat 
Exclusion Policy. The Secretary gave the three services and 
Special Operations Command until January 1, 2016, to open all 
positions to women or formally request an exception to keep 
certain positions closed.
    Admiral Roughead, can--what can the other branches learn 
about the Navy--or learn from the Navy about integrating women 
once these positions are open? And we know that women attain 
advanced degrees at a higher rate than men, suggesting they may 
well be positioned to offer expertise to the DOD, yet about 
half the women separate from the service after their first 
commitment. What are the reasons women do not remain in the 
military? Why do they make up such a small percentage of the 
services? And how could the military better recruit and retain 
women?
    Admiral Roughead. Thank you very much for the question.
    I think that what the Navy has done is open certain 
specialties, early on, which one would classify in a combat 
category. And only now are we beginning to see women rise to 
positions of leadership, where young women who are coming in 
the Navy today can look up and see themselves, and also having 
in place the types of programs that allow family considerations 
to be emphasized. And so, now we have young women coming in the 
Navy that can see themselves, can see having a professional 
fulfilling career, and also see their personal life fulfilled. 
And it's going to take a little bit of time, but I think we 
have to open up those opportunities and look at supporting both 
professionally and personally as young women progress through 
the ranks.
    Senator Gillibrand. So, one of the supports that you've put 
in place is a very good paid leave policy. Do you think that's 
relevant for your ability to retain women?
    Admiral Roughead. I think that that is important. One of 
the things that we did during the time that I was on Active 
Duty, with the help of Congress, was to put in a pilot 
sabbatical program. I think that's helpful. But, it--I think 
it's also important to recognize that it's not always the young 
woman that will take advantage of the sabbatical. It may be 
that, in a dual-service family, that the male spouse takes over 
that responsibility.
    Senator Gillibrand. And we've seen, in the civilian world, 
that that really makes a difference. When men and women both 
take paid leave, it enhances people's values to support 
families overall. And it doesn't marginalize the woman because 
she's the only one who ever takes time off for the dying mother 
or the sick child or the new infant. So, it makes a difference 
that you do encourage it to be gender- neutral, because then 
you become a family-friendly place, and it's not just the women 
who are being sidelined.
    Admiral Roughead. Exactly. And the family will decide what 
career they want to prioritize over the other. And that's----
    Senator Gillibrand. At a given time.
    Admiral Roughead.--a decision that they have to make, and--
--
    Senator Gillibrand. Right.
    Admiral Roughead.--not one that should be made by the 
service.
    Senator Gillibrand. Yeah. I think that's wonderful. Thank 
you.
    Do any of you have anything you want to say on these topics 
before I move to the next topic?
    [No response.]
    Senator Gillibrand. Okay.
    Traditionally, military training has followed a generalist 
or a one-size-fits-all approach. However, technology is 
becoming increasingly complex, requiring a specialized set of 
skills. We have also seen emerging threats in new areas, such 
as cyberwarfare. The private sector offers more money and no 
requirements, like boot camp. All together, these trends 
suggest that there might be a benefit for the military to 
consider different models that would allow at least some of our 
servicemembers to be recruited and retained in a different way. 
What changes do you think would be needed, in terms of 
recruiting and training personnel, to better position the 
military to develop cyberwarriors? How might we better leverage 
our Reserve components to address recruitment and retention of 
cyberwarriors? And are there ways the military can collaborate 
with the private sector to improve cybersecurity specialties 
and capabilities?
    Dr. Chu. Senator, I think you raised an important issue, 
and it does open the door on a conversation about one matter we 
have not discussed today, and that is the opportunity for 
lateral entry. We do allow it for the professions--so, the 
chaplains, health professionals, lawyers, that's okay. But, we 
don't for the rest of the structure, as a generalization. The 
Reserves are better at it, for a variety of reasons. And I 
think this notion of encouraging people who are mid-career in 
the civil sector to think about a period of military service 
under rules that are available to the Department, or could be 
made available to the Department, would be an important step 
for the future.
    Senator Gillibrand. Would you, for the record, give me a 
letter on that describing what you would envision for lateral 
service and what type of accommodations you would make. Because 
I envision someone who's brilliant behind a computer that's 
never going to be brilliant behind a rifle. So, I can imagine 
that, when you can designate someone to be a cyberwarrior, to 
be a cyberdefender, necessarily--being in the field is not 
necessary, because they can be behind a computer anywhere in 
the world at any given time. So, I'd like you to be specific 
about what that would look like, because I'd like to have that 
for the record.
    [The information referred to follows:]
      
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    Dr. Chu. Delighted to do so. Thank you, ma'am.
    Senator Gillibrand. Thank you, Mr. Chairman.
    Chairman McCain. Thank you.
    Just briefly, would the witnesses agree that, although it's 
a beginning, this change in the retirement system is the right 
thing to do?
    Dr. Chu. Yes, sir.
    Dr. Rostker. Yes.
    Dr. Hale. Yes.
    Admiral Roughead. Yes, sir.
    Chairman McCain. Thank you.
    On the issue of tours, very briefly, Dr. Rostker, there's 
a--different kinds of tours, as you know. There's the overseas 
tour at a base in Germany, where we have the school and the 
hospital, et cetera, and then we have the rotational through 
our joint base in Australia. I mean, there--when we talk about 
``tours,'' it's--I think we ought to define it a little bit.
    And, Admiral Roughead, I'm informed that the carriers are 
now on 10-month deployments. I think that's too long. And I 
think it's harmful. Do you agree?
    Admiral Roughead. I agree completely. We've been through 
this before, and, when we talk about retention, the longer you 
stretch those deployments out, the--you'll see the effect in 
retention. And I would submit that the model of getting to 6-
month deployments worked out very well for us. It seemed to 
strike the right balance between familiarity with the region in 
which you're operating and retention.
    Chairman McCain. And time in different ports is drastically 
reduced, as well. It's too tough on these people and their 
families, this kind of separation. And maybe I have some bias, 
but clearly I'd--I'm even--I understand that our obligations 
are expanded, but to keep people at sea for that long a period 
of time, I'd be interested--maybe we can get a readout from the 
Navy on what it does to retention.
    Chairman McCain. Finally, could I say--I thank the 
witnesses--the complexities of these issues, I'm aware of. And 
I know that Jack and I appreciate it. But, this testimony 
today, I think, emphasizes to me that we really have scratched 
the surface, to start with; and, second of all, the--none of 
these issues are simple. None of them are--that there's just a 
easy solution to them. And I think your testimony today, with 
the benefit of probably a century of experience on personnel 
issues, has highlighted the complexities of many of these 
challenges we face, and the need for us to act. But, we want to 
remember the old adage about ``First, do no harm.''
    So, I appreciate the witnesses here today. I appreciate 
your long, many years? service to the Nation. And, 
unfortunately, we will be interrogating you again in the 
future.
    Thank you.
    [Whereupon, at 11:29 a.m., the hearing was adjourned.]

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