Military Personnel: DOD Needs to Conduct a Data-Driven Analysis  
of Active Military Personnel Levels Required to Implement the	 
Defense Strategy (01-FEB-05, GAO-05-200).			 
                                                                 
Congress recently increased active military personnel levels for 
the Army and the Marine Corps. The Secretary of Defense has	 
undertaken initiatives to use military personnel more efficiently
such as rebalancing high-demand skills between active and reserve
components. In view of concerns about active personnel, GAO	 
reviewed the ways in which the Department of Defense (DOD)	 
determines personnel requirements and is managing initiatives to 
assign a greater proportion of active personnel to warfigthing	 
duties. GAO assessed the extent to which the Office of the	 
Secretary of Defense (OSD) (1) has conducted a data-based	 
analysis of active military personnel needed to implement the	 
national defense strategy and (2) has a plan for making more	 
efficient use of active military personnel and evaluating the	 
plan's results. 						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-200 					        
    ACCNO:   A16597						        
  TITLE:     Military Personnel: DOD Needs to Conduct a Data-Driven   
Analysis of Active Military Personnel Levels Required to	 
Implement the Defense Strategy					 
     DATE:   02/01/2005 
  SUBJECT:   Combat readiness					 
	     Defense capabilities				 
	     Labor force					 
	     Military forces					 
	     Military personnel 				 
	     Military reserve personnel 			 
	     Personnel management				 
	     Strategic planning 				 

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GAO-05-200

                 United States Government Accountability Office

                     GAO Report to Congressional Committees

February 2005

MILITARY PERSONNEL

DOD Needs to Conduct a Data-Driven Analysis of Active Military Personnel Levels
                   Required to Implement the Defense Strategy

                                       a

GAO-05-200

[IMG]

February 2005

MILITARY PERSONNEL

DOD Needs to Conduct a Data-Driven Analysis of Active Military Personnel Levels
Required to Implement the Defense Strategy

  What GAO Found

Our prior work has shown that valid and reliable data about the number of
employees required to meet an agency's needs are critical because human
capital shortfalls can threaten the agency's ability to perform missions
efficiently and effectively. OSD provides policy and budget guidance on
active personnel levels and has taken some steps toward rebalancing skills
between active and reserve components, but it has not conducted a
comprehensive, data-driven analysis to assess the number of active
personnel needed to implement the defense strategy. A key reason why it
has not conducted such a comprehensive analysis is that OSD has focused on
limiting personnel costs in order to fund competing priorities, such as
transformation. OSD conducts some analyses of active personnel, such as
monitoring actual personnel levels, and the services have processes for
allocating the active personnel they are authorized to key missions.
However, OSD does not systematically review the services' processes to
ensure that decisions about active personnel levels are linked to the
defense strategy and provide required capabilities within acceptable risk.
If OSD conducted a data-driven analysis that linked active personnel
levels to strategy, it could more effectively demonstrate to Congress a
sound basis for the active personnel levels it requests. The quadrennial
review of the defense program planned for 2005 represents an opportunity
for a systematic reevaluation of personnel levels to ensure that they are
consistent with the defense strategy.

Although OSD has identified some near-and long-term initiatives for
assigning a greater proportion of active personnel to warfighting
positions, it has not developed a comprehensive plan to implement them
that assigns responsibility for implementation, identifies resources, and
provides for evaluation of progress toward objectives. OSD officials told
us a key reason why OSD does not have a plan to oversee its initiatives is
that they have had to respond to other higher priorities. Sustained
leadership and a plan for implementing initiatives and measuring progress
can help decision makers determine if initiatives are achieving their
desired results. Without such a plan, OSD cannot be sure that initiatives
are being implemented in a timely manner and having the intended results.
For example, the initiative to convert military positions to civilian or
contractor performance is behind schedule. Specifically, OSD's goal was to
convert 10,000 positions by the end of fiscal year 2004; however, the
services estimate that they had converted only about 34 percent of these
positions. By establishing performance metrics and collecting data to
evaluate the results of its initiatives, OSD could better determine its
progress in providing more active personnel for warfighting duties and
inform Congress of its results.

                 United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
OSD Has Not Conducted A Comprehensive, Data-Driven Analysis

to Assess Active Personnel Requirements to Implement the Defense Strategy

OSD Does Not Have Comprehensive Plans to Manage Near- and Long-Term
Initiatives to Increase the Proportion of Active Personnel in Warfighting
Positions

Military-to-Civilian Position Conversion and Active and Reserve Component
Rebalancing Initiatives Are Not Meeting Expected Goals or Time Frames

Conclusions
Recommendations for Executive Action
Agency Comments and Our Evaluation

                                       1

                                      2 4

                                       7

15

17 26 27 27

Appendix I Scope and Methodology

Appendix II Comments from the Department of Defense

Appendix III GAO Contacts and Staff Acknowledgments

  Tables

Table 1: Congressionally Authorized Active Duty End Strength

Levels Compared to Actual End Strength Levels for Fiscal

Years 2000 through 2005 5 Table 2: Long-Term Initiatives for Achieving
Greater Efficiencies in the Active Duty Force 25

  Figures

Figure 1: Comparison of OSD's and the Services' Plans for
Militaryto-Civilian Conversions for Fiscal Years 2004 and 2005 and the
Number of Conversions Completed in Fiscal Year 2004 19

Figure 2: Comparison of OSD's and the Services' Plans to Reassign Active
Military Positions to High-Demand Skills and the Number of Positions
Reassigned in Fiscal Year 2004

Abbreviations

DOD Department of Defense
OSD Office of the Secretary of Defense

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separately.

United States Government Accountability Office Washington, DC 20548

February 1, 2005

Congressional Committees

The terrorist attacks of September 11, 2001, changed the security
environment of the United States. The Department of Defense (DOD)1 now
faces multiple complex threats both overseas and at home. U.S. forces,
particularly Army and Marine Corps ground forces, have experienced a high
pace of operations in support of missions in Iraq, Afghanistan, and other
locations. This pace has led to questions about whether the U.S. armed
forces have enough active military personnel to carry out and sustain a
wide range of ongoing and potential future military operations. In the
context of the high pace of operations, the Secretary of Defense permitted
a temporary increase of 30,000 Army active duty military personnel in
January 2004 to enable the Army to convert its combat forces into more
agile and deployable units while continuing to support ongoing operations.
Subsequently, in October 2004, Congress authorized increases in personnel
for the Army and the Marine Corps. However, the services' active personnel
needs are likely to be the subject of continuing debate because increases
in active personnel entail significant near-and longterm costs that
compete with other priorities. For example, the Army estimates that adding
30,000 active duty soldiers to its ranks will cost about $3.6 billion
annually. Senior DOD officials thus want to ensure that the department
uses active personnel as efficiently as possible before personnel levels
are permanently increased.

We prepared this report under the Comptroller General's statutory
authority and are sending it to you because it contains information that
will be useful for your oversight and authorization responsibilities for
active military personnel. We reviewed how the Office of the Secretary of
Defense (OSD) determines active military personnel requirements and
manages initiatives to assign active personnel from infrastructure or
support positions to warfighting positions. Our objectives for this work
were to assess the extent to which (1) OSD has conducted a data-based
analysis of active military personnel needed to implement the national
defense strategy and (2) OSD has a plan for making more efficient use of

1 Throughout this report, the term "DOD" refers to OSD and the services.

active military personnel and evaluating the plan's results. We did not
examine reserve component requirements.

To assess OSD's oversight of active military personnel requirements, we
examined OSD's involvement in determining personnel requirements,
including policy and budget guidance. We also assessed the extent to which
OSD reviews service processes for determining military personnel
requirements and allocating personnel to authorized positions. Also,
relying on our prior work on best practices in human capital management,
we examined assessments that OSD and the services use to determine
requirements and inform decision making. To assess OSD's and the services'
management and implementation of initiatives to use military personnel
more efficiently, we collected and analyzed information on key initiatives
and examined the planning, implementation, and oversight issues that will
likely affect their success. We conducted our review from August 2003
through January 2005 in accordance with generally accepted government
auditing standards. We determined that the data used were sufficiently
reliable for our objectives and in the context in which the data are
presented. Further information on our scope and methodology and data
reliability assessment appears in appendix I.

Our prior work has shown that valid and reliable data about the number of
employees required to meet an agency's needs are critical because human
capital shortfalls can threaten the agency's ability to perform its
missions efficiently and effectively, especially when the environment has
changed significantly.2 OSD provides policy and budget guidance to the
services as to the numbers of active personnel they will be authorized and
performs some assessments, such as monitoring actual personnel levels, but
it has not conducted a comprehensive, data-driven analysis to identify the
total numbers of active military personnel that are needed to execute the
national defense strategy. A key reason why OSD has not conducted a
comprehensive analysis of active personnel needs is that, in balancing
competing priorities within its budgets, it has sought to limit active
personnel levels in order to devote funds to other priorities, such as
transformation. OSD has encouraged the services to rebalance skills in the
active and reserve components to ensure that forces are quickly available
and have required skills. The services have various processes for

2 GAO, A Model of Strategic Human Capital Management, GAO-02-373SP
(Washington, D.C.: Mar. 15, 2002).

  Results in Brief

determining the numbers and types of positions needed to perform their
priority missions within acceptable levels of risk, although several key
assessments that could impact their long-term personnel needs are ongoing.
However, OSD does not review the services' requirements processes and
their results on a systematic basis to ensure that decisions about the
levels of active personnel are driven by data that establish clear links
between personnel levels and capabilities needed to achieve the goals of
the defense strategy. Conducting a data-driven analysis that links active
personnel levels to the defense strategy could enable OSD to more
effectively demonstrate to Congress a sound basis for the level of active
military personnel it requests. The 2005 quadrennial review of the defense
program3 represents an opportunity to conduct such an analysis.

OSD hopes to avert the need to increase active personnel levels by making
more efficient use of active duty personnel within each service, although
it does not have a comprehensive plan to manage several initiatives it has
identified and DOD's progress in implementing some of its initiatives is
lagging behind its stated goals. Specifically, OSD has not developed a
comprehensive plan that assigns clear responsibility for managing the
initiatives, including identifying resources needed to implement them,
establishing performance metrics, and measuring progress. OSD has not
developed such a plan because the officials given this responsibility have
had competing demands on their time and other issues have taken priority.
Sustained leadership and a plan for implementing initiatives and measuring
progress can help decision makers determine if DOD's initiatives are
achieving their desired results. The services are already falling behind
the quantitative goals and time frames for the initiatives OSD initially
approved to convert military positions to civilian or contractor
performance and transfer personnel from low-demand specialties to
specialties in higher demand. For example, the services may have
difficulty in meetings its goals to reassign servicemembers to different
high-demand skills because training facilities may not be available
immediately to accommodate them. Also, senior DOD officials have recently
stated that about 300,000 military personnel are in positions that could
be performed by civilians or contractors. However, this number is based on
a 1997 DOD study, and more recent data compiled by OSD indicate that only
about 44,000 military personnel are in positions that could potentially be
converted to civilians or contractors over the longterm. In December 2003,
OSD set a near-term goal for the services to

310 U.S.C. S:118.

convert about 20,070 military positions to civilian or private-sector
contractor positions in fiscal years 2004 and 2005. However, the services
did not meet their 2004 goals and will face obstacles in achieving the
2005 goals because of the time it takes to hire and train replacement
personnel, among other reasons. Without a comprehensive plan to manage
implementation of its initiatives and assess results, OSD will not be able
to determine whether the initiatives are having the desired effect of
providing more active military personnel for warfighting duties, develop
mitigation plans where needed, and keep Congress informed of the results.

To facilitate decision making on active military personnel levels and
achieve greater efficiency, we are making recommendations to the Secretary
of Defense to (1) establish an OSD-led, systematic approach to assess the
levels of active military personnel needed to execute the defense strategy
as part of the next quadrennial review and report its analysis and
conclusions to Congress and (2) develop a plan to manage and evaluate
DOD's initiatives to assign a greater portion of active military personnel
to warfighting duties. The department agreed with our recommendations and
cited actions it is taking in its 2005 quadrennial review of defense
programs to assess the levels of active and reserve personnel and to
improve its oversight and evaluation of initiatives to reduce the stress
on the force.

For the past several years, DOD has planned and budgeted for about 1.4
million active military personnel active duty forces: about 482,400 in the
Army; 359,300 in the Air Force; 373,800 in the Navy; and 175,000 in the
Marine Corps. These active duty personnel levels have been generally
stable since the mid-1990s, when forces were reduced from their Cold War
levels of almost 2 million active military personnel. Active duty
personnel are considered to be on duty all the time.

Congress authorizes annually the number of personnel that each service may
have at the end of a given fiscal year. This number is known as authorized
end strength. Certain events, such as changes between planned and actual
retention rates, may cause differences between the congressionally
authorized levels and the actual numbers of people on board at the end of
a fiscal year. Table 1 shows the congressionally authorized levels for
fiscal years 2000 through 2005 as compared with the services' military
personnel actually on board at the end of fiscal years 2000 through 2004.

  Background

Table 1: Congressionally Authorized Active Duty End Strength Levels
Compared to Actual End Strength Levels for Fiscal Years 2000 through 2005

                                  Fiscal year

                                 2000    2001    2002    2003    2004    2005 
       Army authorization     480,000 480,000 480,000 480,000 482,400 502,400 
      Actual end strength     482,170 480,801 486,542 499,301 499,543      NA 
     Percentage difference                                            
       between actual end                                             
strength and authorization   0.45%  0.17%   1.36%   4.02%   3.55%       NA 
    Air Force authorization   360,877 357,000 358,800 359,000 359,300 359,700 
      Actual end strength     355,654 353,571 368,251 375,062 376,616      NA 
     Percentage difference                                            
       between actual end                                             
strength and authorization  -1.45% -0.96%   2.63%   4.47%   4.81%       NA 
       Navy authorization     372,037 372,642 376,000 375,700 373,800 365,900 
      Actual end strength     373,193 377,810 385,051 382,235 373,197      NA 
     Percentage difference                                            
       between actual end                                             
strength and authorization   0.31%  1.39%   2.41%   1.74%   -.16%       NA 
Marine Corps authorization 172,518 172,600 172,600 175,000 175,000 178,000 
      Actual end strength     173,321 172,934 173,733 177,779 177,480      NA 
     Percentage difference                                            
       between actual end                                             
strength and authorization   0.47%  0.19%   0.66%   1.59%   1.41%       NA 

Source: GAO analysis of DOD data.

As table 1 shows, the Army and the Air Force exceeded their authorized end
strengths by more than 3 percent in fiscal years 2003 and 2004.

The Secretary of Defense has statutory authority to increase the services'
end strengths by up to 3 percent above authorized levels for a given
fiscal year if such action is deemed to serve the national interest.4 In
addition, if at the end of any fiscal year there is in effect a war or
national emergency, the President may waive end strength authorization
levels for that fiscal year.5 On September 14, 2001, the President
declared a state of national emergency and delegated end strength waiver
authority to the Secretary of

4 10 U.S.C. S: 115(e). 5 10 U.S.C. S: 123a(a).

Defense.6 Since then, the President has annually renewed the national
state of emergency as well as end strength waiver authorities specified in
Executive Order 13223. In January 2004, the Secretary of Defense exercised
the President's authority and increased temporarily the Army's end
strength by 30,000 for fiscal years 2004 through 2009 to facilitate the
Army's reorganization while continuing ongoing operations.

While the Secretary of Defense's goal is ultimately to have the Army
return to an active military personnel level of 482,400 by 2009, in
October 2004, Congress increased the fiscal year 2005 end strength of the
Army by 20,000 personnel, the Marine Corps by 3,000, and the Air Force by
400.7 Congress also authorized additional authority for increases of
10,000 active Army personnel and 6,000 Marines through fiscal year 2009.
In contrast, Congress reduced authorized end strength for the Navy by
7,900 personnel from the fiscal year 2004 level. Moreover, Congress
directed that for fiscal year 2005, the Army will fund active military
personnel increases in excess of 482,400 and the Marine Corps will fund
active military personnel increases in excess of 175,000 through either a
contingent emergency reserve fund or an emergency supplemental
appropriation.

6 Declaration of National Emergency by Reason of Certain Terrorist
Attacks, Pres. Proc. No. 7,463, 66 Fed. Reg. 48, 199 (Sept. 14, 2001);
Exec. Order No. 13,223, Ordering the Ready Reserve of the Armed Forces to
Active Duty and Delegating Certain Authorities to the Secretary of Defense
and the Secretary of Transportation, 66 Fed. Reg. 48,201 (Sept. 14, 2001).

7 Ronald W. Reagan National Defense Authorization Act for Fiscal Year
2005, Pub. L. No. 108-375, S: 401 (2004).

  OSD Has Not Conducted A Comprehensive, Data-Driven Analysis to Assess Active
  Personnel Requirements to Implement the Defense Strategy

Our prior work has shown that valid and reliable data about the number of
employees an agency requires are critical in preventing shortfalls that
threaten its ability to economically, efficiently, and effectively perform
its missions.8 Although OSD has processes through which it issues policy
and budget guidance that set the overall priorities for defense
activities, including personnel levels, it does not have a process for
comprehensively analyzing the active personnel levels needed to execute
the defense strategy within acceptable levels of risk. OSD has not placed
an emphasis on reviewing active military personnel requirements, focusing
instead on limiting personnel costs in order to fund competing priorities
such as transformation. The services have processes to establish their
active duty requirements; however, service processes vary in their
methodologies, and several major reviews are still ongoing and have not
fully identified longterm personnel needs. Although OSD has performed some
reviews related to active duty levels, it does not review the services'
results in a systematic way to ensure that decisions on the numbers of
active military personnel are driven by data that make clear the links
between personnel levels and strategic goals, such as the defense
strategy. Conducting such a review could enable OSD to more effectively
demonstrate how the services' requirements for active military personnel
provide the capabilities to execute the defense strategy within an
acceptable level of risk. Further, OSD could provide more complete
information to Congress about how active military personnel requirements
for each service are changing and about the implications of changes for
future funding and budget priorities. The quadrennial review of the
defense program planned for 2005 represents an opportunity for a
systematic analysis and reevaluation of personnel levels to ensure that
they are consistent with the defense strategy.

    Human Capital Best Practices Rely on Data-Driven Analyses to Guide Decision
    Making

Our prior work has shown that valid and reliable data about the number of
employees an agency requires are critical if the agency is to spotlight
areas for attention before crises develop, such as human capital
shortfalls that threaten an agency's ability to economically, efficiently,
and effectively perform its missions. We have designated human capital
management as a governmentwide high-risk area in which acquiring and
developing a staff whose size, skills, and deployment meet agency needs is
a particular challenge. To meet this challenge, federal managers need to
direct considerable time, energy, and targeted investments toward managing

8 GAO-02-373SP.

human capital strategically, focusing on developing long-term strategies
for acquiring, developing, and retaining a workforce that is clearly
linked to achieving the agency's mission and goals.

The processes that an agency uses to manage its workforce can vary, but
our prior work has shown that data-driven decision making is one of the
critical factors in successful strategic workforce management.
Highperforming organizations routinely use current, valid, and reliable
data to inform decisions about current and future workforce needs,
including data on the appropriate number of employees, key competencies,
and skills mix needed for mission accomplishment, and appropriate
deployment of staff across the organizations. In addition, high-performing
organizations also stay alert to emerging mission demands and remain open
to reevaluating their human capital practices. Changes in the security
environment and defense strategy represent junctures at which DOD could
systematically reevaluate service personnel levels to determine whether
they are consistent with strategic objectives.

In 1999, Congress created a permanent requirement for DOD to conduct a
review of the defense program every 4 years and to report on its
findings.9 During these reviews, DOD is required, among other things, to
define sufficient force structure10 and "other elements" of the defense
program that would be required to execute successfully the full range of
missions called for in the national defense strategy and to identify a
budget plan that would be required to provide sufficient resources to
execute successfully these missions at a low-to-moderate level of risk.
The quadrennial review of the defense program thus represents an
opportunity for DOD to review elements related to force structure, such as
the total numbers of military personnel, both active duty and reserve,
that are needed to execute the defense strategy most efficiently and
effectively. Based on the legislative requirements, DOD plans to conduct a
quadrennial review in 2005 and publish its next report in 2006.

The terrorist attacks of September 11 changed the nation's security
environment. Shortly thereafter, DOD issued a new national defense

9 Pub. L. No. 106-65, S: 901(a), codified at 10 U.S.C. S:118.

10 Force structure represents the numbers, size, and composition of the
units that comprise U.S. forces, for example, ships or air wings.

strategy in its 2001 Quadrennial Defense Review Report.11 The 2001 report
outlined a new risk management framework consisting of four dimensions of
risk-force management, operational, future challenges, and
institutional-to inform the consideration of trade-off decisions among key
performance objectives within resource constraints. According to DOD's
Fiscal Year 2003 Performance and Accountability Report,12 these risk areas
are to form the basis for DOD's annual performance goals. In November
2004, DOD reported its performance results for fiscal year 2004, noting
that it met some of its performance goals associated with these risk
management areas.

Our prior work suggests that agency leaders can use valid and reliable
data to manage risk by highlighting areas for attention before crises
develop and to identify opportunities for improving agency results. As
agency officials seek to ensure that risk remains balanced across their
agencies' activities and investments, they can adjust existing performance
goals. Likewise, they can create new performance goals to gather data
about critical activities.

    OSD Provides Policy and Budget Guidance to the Services but Does Not Conduct
    or Review Analyses of Active Personnel Requirements

OSD has recognized that the active and reserve forces have been challenged
to provide ready forces for current operations, including high demand for
some support skills, such as civil affairs and military police, and is
taking steps to achieve a number of objectives, such as improving the
responsiveness of the force and helping ease stress on units and
individuals with skills in high demand. For example, the Secretary of
Defense, in a July 9, 2003, memorandum, directed the services to examine
how to rebalance the capabilities in the active and reserve forces. The
services had already undertaken a number of steps to address requirements
for high-demand skills sets as a part of their ongoing manpower management
analyses. For example, in 2002 the Army began planning for fiscal years
2004 through 2009 to address high-demand areas, such as military police.
However, the Secretary's memorandum accelerated the services' rebalancing
efforts, which are critical to establishing requirements for active
personnel.

11 Department of Defense, Quadrennial Defense Review Report (Washington,
D.C., Sept. 30, 2001).

12 Department of Defense, Performance and Accountability Report Fiscal
Year 2003 (Washington, D.C., Dec. 23, 2003).

OSD provides policy and budget guidance to the services on balancing the
costs of active personnel with other funding priorities, such as
transformation. Its approach to active personnel levels has been to limit
growth and initiate efforts to use current military personnel levels more
efficiently. OSD also conducts a number of ongoing and periodic reviews
and assessments related to active military personnel levels, although
these do not represent a systematic analysis of requirements for active
military personnel needed to perform missions in the nation's defense
strategy. For example:

o  	The 2001 Quadrennial Defense Review Report identified the defense
strategy that guided DOD's analysis of the force structure. Under the new
strategy, DOD reported it needed sufficient forces to defend the homeland,
provide forward deterrence, execute warfighting missions, and conduct
smaller-scale contingency operations. Thus, DOD shifted its force planning
approach from optimizing the force for conflicts in two particular regions
to providing a range of capabilities for a variety of operations, wherever
they may occur. The report concluded that the department's existing force
structure was sufficient to execute the redesigned defense strategy at
moderate risk, but it did not refer to a specific OSD-led analysis to
reassess the impact of the new capabilities-based planning on the numbers
of military personnel needed. DOD officials said that the 2005 review may
include a topdown review of end strength but did not provide further
details about the specific guidance to implement such a review.

o  	To ensure that the services comply with congressionally authorized
active personnel levels on duty at the end of a fiscal year, OSD monitors
service reports for personnel on board. According to some service
officials, managing personnel levels is challenging for the services
because they cannot always control personnel management factors, such as
retention and retirement rates, which are affected by servicemembers'
personal decisions. Compliance with authorized personnel levels is one of
the performance metrics that DOD presents in its Performance and
Accountability Report. According to the department's fiscal year 2003
report,13 for fiscal years 1999 through 2002, DOD met its goal of not
exceeding authorized levels by more than 2 percent. However, in fiscal
year 2003, the Army and the Air Force did not meet this goal, having
exceeded authorized limits by 4 percent and

13Department of Defense, Performance and Accountability Report Fiscal Year
2003 (Washington, D.C., Dec. 23, 2003).

4.5 percent, respectively, in order to maintain sufficient troops to fight

a global war on terrorism. Air Force officials told us that better than

expected recruitment and retention of personnel also caused the Air

Force to exceed the authorized limit. Also, the Army's exercise of stop

loss authority,14 which prevents servicemembers from leaving the

service even if they are eligible to retire or their service contracts

expire, may have contributed to its overages in fiscal year 2003. DOD's

fiscal year 2004 Performance and Accountability Report shows that the

Army and the Air Force again did not meet the performance goal,

exceeding authorized levels, by 3.7 percent and 5.7 percent,

respectively; the Navy and the Marine Corps did meet the goal.15 While

this measure is important for compliance with congressional direction,

it cannot be used to determine whether the active force has enough

personnel to accomplish its missions successfully because it does not

assess the extent to which end strength levels meet the nation's

defense strategy at an acceptable level of risk.

o  	DOD's annual report to Congress on manpower requirements for fiscal
year 200516 broadly states a justification for DOD's requested active
military personnel, but it does not provide specific analyses to support
the justification. Instead, the report provides summaries on personnel,
such as the allocation of active military personnel between operating
forces and infrastructure. Although the types of operating forces are
specified, for example, "expeditionary forces," the specific capabilities
associated with such forces are not identified. The report also provides
the active military personnel data for the near term-fiscal years 2003
through 2005; it does not, however, contain data for the department's
long-term planned allocations. Although the report stated that DOD will
continue to review the adequacy of military capabilities and associated
end strength requirements, the Office of the Secretary of Defense
(including the Offices of Policy; Personnel and Readiness; Comptroller;
and Program Analysis and Evaluation), Joint Staff, and some service
officials we interviewed could not identify a specific process or an
OSD-led analysis in which the department reexamines the basis for active
military personnel levels.

14 Stop loss authority is provided by 10 U.S.C. S:12305.

15 Department of Defense, Performance and Accountability Report Fiscal
Year 2004 (Washington, D.C., Nov. 15, 2004). The department's data were
based on results for the third quarter of fiscal year 2004; we report the
final fiscal year 2004 results in table 1.

16 Department of Defense, Defense Manpower Requirements Report Fiscal Year
2005 (Washington, D.C., Mar. 2004).

The Services Use Varied Processes to Assess Changing Needs for Active
Personnel, but OSD Has Not Conducted Systematic Analyses across the
Services

OSD coordinates with the services on active personnel levels throughout
the department's planning and budgeting cycle, but it has not established
a process that would enable it to periodically examine the requirements
for the active military personnel and ensure that decisions are driven by
data that establish links between active military personnel levels and key
missions required by the national defense strategy. For example, OSD does
not systematically examine or validate the services' methodologies or
results to assess personnel levels across the active force. Further, OSD
does not systematically collect data that would enable it to monitor how
the services are allocating personnel to key warfighting and support
functions.

Although each of the services has processes for assessing military
personnel requirements, the extent to which OSD has analyzed the results
of these processes is not clear. The services use different methodologies
for assessing their active personnel requirements, and their processes and
initiatives have different time frames. In addition, several key efforts
to assess requirements are still ongoing and have not yet identified
long-term requirements. These processes are described below.

o  	The Army generates personnel requirements through a biennial process
known as Total Army Analysis. During the initial stages of this process,
Army force planners assess the numbers and types of units needed to carry
out missions specified in DOD and Army guidance. The most recent Total
Army Analysis-called Total Army Analysis 2011 because it provides the
force structure foundation for the Army's fiscal year 2006 through 2011
planning cycle-included analyses of operating force requirements for
homeland defense, major combat operations, forward deterrence, and ongoing
military operations, among others, as well as for personnel who operate
installations and provide support services. During the subsequent
resourcing phase of the process, Army officials determine how best to
allocate the limited number of positions authorized by OSD among active
and reserve component units across the Army's force structure to minimize
risk to priority missions.

The Army completed an initial version of Total Army Analysis 2011 in
spring 2004, but the Army continues to assess requirements as it carries
out changes to its basic force structure. These changes, discussed in the
Army Campaign Plan, alter the way in which the service organizes and
staffs its combat forces, and therefore will have significant impacts on
the numbers of active personnel the Army will need. In place of the
existing 10 active divisions, each comprising about 3 combat brigades and
associated support units, the Army's new force structure will be

based on modular combat brigades, each with its own support units. Under
current plans, when the new structure is fully implemented in 2006, the
Army will have 43 combat brigades, an increase of 10 brigades from the 33
it had under the traditional divisional structure. Although the Army has
begun implementing plans to create a modular force structure, several
aspects of these plans are uncertain or have yet to be determined. For
example, the Army is considering increasing the number of brigades it will
have from 43 to 48. This increase could require approximately 17,000 to
18,000 more personnel depending on the types of brigades established. The
Army plans to make the decision by fiscal year 2006 based on resource
considerations as well as the status of ongoing military operations.
Further, while the Army has developed personnel requirements for its
planned modular combat brigades, it has not yet determined the overall
number or composition of all the support units, such as reconnaissance,
which it will need to support those brigades.

o  	The Navy uses two separate processes to assess and validate
requirements for its operating forces and its infrastructure forces. While
the processes vary in scope and methodology, both are based on activities'
workloads. For operating forces, such as ships and aviation squadrons,
workloads are based on each ship's or squadron's mission, the capabilities
needed to execute the mission, and the conditions under which the mission
is to be carried out. For shore-based infrastructure forces, personnel
requirements are based on the numbers and types of personnel required to
accomplish each activity's workload. As we have reported, the Navy has had
difficulty in past years justifying its shore requirements because it has
not evaluated alternative combinations of people, materiel, facilities,
and organizational structures to ensure that the most cost-effective
combination of resources is used.17 The Navy is also conducting

discrete analyses to identify opportunities to reduce military personnel
requirements in support of projected end strength reductions. By reducing
end strength, the Navy aims to free up funds for fleet modernization. For
example, it initiated studies on providing services, such as
meteorological support, financial management, religious ministries, and
recruiting. To achieve the lower cost, the Navy is examining alternatives
to military manpower-for example, using technology or hiring
private-sector contractors instead of using military

17 GAO, Force Structure: Streamlining Plans Could Enable Navy to Reduce
Personnel Below Fiscal Year 1999 Goal, GAO/NSIAD-97-90 (Washington, D.C.:
Apr. 18, 1997).

personnel. Furthermore, these studies aim to identify ways to eliminate
redundant activities by consolidating activities that provide similar
services. Under a separate set of reviews, the Navy is scrutinizing
positions in selected career fields such as supply support to determine
whether these positions are military essential or, rather, could be
staffed with civilian employees.

o  	The Air Force's current process for determining the manpower it needs
is focused on the requirements for training objectives and for operating
and maintaining bases and weapons systems in peacetime. However, the Air
Force is in the process of overhauling its manpower requirements process
to determine the capabilities it needs for its role as an expeditionary
force able to respond rapidly to worldwide contingencies. The Air Force
plans to continue using the same methodological techniques (e.g., time
studies, work sampling, computer simulation, and aircrew ratios) to
quantify its personnel requirements, but the new process will include both
the infrastructure personnel and the warfighting force needed to support
expeditionary missions. The Air Force expects to implement its new
capabilitiesbased approach by fiscal year 2008.

o  	The Marine Corps uses modeling, simulations, spreadsheet analysis, and
other analytic tools to identify gaps in its capabilities to perform its
missions, and then identifies the personnel and skills needed to provide
the capabilities based largely on the professional judgment of manpower
experts and subject matter experts. The results are summarized in a
manpower document, updated as needed, which is used to allocate positions
and personnel to meet mission priorities. The Marine Corps' analyses for
fiscal year 2004 indicated that to execute its assigned missions the Corps
needs about 9,600 more personnel than it has on hand. The 2005 National
Defense Authorization Act authorized the Marine Corps to increase its end
strength by 3,000 personnel to 178,000 in 2005 and to increase by an
additional 6,000 personnel between fiscal year 2005 and 2009.

Although the security environment has changed since 2001, OSD has not
conducted a systematic review of the services' analyses and allocation of
personnel. Consequently, OSD cannot ensure that the end strength levels
established in its strategic and fiscal guidance reflect the numbers of
personnel needed to execute the defense strategy. Further, it cannot
ensure that it has a sufficient basis for understanding the risks
associated with different levels of active military personnel. While too
many active personnel could be inefficient and costly, having too few
could result in other negative consequences, such as inability to provide
the capabilities

  OSD Does Not Have Comprehensive Plans to Manage Near- and Long-Term
  Initiatives to Increase the Proportion of Active Personnel in Warfighting
  Positions

that the military forces need to deter and defeat adversaries. If OSD had
a data-driven rationale to support its funding requests for specific end
strength levels, it could provide congressional decision makers more
complete information on how active duty personnel requirements are linked
to the budget, the force structure, and the defense strategy.

OSD hopes to avert the need to increase active personnel levels by making
more efficient use of the current active military personnel within each
service, although it does not have a comprehensive plan for how it will
accomplish this and progress in implementing initiatives designed to make
more efficient use of active military is lagging behind goals.
Specifically, OSD has not developed a comprehensive plan for managing the
initiatives because the officials assigned this responsibility have
competing demands on their time and resources and have not made this a
priority. Sustained leadership and a plan for implementing initiatives and
measuring progress can help decision makers determine if initiatives are
achieving their desired results. In addition, although OSD has identified
two near-term initiatives--military-to-civilian conversion and retraining
for high-demand skills--current data indicate that the initiatives are not
meeting their quantitative goals or prescribed time frames because funding
has not been identified and time frames have not taken into account hiring
and training factors. OSD has approved quantitative goals and time frames
for the nearterm initiatives, and the services are taking steps to
implement them, but OSD does not have an implementation plan that assigns
responsibility for ensuring that the initiatives are implemented,
identifies resources needed, monitors progress, and evaluates their
results. In addition to the near-term goals, OSD has identified some
long-term initiatives to reduce the need for active personnel, such as
using technology more extensively, although these initiatives are not
fully developed, and it hopes to identify additional ways to use active
personnel more efficiently. However, without a comprehensive plan to
manage implementation of its initiatives and assess their results, OSD may
be unable to determine whether the initiatives have the desired effect of
providing more military personnel for warfighting duties, thus averting
the need for more active personnel. Consequently, OSD may not be able to
track the progress of these initiatives and keep Congress informed on the
results of its initiatives to use active military personnel more
efficiently.

    Responsibilities for Managing and Overseeing Initiatives Have Not Been
    Clearly Defined

According to officials in the Office of the Secretary of Defense's Under
Secretaries for Policy and for Personnel and Readiness, in summer 2003,
the Secretary of Defense directed the Deputy Under Secretary of Defense
for Policy to develop a plan for managing initiatives that might either
directly or indirectly use the active force more efficiently. However, no
personnel were assigned responsibility for carrying out the Secretary's
tasking, in part because of competing demands on staff time, such as
developing DOD's Strategic Planning Guidance. According to a senior
official in the Policy office, OSD and service officials met soon after
the Secretary directed more efficient use of the force to discuss how to
provide oversight of the initiatives. However, other work demands took
priority, and they did not continue the meetings. In spring 2004,
oversight responsibilities for the initiatives were transferred to the
Office of the Under Secretary of Defense for Personnel and Readiness,
according to an official in the Office of Policy. Even after the transfer,
OSD officials could not identify an individual with responsibility for
creating and implementing a plan to organize, monitor, and evaluate the
initiatives. In response to an inquiry by the Secretary of Defense, in
fall 2004 an official in the Office of the Under Secretary of Defense for
Personnel and Readiness told us that he had begun developing ways to
determine the results of the services' efforts to achieve workforce
efficiencies. However, at the time of our review, the methodology for the
analysis was still being developed.

Management principles embraced in the Government Performance and Results
Act of 199318 provide agencies a framework for implementing and managing
programs. One principle is the need to describe detailed implementation
actions as well as measurements and indicators of performance (i.e., a
performance plan). Critical elements of such a plan include identifying
resources and developing mechanisms to measure outcomes and means to
compare program results to performance goals. In addition, sustained
leadership in managing this plan is needed to ensure that program
objectives are implemented in accordance with the plan, compare program
results to performance goals, and take corrective actions as needed.

Without oversight of the services' implementation of initiatives to make
more efficient use of military personnel, DOD cannot be sure that changes
are having the desired effect. For example, the department recently

18 Pub. L. No. 103-62.

  Military-to-Civilian Position Conversion and Active and Reserve Component
  Rebalancing Initiatives Are Not Meeting Expected Goals or Time Frames

Converting Military Positions to Civilian or Contractor Performance Is Not
Meeting Quantitative Goals within Planned Time Frames

reported that it had completed its initiative to reduce and maintain the
numbers of active personnel assigned to headquarters units by 15 percent
from their 1999 levels. Although the objective of the initiative was to
increase the numbers of military personnel assigned to warfighting duties,
DOD did not collect data on how the military positions that had been
assigned to headquarters units were assigned after the reductions.
Therefore, DOD could not demonstrate whether headquarters staff reductions
directly resulted in more active military personnel being available for
the services' warfighting duties and could not assess the magnitude of any
changes.

While the services are in the process of implementing OSD's initiatives to
use active personnel more efficiently in the near term, such as converting
military positions to civilian or contractor performance and rebalancing
the active and reserve component skills, the initiatives are not meeting
planned goals and time frames and are not having the desired results. The
services have made some progress in converting positions to civilians or
contractors and reassigning positions to high-demand skills, but most of
the services did not meet their quantitative goals or time frames for
200419 because of funding issues and delays in recruiting, hiring,
contracting, and training personnel. Without a plan for overseeing the
services' implementation of the initiatives, including assigning
responsibility and collecting data, OSD cannot assess progress toward
meeting the goals of moving military positions to the operating forces and
take corrective action, if needed.

Some military personnel are assigned to activities that are commercial in
nature and could, theoretically, be performed by a DOD civilian or by a
contractor. For example, many activities that DOD organizations must
accomplish, such as administrative, personnel, and infrastructure support,
do not require military training. However, estimates of the numbers of
military personnel occupying such positions who could be reassigned to
warfighting positions vary widely. For example, senior OSD officials
recently stated that about 300,000 military personnel are performing
functions that civilians could perform or that could be contracted out to
a commercial source. However, OSD and some service officials

19 With the exception of the Navy and the Marine Corps, we were unable to
determine the reliability of the fiscal year 2004 data for the numbers of
completed positions related to military-to-civilian conversions and
rebalancing of the active and reserve components. Further information on
our data reliability assessment appears in appendix I.

acknowledged this estimate was based on a 1997 study that used a
methodology, that overstated the actual number of military personnel in
positions suitable for civilian or contractor performance. Since that
time, a comprehensive review of commercial-type positions20 completed in
2003 identified only about 44,000 military positions as suitable for
conversion to civilian or contractor positions.

In December 2003, OSD directed the services to convert about 20,070
military positions to civilian or private-sector contractor positions by
the end of fiscal year 2005-10,000 in fiscal year 2004 and 10,070 in
fiscal year 2005. OSD directed the services to fund the conversion costs
through offsets from other programs, such as base operations support.
Several service officials told us that OSD did not provide them with
information on how the conversion goals were developed. They also
explained that since the fiscal year goals were not realistic, given that
the fiscal year was already under way, taking planned funding from other
programs could be disruptive. Moreover, some service officials indicated
that the amount of time needed to hire civilians or award contracts was a
further impediment to meeting the OSD goals. Therefore, the services
developed alternative goals to convert about 2,900 positions by the end of
fiscal year 2004. As figure 1 shows, at the end of fiscal year 2004, the
service officials told us that they had converted about 3,400 positions,21
which was about 34 percent of OSD's original goal of 10,000 positions.
Although the services have a goal to convert about 15,900 positions in
fiscal year 2005, several service officials believe that identifying
funding and the time needed to hire civilians or award contracts may
impede their ability to fully implement their goals.

20 DOD conducts annual reviews of governmental positions to satisfy the
reporting requirements of the Federal Activities Inventory Reform Act of
1998, Pub. L. No. 105-270.

21 We did not include in this total about 4,100 security positions
originally filled by Army National Guard personnel that the Army replaced
with contractor personnel because this action did not result in an
increase of active military personnel available for warfighting duties.

Figure 1: Comparison of OSD's and the Services' Plans for
Military-to-Civilian Conversions for Fiscal Years 2004 and 2005 and the
Number of Conversions Completed in Fiscal Year 2004

Fiscal year 2004

Armya

Air Force

Navy

Marine Corps

Total

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

Number of military positions

Fiscal year 2005

Army

Air Force

Navy

Marine Corps

Total

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

Number of military positions

Positions completed

Service target approved by OSD

Current service plan

Source: GAO analysis of DOD data.

Note: With the exception of the Navy and the Marine Corps, we were unable
to determine the reliability of the fiscal year 2004 data for the numbers
of completed positions related to military-tocivilian conversions. Further
information on our data reliability assessment appears in appendix I.

aThe Army converted about 35 active military positions in fiscal year
2004. This figure does not include changes to the reserve components.

In fiscal year 2004, several of the services had to pay for the civilian
or contractor replacements for military personnel who will continue to
serve in different positions through offsets from other programs.
According to some service officials, lack of additional funding limited
the number of conversions that could be made in 2004. For example, in
fiscal year 2004, the Army converted only about 35 military positions
because, according to Army officials, paying for more positions would have
created problems in other program areas. Neither OSD nor the services had
fully evaluated the costs of proposed military-to-civilian position
conversions. OSD plans to provide $416 million in fiscal year 2005 to fund
some conversions, but because the services have not identified specific
positions to be converted, whether this amount will fully fund all the
planned conversions is not known.

In addition, several service officials expressed concern that hiring
civilians or contractors with the necessary skills to fill the positions
vacated by military personnel may exceed planned time frames. For example,
Navy officials explained that the process of hiring civilians who are
qualified to replace 1,772 military personnel with medical skills could
extend beyond the planned date of fiscal year 2005. To complete these
conversions, the Navy will have to compete with the job markets in local
economies to recruit individuals with the appropriate medical specialties
in varied geographical areas. In addition, it will have to manage the
planned rotation dates and service obligation commitments of the military
servicemembers currently in the target positions.

The services plan to use varying processes that could result in the
conversion of positions currently performed by active military personnel.
The Air Force and the Marine Corps plan to use the competitive sourcing
process to determine whether it would be more cost-efficient to perform
activities within DOD such as aircraft maintenance or, alternatively, to
contract with the private sector. The Army does not plan to use this
process to compete active military positions for potential private-sector
contracts, Army officials told us, because the process may take longer
than 2 years to complete.22 Rather, the Army plans to hire government
civilians to fill positions vacated by military personnel.

22 As we reported, DOD data indicated that conducting competitive sourcing
studies takes an average of 20 to 35 months to complete. See GAO, Defense
Management: DOD Faces Challenges Implementing Its Core Competency Approach
and A-76 Competitions, GAO-03-818 (Washington, D.C.: July 15, 2003).

Goals for Reassigning Servicemembers to High-Demand Skills May Not Be
Achievable within Planned Time Frames because of Limited Training
Availability

Although OSD does not have a comprehensive plan to implement, monitor, and
evaluate its efficiency initiatives as a whole, in April 2004, the Under
Secretary of Defense for Personnel and Readiness introduced a process for
managing conversions of military positions to civilian or contractor
positions. Specifically, this process is designed to (1) measure the
services' progress in achieving military-to-civilian conversion goals, (2)
determine which skill sets will receive additional military positions
subsequent to conversions, and (3) identify and track the number of
civilian or contractor positions added as a result of conversions.
According to OSD and some service officials, this oversight mechanism will
lend greater transparency to the services' military-to-civilian conversion
efforts and will provide the services an incentive to accelerate their own
conversion efforts. It was too early to evaluate the process' performance
because the systems that will be used to measure progress or account for
conversions either were being developed or required modifications to
capture new data.

Another near-term initiative to make the best use of active military
personnel focuses on shifting positions in low-demand skills, such as
artillery, to high-demand skills, such as military police, both within the
active and reserve components and between them. That would include
shifting some functions predominately concentrated in the reserve
component, such as civil affairs, to the active component. Through this
initiative, DOD plans to increase the availability of high-demand skills
overall and to meet short-notice demands. In February 2004, service
officials reported to OSD that they could reassign about 22,900 active
duty military positions23 to skills in high demand-about 13,900 positions
and 9,000 positions in fiscal years 2004 and 2005, respectively-and OSD
approved the services' estimates. However, in planning to implement
rebalancing activities, a senior OSD official told us service officials
determined that the initial estimates would be difficult to execute in the
near term due in part to the emerging operational requirements as a result
of the global war on terrorism. Therefore, as figure 2 shows, the
services' plans for reassigning active personnel were lowered. For
example, the services planned to reassign about 5,900 positions in fiscal
year 2004- about 42 percent of the 13,900 positions originally estimated.
In fiscal year

23 Reassigning active military personnel from a position in a low-demand
skill to a position in a high-demand skill is commonly referred to as
military-to-military conversions. The services' targets approved by OSD
represent military-to-military conversions. They do not include converting
military positions to civilian or contractor performance or applying new
technologies that may reduce the need for military positions.

2005, the Army, the Air Force, and the Navy plan to reassign skills for
about 8,940 military positions-about 60 fewer positions than the original
estimate of about 9,000. In fiscal year 2004, the Marine Corps did not
plan to change the mix of skills for any active military personnel, and it
has not yet completed plans for fiscal year 2005 according to a Marine
Corps official.

Figure 2: Comparison of OSD's and the Services' Plans to Reassign Active
Military Positions to High-Demand Skills and the Number of Positions
Reassigned in Fiscal Year 2004

Fiscal year 2004 Army Air Force Navy Marine Corpsa Total

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Number of military
positions

Fiscal year 2005 Army Air Force Navy Marine Corpsa Total

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Number of military
positions

Positions completed Service target approved by OSD Current service plan
Source: GAO analysis of DOD data. Note: With the exception of the Navy, we
were unable to determine the reliability of the fiscal year 2004 data for
the numbers of completed positions related to rebalancing of the active
and reserve components. Further information on our data reliability
assessment appears in appendix I.

aIn fiscal year 2004, the Marine Corps did not change the mix of skills
for active military personnel and in fiscal year 2005, the Marine Corps
has not yet completed its plans.

Even if the services could identify positions to meet targets for
rebalancing skills, DOD could still encounter delays in providing active
personnel with high-demand skills quickly because, according to some
service officials, training facilities, courses, and instructors may limit
the numbers of personnel who can be retrained in the short term. Further,
training servicemembers for some specialized skills requires time for them
to acquire proficiency. For example, Army and Marine Corps officials told
us that training military personnel for skills such as satellite imagery
analysis might take 1 to 2 years.

    Long-Term Initiatives Do Not Have Well-Defined Implementation Plans

Although DOD has begun to implement its two major initiatives, it had not
developed clear implementation plans for initiatives, which have
longerterm or less direct effects on active military personnel who may be
needed for warfighting duties. While some of the long-term initiatives
focus on specific problems and issues, such as relying more on volunteers,
others are concepts the department would like to explore more fully over
time, such as greater use of varied technologies. Senior OSD officials
acknowledged that these initiatives are not yet completely developed and
do not yet have detailed implementation plans that identify time frames,
resources, and measures of success. Moreover, some long-term initiatives
may take years to implement, according to these officials. Consequently,
it may take years before OSD is in a position to determine whether these
long-term initiatives will yield the expected increases of active duty
military personnel for warfighting duties. For example, senior OSD
officials identified global reachback, other new technologies, and
volunteerism as initiatives the department is exploring, as described in
table 3.

Table 2: Long-Term Initiatives for Achieving Greater Efficiencies in the
Active Duty Force

                             Initiative Description

Global reach back  o  	This initiative would enable servicemembers to
provide essential support and skills, such as intelligence, by connecting
electronically to sites in the United States and worldwide locations.

o  	This capability could reduce both the number of forces deployed and
the rotation base needed to maintain the troops deployed in theater.

o  	DOD completed a study on reachback best practices in summer 2004.

Technology  o  	This initiative involves investing in new technologies,
such as remote sensing devices and unmanned air vehicles, which are
intended to reduce the required numbers of military personnel.

o  DOD plans to assess new technology on a continuing basis.

Volunteerism  o  	This initiative involves deploying civilians, private
contractors, or reserve personnel who have critical skills in high demand,
such as linguists and engineers, who would volunteer for short periods of
time and in response to specific emergencies.

o  	DOD plans to develop policies and legislative proposals for Congress.

Source: GAO analysis of DOD data.

The services targeted some technologies that they can use to reduce the
need for support personnel in the near term, although these may not be
implemented as planned because technologies are supplied first to
operational needs. For example, to reduce its reliance on about 3,000 Army
National Guard and Reserve personnel who provide security-related
functions at Air Force bases, the Air Force planned to use ground
surveillance radars and thermal imagers to detect intruders and improve
surveillance in fiscal year 2004. However, the Air Force has not yet
outfitted its domestic military bases with this equipment because it was
needed for use on Army bases in Iraq and Afghanistan. As a result, the Air
Force must continue to rely on servicemembers for security until at least
fiscal year 2006, when it plans to buy additional equipment. For the long
term, Navy officials anticipate that acquisition of new technology related
to transformation could reduce the manpower it needs. For example, the
Navy expects the number of military personnel it will need to operate and
support its new DD(X) destroyer will be smaller than the number needed

Conclusions

to operate destroyers currently in use.24 However, Navy officials have not
yet determined the exact crew size for the new destroyers.

The changing security environment and high pace of operations resulting
from the global war on terrorism have led to significant debate about
whether there are a sufficient number of active military servicemembers to
carry out ongoing and potential future military operations. Although DOD
defined a new defense strategy that broadens the range of capabilities
that may be needed at home and around the world, OSD has not undertaken a
systematic, data-based analysis of how the changed strategy is linked to
personnel levels, so it cannot demonstrate how the current number of
active personnel supports the department's ability to execute the strategy
within acceptable levels of risk. While personnel costs compete with costs
of other priorities, without data-driven analyses of the forces-including
active and reserve personnel-and how they are linked to the strategy, DOD
is limited in its ability to determine how best to invest its limited
resources over the near and long term between the competing priorities of
personnel costs and other needs. The department will also continue to face
challenges in achieving consensus with Congress on active duty end
strength levels, in light of the demands imposed by ongoing operations and
the significant changes in the security environment, until it can better
demonstrate the basis for its budget requests.

Although DOD has taken several positive steps to achieve its goal of using
active military personnel more efficiently, its initiatives may lose
momentum without additional management attention. Further, DOD cannot
assess whether the initiatives are having the desired effect of providing
more active personnel to warfighting positions because it has not
developed an implementation plan to coordinate and oversee the initiatives
put forward as contributing to more efficient use of active forces. Until
DOD develops a plan that assigns responsibilities, clarifies time frames,
identifies resources, and sets out performance metrics, DOD will not be
able to assess the progress of the initiatives and take corrective action,
if necessary. Moreover, in the absence of specific monitoring and
reporting, DOD will not be able to inform Congress on the extent to which
its efficiency initiatives are enabling it to meet emerging needs and
better

24 GAO, Military Personnel: Navy Actions Needed to Optimize Ship Crew Size
and Reduce Total Ownership Costs, GAO-03-520 (Washington, D.C.: June 9,
2003).

  Recommendations for Executive Action

Agency Comments and Our Evaluation

manage the high pace of operations that U.S. active forces are currently
experiencing.

To facilitate DOD's and congressional decision making on active military
personnel levels and to help DOD achieve its goals for assigning a greater
proportion of active military personnel to positions in the operating
force, we recommend that the Secretary of Defense take the following two
actions:

o  	Conduct a review of active military personnel requirements as part of
the 2005 Quadrennial Defense Review. This review should include a detailed
analysis of how the services currently allocate active military forces to
key missions required by the defense strategy and should examine the need
for changes in overall personnel levels and in the allocation of personnel
in response to new missions and changes in the defense strategy. The
Secretary of Defense should summarize and include in its Quadrennial
Defense Review report to Congress DOD's conclusions about appropriate
personnel levels for each of the services and describe the key assumptions
guiding DOD's analysis, the methodology used to evaluate requirements, and
how the risks associated with various alternative personnel force levels
were evaluated.

o  	Develop a detailed plan to manage implementation of DOD's initiatives
to use the force more efficiently. Such a plan should establish
implementation objectives and time frames, assign responsibility, identify
resources, and develop performance measures to enable DOD to evaluate the
results of the initiatives in allocating a greater proportion of the
active force to warfighting positions.

The Deputy Under Secretary of Defense (Program Integration) provided
written comments on a draft of this report. The department generally
agreed with our recommendations and cited actions it is taking to
implement them. The department's comments are reprinted in their entirety
in appendix II. In addition, the department provided technical comments,
which we incorporated as appropriate.

The department agreed with our recommendation that the Secretary of
Defense conduct an OSD-led, comprehensive assessment of the manning and
balancing the force needed to execute the defense strategy as part of the
next quadrennial review. In its comments, the department said that it

intends to meet the requirements that Congress set forth in mandating the
quadrennial review, including assessing the total force structure needed
to implement the defense strategy. Further, the department agreed with our
recommendation to report to Congress its conclusions about appropriate
personnel levels for each of the services and describe the key assumptions
guiding its analysis, the methodology used to evaluate the requirements,
and how the risks associated with various alternative personnel force
levels were evaluated. We believe that the department's approach will
satisfy the intent of our recommendation if, in the course of the
quadrennial review, the manning and balancing of active and reserve forces
are specifically analyzed using appropriate methodologies, assumptions,
and evaluative techniques. Providing this information to Congress will
assist in its oversight of defense programs by providing a sound basis for
decision making on the size of the active and reserve forces and the costs
and risks associated with various alternatives.

The department also agreed with our recommendation to develop a detailed
plan to manage implementation of its initiatives to use the force more
efficiently and such a plan should establish implementation objectives and
time frames, assign responsibility, identify resources, and develop
performance measures to use the force more efficiently. In its comments,
the department noted that it has put in place some mechanisms to capture
and track activities that enable it to use the force more efficiently. For
example, it is now tracking the services' military-to-civilian conversions
and documenting the results in its budget exhibits. The department also
noted that it has established a forum for OSD and service officials to
discuss and track the services' initiatives to reduce stress on the force.
We believe that the department's approach represents positive steps.
However, we believe that OSD should consider taking additional actions to
clearly assign responsibility and develop comprehensive plans for
implementing initiatives and measuring their progress. Critical elements
of such plans would include identifying resources and developing
mechanisms to measure outcomes and means to compare program results to
performance goals. By embracing these management principles, OSD and
service officials can help decision makers determine if initiatives are
achieving their desired results and take corrective actions as needed.

We are sending copies of this report to other appropriate congressional
committees and the Secretary of Defense. We will also make copies
available to other interested parties upon request. In addition, the
report will be available at no charge on the GAO Web site at
http://www.gao.gov.

If you have any questions about this report, please contact me at (202)
512-4402. Major contributors to this report at listed in appendix III.

Janet A. St. Laurent Director, Defense Capabilities and Management

List of Committees

The Honorable Saxby Chambliss The Honorable Ben Nelson Committee on Armed
Services United States Senate

The Honorable John M. McHugh The Honorable Victor F. Snyder Committee on
Armed Services House of Representatives

                       Appendix I: Scope and Methodology

To assess the extent to which the Office of the Secretary of Defense (OSD)
has conducted a data-based analysis of active military personnel needed to
implement the national defense strategy, we identified and examined
relevant laws, presidential documents, and the Department of Defense (DOD)
guidance, reports, and analyses related to active military personnel and
the defense strategy. These documents included the 2001 Quadrennial
Defense Review Report, the defense strategy issued as part of the 2001
Quadrennial Defense Review Report, the National Military Strategy of the
United States of America 2004, the Defense Manpower Requirements Report
Fiscal Year 2005, the Secretary of Defense's Annual Report to the
President and the Congress for 2003, and the Department of Defense
Performance and Accountability Report Fiscal Year 2004. Although the total
force includes active military personnel and National Guard and reserve
forces, our review focused on active military personnel because Congress
considered and passed legislation in 2004 to increase their numbers. We
examined the services' guidance on processes for determining personnel
requirements for the total force to identify the methodologies, time
frames, and organizations involved in these processes. We also obtained
and analyzed the results of the services' requirements processes and
studies, and we discussed their status with officials responsible for
managing these efforts at DOD organizations. These organizations included,
but are not limited to, the Army's Offices of the Deputy Chiefs of Staff
for Personnel and for Operations and Plans, and the Army's Programs
Analysis and Evaluation Directorate; the U.S. Army Forces Command; the Air
Force's Deputy Chiefs of Staff for Personnel and for Plans and Programs;
the Air Force Manpower Agency; the Air Force Personnel Center; the Navy's
Deputy Chief of Naval Operation for Manpower and Personnel; the Marine
Corps Manpower and Reserve Affairs; and the Marine Corps Combat
Development Command.

Because it did not fall within the scope of our review, we did not assess
the services' methodologies or validate the results of their requirements
analyses. We also examined guidance on the services' processes for
allocating manpower resources. We identified criteria for examining
workforce levels through our products on strategic human capital
management and consulting with our staff with expertise in this area.
Testimonial evidence was obtained from officials assigned to (1) the
Offices of the Under Secretary of Defense for Policy, the Under Secretary
of Defense for Personnel and Readiness, and the Under Secretary of Defense
for Comptroller; (2) the Office of Program Analysis and Evaluation; and
(3) the Joint Chiefs of Staff. In addition, we analyzed transcripts of
public briefings and congressional testimony presented by OSD officials.
We reviewed DOD's fiscal year 2005 Defense Manpower

Appendix I: Scope and Methodology

Requirements Report and DOD's fiscal years 2003 and 2004 Performance and
Accountability Reports to determine the manner and extent to which OSD
evaluates end strength in fulfilling statutory reporting requirements
pertaining to force management. We reviewed our prior work on the 2001
Quadrennial Defense Review to ascertain whether this process included an
explicit assessment of active duty personnel. To gain an independent
perspective on the OSD role in analyzing the number of active military
personnel needed to implement the national defense strategy, we
interviewed a former Assistant Secretary of Defense.

To assess the extent to which OSD has a plan to implement initiatives to
make more efficient use of active military personnel and evaluate their
results, we analyzed available internal DOD documentation such as
briefings, memoranda, and reports that identified DOD's plans and time
frames. We obtained, analyzed, and compared OSD's and the services' fiscal
year 2004 and 2005 targets to ascertain the differences. Also, we compared
the services' fiscal year 2004 results with the services' fiscal year 2004
plans. To understand the reasons for any differences, we discussed their
status and implications with officials responsible for managing these
efforts at DOD organizations including, but not limited to, the Offices of
the Under Secretaries of Defense for Policy, for Personnel and Readiness,
and for Comptroller; the Army's Offices of the Deputy Chiefs of Staff for
Personnel and for Operations and Plans; the U.S. Army Forces Command; the
Air Force's Deputy Chiefs of Staff for Personnel; the Navy's Deputy Chief
of Naval Operations for Manpower and Personnel; and the Marine Corps'
Combat Development Command. We limited our review to the major initiatives
that were identified by these officials and emphasized by the Secretary of
Defense in his testimony1 because DOD officials did not have a
comprehensive document that listed or described all the initiatives. We
held further discussions with service officials and obtained and analyzed
written responses to our questions to (1) identify the actions that the
services took or will take in fiscal years 2004 and 2005 to implement the
initiatives and (2) fully understand the challenges that the services may
face with implementation. Also, we reviewed DOD's fiscal year 2005 budget
request to assess DOD's expected costs for military-to-civilian
conversions. To identify the extent to which DOD had implemented mandated
reductions in major headquarters staff, we reviewed the governing
directives and analyzed DOD's draft budget

1 Statement of U.S. Secretary of Defense Donald H. Rumsfeld before the
Senate Committee on Armed Services, Feb. 4, 2004.

Appendix I: Scope and Methodology

exhibits for fiscal year 2004, which contained data on actual reductions
for the services and other defense organizations for fiscal year 2003 and
estimated reductions for fiscal years 2004 and 2005. We also interviewed
an OSD official and obtained data from the services to identify whether
they collected data on the extent to which military personnel affected by
headquarters reductions were reassigned to warfighting forces. Moreover,
we conducted interviews with officials from the Under Secretary of Defense
for Personnel and Readiness, the Army, the Air Force, the Navy, and the
Marine Corps and reviewed DOD guidance to understand DOD's process for
managing conversions of military positions to civilian or contractor
positions. Further, we reviewed our prior audit work related to the
conversion of military positions to civilian or contactor positions, the
competitive sourcing process, and headquarters reductions to enhance our
understanding of DOD's ongoing efforts to achieve efficiencies. Our work
was conducted in the Washington, D.C., metropolitan area; Atlanta,
Georgia; and San Antonio, Texas.

We performed our work from August 2003 through January 2005 in accordance
with generally accepted government auditing standards and determined that
data, other than those used for the efficiency initiatives, were
sufficiently reliable to answer our objectives. We interviewed data
sources about how they ensure their own data accuracy, and we reviewed
their data collection methods, standard operating procedures, and other
internal control measures. Concerning the fiscal year 2004 data for the
military-to-civilian conversions and rebalancing initiatives, we
determined that the Navy's and the Marine Corps' data were sufficiently
reliable for the purposes of our objectives. We considered the Army's and
the Air Force's military-to-civilian conversion and rebalancing skills
data for fiscal year 2004 to be of undetermined reliability because the
two services did not respond to our requests to provide documentation for
the controls they use to ensure the accuracy of their data. Even though
those services' officials presented the fiscal year 2004 data as their
official numbers, we cannot attest to their reliability. However, in the
context in which the data were presented, we determined the usage to be
appropriate because the fiscal year 2004 data did not constitute the sole
support for our findings, conclusions, and recommendations. Further, if
the fiscal year 2004 results were revised, our conclusions would remain
unchanged.

Appendix II: Comments from the Department of Defense

Appendix II: Comments from the Department of Defense

Now on p. 27.

                                 See comment 1.

Appendix II: Comments from the Department of Defense

                                 Now on p. 27.

Appendix II: Comments from the Department of Defense

The following is GAO's comment on the department's letter dated January
12, 2005.

GAO Comment 	1. The department's response correlates to the second part of
our first recommendation.

Appendix III: GAO Contacts and Staff Acknowledgments

  GAO Contacts Acknowledgments

(350333)

Janet St. Laurent, (202) 512-4402
Margaret G. Morgan, (202) 512-8975

In addition to the persons named above, Deborah Colantonio,
Susan K. Woodward, Paul Rades, Leland Cogliani, Michelle Munn,
Margaret Best, Cheryl Weissman, Kenneth E. Patton, John G. Smale Jr.,
and Jennifer R. Popovic also made major contributions to this report.

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