Military Personnel: Guidance Needed for Any Future Conversions of
Military Medical Positions to Civilian Positions (08-FEB-08,	 
GAO-08-370R).							 
                                                                 
Since September 11, 2001, the high pace of military operations	 
has placed significant stress on U.S. operating forces. In late  
2003, the Department of Defense (DOD) reported that several	 
studies had found that tens of thousands of military personnel	 
were performing tasks that were not military essential and that  
these tasks could be performed more cost effectively by civilian 
or private-sector contract employees. To address this matter,	 
DOD, in fiscal year 2004, began a multiyear initiative to convert
military positions, including military health care positions, to 
federal civilian or contract positions. Within DOD, the Office of
the Under Secretary of Defense, Personnel and Readiness (USD,	 
P&R), has overall responsibility for issuing guidance on manpower
management, which includes guidance related to determining the	 
least costly mix of military, civilian, and contract personnel.  
Additionally, the Under Secretary of Defense (Comptroller) (USD  
(C)) and the Director, Program Analysis and Evaluation (PA&E)	 
play key roles in determining the costs of military, civilian,	 
and contract personnel. For example, the USD(C) is responsible	 
for developing the composite pay rates used in developing	 
military and civilian personnel budgets and PA&E provides	 
leadership in developing and promoting tools, data, and methods  
for analyzing allocation of resources. USD, P&R also has	 
responsibility for the Defense Health Program, which provides	 
health care to over 9 million beneficiaries--including military  
servicemembers and retirees and their families and survivors.	 
This program had estimated costs of $21 billion for fiscal year  
2007 and DOD officials anticipate further significant growth in  
these health care costs. In fact, the costs associated with the  
program have doubled since fiscal year 2000 due to factors such  
as increased enrollment, medical inflation, and implementation of
the TRICARE for Life program.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-370R					        
    ACCNO:   A80617						        
  TITLE:     Military Personnel: Guidance Needed for Any Future       
Conversions of Military Medical Positions to Civilian Positions  
     DATE:   02/08/2008 
  SUBJECT:   Civilian employees 				 
	     Cost effectiveness analysis			 
	     Defense conversion 				 
	     Defense operations 				 
	     Health care personnel				 
	     Military forces					 
	     Military operations				 
	     Military personnel 				 
	     Military policies					 
	     Military procurement				 
	     Strategic planning 				 
	     Defense Health Program				 

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GAO-08-370R

   

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United States Government Accountability Office: 
Washington, DC 20548: 

February 8, 2008: 

Congressional Committees: 

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

Since September 11, 2001, the high pace of military operations has 
placed significant stress on U.S. operating forces. In late 2003, the 
Department of Defense (DOD) reported that several studies had found 
that tens of thousands of military personnel were performing tasks that 
were not military essential and that these tasks could be performed 
more cost effectively by civilian or private-sector contract employees. 
To address this matter, DOD, in fiscal year 2004, began a multiyear 
initiative to convert military positions, including military health 
care positions,[Footnote 1] to federal civilian or contract 
positions.[Footnote 2] 

Within DOD, the Office of the Under Secretary of Defense, Personnel and 
Readiness (USD, P&R), has overall responsibility for issuing guidance 
on manpower management, which includes guidance related to determining 
the least costly mix of military, civilian, and contract 
personnel.[Footnote 3] Additionally, the Under Secretary of Defense 
(Comptroller) (USD (C)) and the Director, Program Analysis and 
Evaluation (PA&E) play key roles in determining the costs of military, 
civilian, and contract personnel. For example, the USD(C) is 
responsible for developing the composite pay rates used in developing 
military and civilian personnel budgets and PA&E provides leadership in 
developing and promoting tools, data, and methods for analyzing 
allocation of resources. USD, P&R also has responsibility for the 
Defense Health Program, which provides health care to over 9 million 
beneficiaries--including military servicemembers and retirees and their 
families and survivors. This program had estimated costs of $21 billion 
for fiscal year 2007 and DOD officials anticipate further significant 
growth in these health care costs. In fact, the costs associated with 
the program have doubled since fiscal year 2000 due to factors such as 
increased enrollment, medical inflation, and implementation of the 
TRICARE for Life program.[Footnote 4] 

In recent years, however, questions have surfaced about the potential 
effects of DOD's planned conversions on the Defense Health Program. 
Congress addressed these questions in the National Defense 
Authorization Act for Fiscal Year 2006[Footnote 5] by prohibiting the 
military departments from performing any further military to civilian 
conversions until the service secretaries' submitted certifications 
that such conversions would not increase costs or decrease access to or 
quality of care. The act also required us to report on the potential 
effects on the Defense Health Program of converting military health 
care positions to civilian positions--to include impacts on medical 
readiness, recruitment and retention, and cost associated with the 
conversions. In our May 2006 report,[Footnote 6] we stated that the 
military departments[Footnote 7] did not expect conversions to have any 
effects on medical readiness, quality of care, recruitment and 
retention of military personnel, or access to care. However, we noted 
at that time that it was unknown whether these conversions would 
increase or decrease costs to DOD, primarily because the methodology 
each of the departments considered using in its certification did not 
include the full cost of military personnel. At that time, PA&E was 
developing a methodology to account for both the direct and indirect 
costs for military personnel, including costs for training and 
recruiting. Accordingly, we recommended, among other things, that the 
secretaries of the military departments coordinate their certifications 
with PA&E to consider full costs for military personnel and for 
civilian or contract personnel when reporting to Congress. DOD 
generally concurred with the recommendations, but commented that it was 
unclear when the PA&E cost methodology would be finalized and available 
for use by the military departments. As of December 6, 2007, PA&E was 
still working to finalize the full cost methodology and responsible 
officials said they did not expect it to be final until June or July of 
2008. We continue to believe the military departments should account 
for the full cost of military health care positions converted or 
planned for conversion as we recommended. 

In October 2006, the John Warner National Defense Authorization Act 
(NDAA) for fiscal year 2007[Footnote 8] revised the requirements for 
the military departments to certify and report on planned conversions 
of military medical and dental positions to civilian medical and dental 
positions. Under this law, the Secretary of a military department may 
not convert any military medical or dental positions to civilian 
positions until the Secretary submits a certification to the 
congressional defense committees that conversions will not increase 
cost or decrease quality of care or access to care. Furthermore, the 
act required that each certification include a written report that 
addressed, among other things: 

* the methodology used by the Secretary in making the determinations 
necessary for the certification; 

* the number of positions, by grade or band and specialty, planned for 
conversion; 

* an analysis showing the extent to which access to care and cost of 
care will be affected; 

* a comparison of the full costs for the military medical and dental 
positions planned for conversion with the estimated full costs for the 
civilian medical and dental positions that will replace them, including 
expenses such as recruiting, salary, benefits, training, and any other 
costs the department identifies; and; 

* an assessment showing that the military medical or dental positions 
planned for conversion are in excess of those needed to meet medical 
and dental readiness requirements: 

In addition, the act required the military departments to submit their 
certification for fiscal year 2008[Footnote 9] at the time the 
President's Budget was submitted to Congress (Feb. 5, 2007), resubmit 
their certifications and reports for fiscal year 2006 conversions, and 
follow certain special requirements for fiscal year 2007 
certifications. Enclosure I has the detailed reporting requirements for 
the certification reports, along with the specific special requirements 
for the fiscal year 2007 certifications. 

All of the military departments submitted their certification packages 
to Congress at various times--in some cases several months after the 
President's Budget had been submitted to Congress on February 5, 2007. 
For example, the Air Force's packages for fiscal years 2007 and 2008 
were submitted April 17 and 12, 2007, respectively; while the Navy's 
fiscal years 2007 and 2008 certification packages were submitted July 
10, 2007. The Army's fiscal year 2007 certification was submitted June 
4, 2007; while the fiscal year 2008 certification was submitted October 
9, 2007. In addition, the military departments' certification packages 
varied in terms of format and content. Specifically, each department 
created its own format for its certification; two included the 
certification as a stand-alone document, while one provided a separate 
certification document and a report with several pages to address each 
of the requirements under the law. For example, the Navy's packages 
included a 1-page certification letter along with a separate 11-page 
report with sections corresponding to the 8 reporting requirements of 
the law. The Army, on the other hand, submitted a 1-page certification 
letter with 1 paragraph to address all of the 8 reporting requirements. 

In addition to the mandate for the military departments, the act also 
required that we review any certifications and reports that the 
military departments had submitted to the congressional defense 
committees. For this report, we reviewed the extent to which the 
military departments addressed the reporting requirements of the 2007 
National Defense Authorization Act. In addition, we reviewed the extent 
to which the military departments (1) had documentation to support 
their assessments of the impact of conversions on readiness, cost, 
quality of care, access to care, and recruitment/retention of military 
personnel; and (2) converted or planned to convert military medical and 
dental positions during fiscal years 2005 to 2009. This report 
documents and updates information that we provided to your offices in 
an interim status briefing on October 5, 2007. Enclosure II contains 
the updated briefing slides. 

To address our objectives, we interviewed officials and obtained 
pertinent documents, reports, and information related to the military 
medical to civilian conversion programs from each of the offices of the 
Surgeons General for the Army, Navy, and Air Force; the Office of the 
Secretary of Defense for Personnel and Readiness; Director for PA&E 
and the TRICARE Management Activity within the Office of the Assistant 
Secretary of Defense for Health Affairs (ASD (HA)). Specifically, to 
determine the extent to which the military departments had addressed 
the certification and reporting requirements of the 2007 National 
Defense Authorization Act, we obtained and reviewed each of the 
military departments' certification letters and reports submitted to 
Congress. To determine the extent to which the military departments had 
documentation to support their assessments of the potential effects of 
planned conversions, we reviewed documentation supporting the military 
departments' assessments of the potential effects of conversions on 
medical readiness, cost, quality of care, access to care, and 
recruitment and retention of military medical and dental positions. To 
determine the extent to which the military departments have developed 
and implemented plans to convert military medical positions, we 
obtained documents and interviewed officials from the offices of the 
Surgeons General for the Army, the Navy, and the Air Force concerning 
their department's actual conversions for fiscal years 2005 through 
2007, planned conversions for fiscal years 2008 and 2009, and the 
current status of efforts to hire civilian employees to fill converted 
positions. Further details on our scope and methodology can be found in 
enclosure III. We conducted this performance audit in accordance with 
generally accepted government auditing standards from August 2007 to 
February 2008.[Footnote 10] Those standards require that we plan and 
perform the audit to obtain sufficient, appropriate evidence to provide 
a reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

Summary: 

Although each of the military departments submitted certification 
packages to Congress that addressed or partially addressed most of the 
reporting requirements of the law, none of the departments' 
certifications addressed all of those requirements. For example, each 
department identified the methodology it had used to reach its 
certification decisions, and each reported that the positions it 
planned to convert were in excess of those needed to meet military 
readiness requirements. On the other hand, none of the military 
departments provided an analysis of the impact the conversions would 
have on the cost of care--within either the direct care system or the 
purchased care system. Officials from each of the military departments 
told us that their certification packages did not address the cost of 
care because it would be difficult to attribute specific changes in 
such costs within either system given that the cost growth within the 
Defense Health Program results from several factors, such as increased 
enrollment in beneficiaries, medical inflation, and implementation of 
the TRICARE for Life program. In response to the requirement to use a 
full cost methodology, the Navy's methodology was the only one that 
addressed the specific factors identified by the act--including 
training and recruiting[Footnote 11]--for positions planned for 
conversion for fiscal years 2007 and 2008.[Footnote 12] The Air Force 
and the Army relied on composite military rates, instead of using a 
full cost methodology like the one PA&E is developing.[Footnote 13] 
These composite rates did not include all of the required cost factors, 
such as training and recruiting costs. Responsible officials from both 
the Air Force and the Army stated that the composite rates provided by 
USD (C) represented the funding associated with the converted positions 
at the time and that, because the development of the PA&E methodology 
was not complete, they used the composite rates for their analysis. 
However--as we reported in May 2006--without accounting in their 
certifications to Congress for the full costs of military health care 
positions that have been converted or are planned for conversion, the 
military departments cannot accurately compare the costs of military 
and civilian positions, and Congress cannot be assured that the 
certified conversions will not increase DOD's cost of care. 

In their certification packages, the military departments identified or 
provided support for some of the potential effects of conversions; 
however, they did not provide us with analysis or with additional 
documentation to support all of their assessments of potential effects. 
While the statute requiring certifications does not require the 
departments to provide documentation supporting their assessments, such 
additional information would provide Congress with a better 
understanding of the certification packages. Although the USD, P&R has 
issued memoranda urging the military departments to comply with the 
certification requirements and advising them on implementing 
conversions, this guidance did not address how to conduct the cost 
analysis, how to comply with reporting requirements, or how to document 
the analyses of potential effects of conversions including the key 
assumptions. In addition, officials within the USD, P&R and the TRICARE 
Management Activity stated that such guidance was not issued because 
the law required the secretaries of the military departments--not the 
Secretary of Defense--to submit the certifications. These OSD officials 
acknowledged, however, that leadership was needed in this area at the 
OSD level. As stated previously, under DOD's manpower management 
directive, OSD (P&R) is responsible for issuing guidance on manpower 
management, which would include guidance related to determining the 
least costly mix of military, civilian, and contract personnel. 
Specifically, regarding the military to civilian conversion 
certifications, we found that each of the military departments provided 
documentation to support its assessment of the impact of conversions on 
medical readiness,[Footnote 14] along with documentation to demonstrate 
how their cost comparisons were performed. On the other hand, we found 
that even though each of the departments stated that planned and 
completed conversions would not have a negative impact on access to 
care, only the Navy provided an analysis of patient waiting times for 
medical appointments to support this conclusion. Air Force and Army 
officials told us that they based their assertion that conversions 
would not decrease access to care on the assumption that converted 
military positions would be filled on a one-to-one basis by qualified 
civilian employees, and thus qualified providers would be available to 
prevent problems with access to care. Regarding the quality of care 
received by beneficiaries, all of the military departments stated that 
quality of care would not be affected by conversions because the 
civilians being hired would be required to have the same 
qualifications, credentials, and licenses as the military personnel who 
had held the positions being converted. However, none of the 
departments provided documentation--for example, an assessment that 
quality of care performance measures[Footnote 15] had not been 
negatively impacted by conversions--to demonstrate this. Similarly, all 
of the military departments stated that they did not expect conversions 
to negatively impact recruitment or retention of military personnel, 
but none provided any data supporting this view. Officials from each of 
the military departments stated that the impact of conversions on 
access to care, quality of care, and recruitment/retention of military 
personnel would be difficult to isolate and document because many 
factors would influence any performance metric used to assess any 
impacts. These factors include the cost growth discussed earlier, 
increased number of beneficiaries covered by the defense health 
program, as well as deployments and temporary duty travel. However, 
federal internal control guidance states that appropriate documentation 
should be maintained for significant events, and internal controls are 
designed to provide reasonable assurance concerning compliance with 
applicable laws and regulations.[Footnote 16] Without guidance from OSD 
to direct the military departments in preparing their certifications, 
particularly in the area of documenting and maintaining a record of the 
assessments of the impacts of conversions, the certification packages 
would not provide Congress with a complete understanding of the 
potential impacts of conversions. Consequently, Congress would not have 
reasonable assurance that conversions will not increase the cost of 
care, decrease access to care, or decrease quality of care. Moreover, 
Congress would not have all the information necessary to make informed 
decisions about current and future conversion of military medical 
personnel. 

To date, the military departments have converted or have plans to 
convert almost 10,000 military medical and dental positions to federal 
civilian/contract positions from fiscal year 2005 through fiscal year 
2009. As shown in table 1 (enclosure II), the Army, Navy, and Air Force 
converted a total of 5,305[Footnote 17] military positions to civilian 
positions from fiscal year 2005 through 2007. Notably, only 152 
physician and 11 psychologist positions were included in the fiscal 
year 2005 to fiscal year 2007 conversions (see enclosure IV for a 
detailed distribution of converted positions). In addition, the 
military departments plan to convert another 4,426[Footnote 18] 
positions during fiscal years 2008 and 2009. Similarly, only 86 
physician and 12 psychologist positions were planned for conversion in 
fiscal years 2008 and 2009; none of the physician or psychologist 
positions planned for conversion are Army medical positions. According 
to DOD and military department officials, success in hiring civilian 
replacements for converted military medical and dental positions is 
dependent on a number of factors, including the availability of 
qualified civilian applicants, competitiveness of proposed salaries, 
economic conditions in the affected areas, and the lead time needed to 
hire civilian employees. As shown in table 2, (enclosure II), each of 
the military departments has had varying degrees of success in hiring 
civilians to fill converted military positions. For example, the Navy 
(the only military department with conversions in fiscal year 2005) has 
hired 94 percent of the planned hires. Each of the departments has 
hired about three-fourths of the planned hires for the fiscal year 2006 
conversions. Success in hiring civilian replacements for fiscal year 
2007 varied widely, from 9 percent for the Navy to 85 percent for the 
Army. 

In January 2008, as we were preparing to issue this report, the 
National Defense Authorization Act for Fiscal Year 2008 was 
passed.[Footnote 19] The Act contains language that would establish a 
statutory moratorium on converting any military medical and dental 
positions to civilian positions from October 1, 2007, through September 
30, 2012.[Footnote 20] According to DOD and military department 
officials, this prohibition could negatively affect the department's 
ability to provide health care services. However, we received limited 
documentation supporting these assertions. For example, these officials 
told us that, once a position has been selected for conversion, it is 
no longer included in recruiting targets. They further stated that if a 
military department, in the future, restores the position to a military 
position, it will have to reinitiate efforts to recruit and train 
military personnel; this could take years and could negatively affect 
access to care, quality of care, and the military departments' 
capability to provide services in key areas such as mental health 
treatment and surgical support. We did not evaluate these assertions. 

Conclusions: 

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

Recommendations for Executive Action: 

To help ensure that the military departments provide Congress with 
reasonable assurances that any future conversions would not increase 
cost or decrease access to care or quality of care, we recommend that 
the Secretary of Defense direct the Under Secretary of Defense for 
Personnel and Readiness, in coordination with the Under Secretary of 
Defense, Comptroller, the Director, Program Analysis and Evaluation, 
the Assistant Secretary of Defense for Health Affairs, and the Service 
Secretaries, to develop operating guidance for the military departments 
to use when justifying future conversions of military medical and 
dental positions to civilian positions. This guidance should stipulate 
requirements to: 

* use a consistent full cost methodology for comparing the cost of 
military and civilian personnel as we had recommended in our May 2006 
report and: 

* provide documentation to support assertions about the potential effects 
of planned conversions on medical readiness, cost, quality of care, 
access to care, and recruitment and retention of military medical and 
dental personnel. 

Agency Comments and Our Evaluation: 

DOD provided written comments on a draft of this report and generally 
concurred with our recommendations. 

In commenting on our draft, DOD supported our recommendation to develop 
operating guidance that stipulates requirements to use a consistent 
full-cost methodology and to provide documentation to support 
assertions regarding the potential effects of planned conversions. DOD 
noted, however, that using a full-cost methodology to account for the 
cost of military personnel may have the consequence of making 
conversions even more compelling, because the cost of military manpower 
would be even more expensive as compared with civilian manpower. We 
recognize that using a full-cost methodology will increase the cost of 
military manpower used in the conversion decision-making process; 
however, the same full cost principles would also apply to determining 
the associated cost of civilian manpower. As a result, we continue to 
believe it is important that the military departments provide Congress 
with the most accurate comparative costs for converting military health 
care positions to civilian positions. In addition, DOD noted that the 
USD (C) and the Director, PA&E, along with USD (P&R) and ASD (HA) have 
responsibility to develop the tools and guidance necessary for 
determining the costs of military, civilian, and contract personnel and 
should be included as responsible parties in our recommendation. We 
concur that it would be appropriate to include USD (C) and the 
Director, PA&E as responsible parties and we have revised our 
recommendation accordingly. In fact, our report discusses the critical 
role that the full-cost methodology being developed by PA&E will play 
in any future medical conversions. In addition, prior GAO work has 
identified the need for consistent cost information across the military 
departments and recognized recent guidance issued by USD (C) regarding 
comparable cost estimates to support military to civilian conversions. 
Considering the many organizations within DOD that play key roles in 
military to civilian conversions, we believe that consistent leadership 
from the USD, P&R level is essential to the success of any future 
conversion efforts. 

Finally, while DOD agreed that the military departments should provide 
the rationale for their conclusions and assertions as appropriate, it 
noted that there are many factors that affect quality, access to, and 
cost of health care, which are unrelated to military-to-civilian 
conversions and in many cases it is impossible to isolate the impact of 
conversions. It further noted that the Department routinely rotates 
military medical and dental personnel at military treatment facilities 
(MTFs) to other assignments within DOD and replaces civilian personnel 
who retire or separate without adverse consequences to health care 
delivery. As a result, the department stated that it is not 
unreasonable for the Military Departments to presume that quality and 
access to care will not be adversely impacted by the conversion of 
military medical and dental personnel--so long as civilian replacements 
are fully qualified, the rate of conversion is in keeping with the 
military rotation rate, the fill rate of vacated positions is fairly 
consistent with the routine fill rates at the MTFs, and requirements 
for skill levels are not changed at the time of the conversions. We 
noted throughout our report that the military departments identified 
the difficulties they encountered in attempting to isolate the impact 
of conversions. However, the certifications provided by the military 
departments did not provide documentation or information to support 
assumptions--such as fill rates for vacated positions were fairly 
consistent with routine fill rates. Consequently, we continue to 
believe that the military departments should provide both the rationale 
for their conclusions and information and documentation to support the 
assumptions on which their conclusions are based. 

DOD's comments are reprinted in enclosure V. DOD also provided 
technical comments, which we have incorporated in the final report 
where appropriate. 

We are sending copies of this report to interested congressional 
committees, the Secretary of Defense, and the Secretaries of the Army, 
Air Force, and Navy. We will also make copies available to others upon 
request. In addition, this report will be available at no charge on 
GAO's Web site at [hyperlink, http://www.gao.gov]. 

If you have any questions about this report or need additional 
information, please contact me at (202) 512-3604 or [email protected]. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. Key contributors 
to this report are listed in enclosure VI. 

Signed by: 

Brenda S. Farrell: 
Director: 
Defense Capabilities and Management: 

List of Committees: 

The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate: 

The Honorable Ike Skelton:
Chairman:
The Honorable Duncan Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives: 

The Honorable Daniel K. Inouye:
Chairman:
The Honorable Ted Stevens:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate: 

The Honorable John P. Murtha:
Chairman:
The Honorable C. W. Bill Young:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives: 

[End of section] 

Enclosure I: 

The John Warner National Defense Authorization Act for Fiscal Year 2007 
required the military departments to certify and report on planned 
conversions of military medical and dental positions to civilian 
medical and dental positions. The act required a written report with 
detailed requirements and included several special requirements for the 
fiscal year 2007 certifications, which are contained in the following 
excerpts from the act. 

Public Law 109-364 Section 742: 

(a) Prohibition On Conversions.- 

(1) Submission of Certification.--The Secretary of a military 
department may not convert any military medical or dental position to a 
civilian medical or dental position in a fiscal year until the 
Secretary submits to the congressional defense committees with respect 
to that fiscal year a certification that the conversions within that 
department will not increase cost or decrease quality of care or access 
to care. 

(2) Report on Certification.--Each certification under paragraph (1) 
shall include a written report setting forth the following: 

(A) The methodology used by the Secretary in making the determinations 
necessary for the certification. 

(B) The number of military medical or dental positions, by grade or 
band and specialty, planned for conversion to civilian medical or 
dental positions. 

(C) The results of a market survey in each affected area of the 
availability of civilian medical and dental care providers in such area 
in order to determine whether the civilian medical and dental care 
providers available in such area are adequate to fill the civilian 
positions created by the conversion of military medical and dental 
positions to civilian positions in such area. 

(D) An analysis, by affected area, showing the extent to which access 
to health care and cost of health care will be affected in both the 
direct care and purchased care systems, including an assessment of the 
effect of any increased shifts in patient load from the direct care to 
the purchased care system, or any delays in receipt of care in either 
the direct or purchased care system because of the planned conversions. 

(E) The extent to which military medical and dental positions planned 
for conversion to civilian medical or dental positions will affect 
recruiting and retention of uniformed medical and dental personnel. 

(F) A comparison of the full costs for the military medical and dental 
positions planned for conversion with the estimated full costs for 
civilian medical and dental positions, including expenses such as 
recruiting, salary, benefits, training, and any other costs the 
Department identifies. 

(G) An assessment showing that the military medical or dental positions 
planned for conversion are in excess of the military medical and dental 
positions needed to meet medical and dental readiness requirements of 
the uniformed services, as determined jointly by all the uniformed 
services. 

(H) An identification of each medical and dental position scheduled to 
be converted to a civilian position in the subsequent fiscal year, 
including the location of each position scheduled for conversion, and 
whether or not civilian personnel are available in the location for 
filling a converted military medical or dental position. 

(3) Submission Deadline.--A certification and report with respect to 
any fiscal year after fiscal year 2007 shall be submitted at the same 
time the budget of the President for such fiscal year is submitted to 
Congress pursuant to section 1105(a) of title 31, United States Code. 

(b) Requirement For Comptroller General Review.--Not later than 120 
days after the submission of the budget of the President for a fiscal 
year, the Comptroller General shall submit to the congressional defense 
committees a report on any certifications and reports submitted with 
respect to that fiscal year under subsection (a). 

(c) Requirement To Resubmit Certification And Report Required By Public 
Law 109-163.--The Secretary of each military department shall resubmit 
the certification and report required by section 744(a) of the National 
Defense Authorization Act for Fiscal Year 2006 (Public Law 109-163; 119 
Stat. 3360; 10 U.S.C. 129c note.) Such resubmissions shall address in 
their entirety the elements required by section 744(a)(2) of such Act. 

(d) Special Requirements For Fiscal Year 2007 Certification.-- 

(1) List of 2007 Planned Conversions. - The report required by 
paragraph (2) of subsection (a) with respect to fiscal year 2007 shall 
contain, in addition to the elements required by that paragraph, a list 
of each military medical or dental position scheduled to be converted 
to a civilian medical or dental position in fiscal year 2007. 

(2) Resubmission Required First. - The certification and report 
required by subsection (a) with respect to fiscal year 2007 may not be 
submitted prior to the resubmission required by subsection (c). 

(3) Prohibition on Conversions During Fiscal Year 2007. - No 
conversions of a military medical or dental position may occur during 
fiscal year 2007 prior to both the resubmission required by subsection 
(c) and the submission of the certification and report required by 
subsection (a). 

[End of enclosure] 

Enclosure II: 

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

Briefing to Congressional Committees: 

Observations: NDAA Requirements: 

Prohibition on conversions: 

* The secretary of a military department may not convert any military 
medical or dental positions to civilian positions until its secretary 
submits certification to the congressional defense committees that 
conversions will not increase cost or decrease quality of care or 
access to care. 

Written report required for certifications must include: 

* methodology used; 

* number of positions, by grade or band and specialty, planned for 
conversion; 

* results of market surveys determining that there are adequate 
civilian providers available in each affected area; 

* extent to which access to care and cost of care will be affected; 

* effects of planned conversions on recruiting and retention of 
uniformed personnel; 

* comparison of full costs for military medical and dental positions 
planned for conversion with estimated full costs for civilian positions 
including expenses such as recruiting, salary benefits, training, and 
any other identified costs; 

* assessment showing that military medical and dental positions planned 
for conversion are in excess of the military positions needed to meet 
medical and dental readiness requirements; and; 

* identification of each medical and dental position scheduled to be 
converted to a civilian position in the subsequent fiscal year, 
including location, estimated cost of conversion, and availability of 
civilian personnel to fill the position. 

Deadline: 

* The secretaries of the military departments must submit their 
certifications and reports to Congress with respect to any fiscal year 
after fiscal year 2007 at the same time as the Presidentï¿½s Budget for 
the fiscal year. 

Additional requirements: 

* Secretaries are required to resubmit certifications and reports for 
FY 2006 conversions. 

* Special requirements for FY 2007 certifications: 

- the required report must list each military medical and dental 
position scheduled for conversion in FY 2007; 

- certification for FY 2006 must be resubmitted before submitting 
certification for FY 2007, and; 

- no conversions may occur during FY 2007 until FY 2006 certification 
and report is resubmitted and report for FY 2007 is submitted. 

Observations: Prior GAO Report: 

GAOï¿½s May 2006 report [Footnote 21]: 

* Examined, among other things, the military departmentsï¿½ completed and 
planned conversions and the potential effects of conversions on the 
Defense Health Program. 

* Found that departments do not expect conversions to have any affect 
on medical readiness, quality of care, recruitment and retention of 
military personnel, or access to care. However, it is unknown whether 
conversions will increase or decrease costs to the Department of 
Defense (DOD). 

* Recommended that the secretaries of the military departments be 
directed to (1) coordinate their certifications with the Office of the 
Director, Program Analysis and Evaluation (PA&E), in order to consider 
full costs for military personnel and full costs for civilian or 
contract personnel, and(2) address in certifications the extent to 
which total projected costs for hiring civilian or contract personnel 
include both the actual cost of completed hires and anticipated costs 
of future hires. 

* As shown later in this briefing, the military departments have 
implemented, to some extent, certain aspects of these recommendations. 

Observations: Key Questions: 

To address the mandate for GAO to review any certifications and reports 
submitted by the military departments, we reviewed the extent to which 
the military departments addressed the certification and reporting 
requirements of Public Law 109-364 ï¿½ 742 pertaining to conversions of 
military medical and dental positions. 

In addition, we reviewed the extent to which the military departments: 
* had documentation to support their assessments of the potential 
effects of conversions on medical readiness, cost, quality of care, 
access to care, and recruitment and retention of military medical and 
dental personnel, and; 

* converted or planned to convert military medical and dental positions 
to civilian positions. 

Observations: Scope and Methodology: 

To address our objectives, we interviewed officials and obtained 
pertinent documents, reports, and information related to the military 
medical to civilian conversion programs from: 

* the offices of the Surgeons General for the Army, Navy, and Air 
Force; 

* the Office of the Under Secretary of Defense for Personnel and 
Readiness; 

* the Director for PA&E and; 

* the TRICARE Management Activity within the Office of the Assistant 
Secretary of Defense for Health Affairs. 

Specifically, to determine the extent to which the military 
departments: 

* had addressed the certification and reporting requirements, we 
obtained and reviewed each of the military departmentsï¿½ certification 
letters and reports submitted to Congress; 

* had documentation to support their assessments of the potential 
effects of planned conversions, we reviewed documentation supporting 
the military departmentsï¿½ assessments of the potential effects of 
conversions on medical readiness, cost, quality of care, access to 
care, and recruitment and retention of military medical and dental 
positions, and; 

* have developed and implemented plans to convert military medical 
positions, we obtained documents and interviewed officials from the 
offices of the Surgeons General for the Army, the Navy, and the Air 
Force concerning their departmentsï¿½ actual conversions between fiscal 
years 2005 and 2007, planned conversions for fiscal years2008 and 2009, 
and the current status of efforts to hire civilian employees to fill 
converted positions. 

Observations: Reporting Requirements: 

Although each of the military departments submitted certification 
packages to Congress that addressed or partially addressed the 
requirements of the law, none of the certifications addressed all of 
the requirements. 

For example, in the reports submitted with the certifications: 

* each of the military departments identified the methodology used to 
reach certification decisions; 

* each of the military departments reported that positions planned for 
conversion were in excess of positions needed to meet military 
readiness requirements; and; 

* the Navy included a full cost comparison that addressed specific 
factors identified by the statute. 

However, we noted the following: 

* None of the departments included an analysis of the impact of 
conversions on cost of care within both the direct care system and the 
purchased care system. 

* The Army and the Air Force did not include a complete, full-cost 
comparison for all of their planned conversions. Instead, they relied 
on composite military rates, which do not include all of the cost 
factors identified by the statute, such as training and recruiting. 
However, the Air Force used a cost methodology that included training 
costs for a portion of its FY2008 conversions. 

Observations: Supporting Documentation: 

While the military departmentsï¿½ certification packages identified or 
provided support for some of their assessments of the potential effects 
of conversions, none of the departments provided us with analyses or 
additional documentation to support all of their assessments. 

Specifically, each of the military departments: 

* stated that medical readiness was based on DODï¿½s most recent Medical 
Readiness Review (MRR) and Army, Navy, and Air Force officials told us 
that their planned conversions are in excess of those required for the 
readiness mission. (We have not reviewed the assumptions and data used 
in conducting the MRR), and; 

* provided support that demonstrated how its cost comparison was 
performed. 

On the other hand, all of the departments stated the following: 

* Access to care would not be adversely affected by conversions. 

- The Navy provided slides from a Navy study of access to care 
statistics, which showed that although access to care has decreased 
slightly, it continues to be within TRICARE standards. 

- Army and Air Force assessments were based on the assumption that 
converted positions would be filled by qualified civilians. 

* Quality of care would not be negatively affected: 

- Assessments were based on the assumption that civilian hires would 
have the same qualifications, credentials, and licenses as the military 
personnel being replaced. 

- No analysis of quality of care performance measures was provided to 
support this assessment. 

Conversions were not expected to negatively affect recruitment or 
retention of military personnel, but the departments provided no 
supporting data. 

Officials from each of the departments stated that the impact of 
conversions on access to care, quality of care, and recruitment/ 
retention of military personnel would be difficult to isolate and 
document because many factors, such as deployment, temporary duty 
travel, and illness of health care providers, affect these metrics. 

Observations: Conversion Plans: 

In FY 2005 through 2007, the Army, Navy, and Air Force have converted a 
total of 5,305 military positions to civilian positions and some 
progress has been made in hiring the civilian replacements. Another 
4,426 conversions are planned in FY 2008 and 2009. 

Table 1: Number of Military Medical and Dental Positions Converted or 
Planned for Conversion to Civilian Positions, Fiscal Years 2005-2009: 

Military Department: Air Force; 
Actual conversions[A], FY 2005: 0; 
Actual conversions[A], FY 2006: 403; 
Actual conversions[A], FY 2007: 813; 
Planned conversions[B], FY 2008: 954; 
Planned conversions[B], FY 2009: 422; 
All conversions, FY 2005-2009, Total: 2,592; 
All conversions, FY 2005-2009, Percent: 27. 

Military Department: Army; 
Actual conversions[A], FY 2005: 0; 
Actual conversions[A], FY 2006: 977; 
Actual conversions[A], FY 2007: 436; 
Planned conversions[B], FY 2008: 438; 
Planned conversions[B], FY 2009: 554; 
All conversions, FY 2005-2009: 2,405; 
All conversions, FY 2005-2009: 25. 

Military Department: Navy; 
Actual conversions[A], FY 2005: 1,772; 
Actual conversions[A], FY 2006: 215; 
Actual conversions[A], FY 2007: 689; 
Planned conversions[B], FY 2008: 1,036; 
Planned conversions[B], FY 2009: 1,022; 
All conversions, FY 2005-2009: 4,734; 
All conversions, FY 2005-2009: 49. 

Military Department: Total; 
Actual conversions[A], FY 2005: 1,772; 
Actual conversions[A], FY 2006: 1,595; 
Actual conversions[A], FY 2007: 1,938; 
Planned conversions[B], FY 2008: 2,428; 
Planned conversions[B], FY 2009: 1,998; 
All conversions, FY 2005-2009: 9,731; 
All conversions, FY 2005-2009: 100. 

Military Department: Percent of total conversions; 
Actual conversions[A], FY 2005: 18; 
Actual conversions[A], FY 2006: 16; 
Actual conversions[A], FY 2007: 20; 
Planned conversions[B], FY 2008: 25; 
Planned conversions[B], FY 2009: 21. 

Source: GAO analysis of Air Force, Army, and Navy data. 

[A] Actual conversions represent those military medical and dental 
positions that have been programmed for conversion by the respective 
departments' medical command. 

[B] For fiscal year 2008, the Army certified 438 medical and dental 
positions within the Defense Health Program for conversion. The Army is 
converting an additional 300 positions within the Defense Health 
Program that are administrative and were not included in the 
certification. 

[End of table] 

Table 2: Number of Military Medical and Dental Conversions, Planned 
Hires, and Positions Filled, Fiscal Years 2005-2007: 

Military departments: Air Force, FY 2005: 
Actual conversions: 0; 
Planned hires[A]: 0; 
Positions filled[B]: 0; 
Percentage of positions filled: 0. 

Military departments: Air Force, FY 2006: 
Actual conversions: 403; 
Planned hires[A]: 403; 
Positions filled[B]: 299; 
Percentage of positions filled: 74. 

Military departments: Air Force, FY 2007: 
Actual conversions: 813; 
Planned hires[A]: 813; 
Positions filled[B]: 483; 
Percentage of positions filled: 59. 

Military departments: Air Force, Total; 
Actual conversions: 1,216; 
Planned hires[A]: 1,216; 
Positions filled[B]: 782; 
Percentage of positions filled: 64. 

Military departments: Army, FY 2005; 
Actual conversions: 0; 
Planned hires[A]: 0; 
Positions filled[B]: 0; 
Percentage of positions filled: 0. 

Military departments: Army, FY 2006; 
Actual conversions: 977; 
Planned hires[A]: 977; 
Positions filled[B]: 716; 
Percentage of positions filled: 73. 

Military departments: Army, FY 2007; 
Actual conversions: 436; 
Planned hires[A]: 436; 
Positions filled[B]: 370; 
Percentage of positions filled: 85. 

Military departments: Army, Total; 
Actual conversions: 1,413; 
Planned hires[A]: 1,413; 
Positions filled[B]: 1,086; 
Percentage of positions filled: 77. 

Military departments: Navy, FY 2005; 
Actual conversions: 1,772; 
Planned hires[A]: 1,323; 
Positions filled[B]: 1,260; 
Percentage of positions filled: 94. 

Military departments: Navy, FY 2006; 
Actual conversions: 215; 
Planned hires[A]: 128; 
Positions filled[B]: 102; 
Percentage of positions filled: 80. 

Military departments: Navy, FY 2007; 
Actual conversions: 689; 
Planned hires[A]: 625; 
Positions filled[B]: 58; 
Percentage of positions filled: 9. 

Military departments: Navy, Total; 
Actual conversions: 2,676; 
Planned hires[A]: 2,076; 
Positions filled[B]: 1,420; 
Percentage of positions filled: 68. 

Military departments: DOD Total; 
Actual conversions: [Empty]; 
Planned hires[A]: 4,705; 
Positions filled[B]: 3,288; 
Percentage of positions filled: 70. 

Source: GAO analysis of Air Force, Army, and Navy data. 

[A] Planned hires represent the number of positions that the Army, 
Navy, and Air Force certified in a given fiscal year except for the 
Navyï¿½s FY 2005 and FY 2006 planned hires which are lower than the 
certified conversion due to an efficiency review that indicated the 
Navy did not need to hire a civilian for each of the converted 
positions. 

[B] Positions filled represents the most recent information provided by 
the services. 

[End of table] 

Observations: Conclusions: 

* While the military departments are well under way in converting 
approximately 10,000 military health care positions to civilian 
positions and have generally addressed the reporting requirements of 
the law, additional information could be helpful to Congress in making 
decisions on current and future military to civilian conversions within 
the medical community. 

* Clear guidance articulating the need to use a full cost methodology, 
as we previously recommended, when comparing the cost of military and 
civilian health care positions, could assist the military departments 
in demonstrating the cost effectiveness of military to civilian 
conversions. 

* Such guidance could include requirements pertaining to the 
documentation and retention of information related to the departmentsï¿½ 
assessments of the potential effects of conversions on cost of care, 
access to care, quality of care, and recruitment and retention of 
military personnel. 

* Including such guidance could provide Congress with reports that 
would give them greater assurance that conversions will not increase 
costs or decrease access to care or quality of care. 

Observations: Recommendations: 

To help ensure that the future certifications submitted by the military 
departments provide Congress with reasonable assurances that any future 
conversions would not increase costs or decrease access to care or 
quality of cost, we recommend that the Secretary of Defense direct the 
Under Secretary of Defense for Personnel and Readiness, in coordination 
with the Under Secretary of Defense, Comptroller, the Director, Program 
Analysis and Evaluation, the Assistant Secretary of Defense for Health 
Affairs, and the service secretaries, to develop operating guidance for 
the military departments to use when preparing any future 
certifications for planned conversion of military medical and dental 
positions to civilian positions. This guidance should stipulate 
requirements to: 

* use a full cost methodology for comparing the cost of military and 
civilian personnel as we had recommended in our May 2006 report and; 

* provide documentation to support assertions on the potential effects 
of planned conversions on medical readiness, cost, quality of care, 
access to care, and recruitment and retention of military medical and 
dental personnel. 

[End of enclosure] 

Enclosure III: Scope and Methodology: 

To address our objectives, we obtained and reviewed pertinent 
documents, reports, and information related to the military medical to 
civilian conversion programs from each of the military departments. We 
also interviewed cognizant officials from the offices of the Surgeons 
General for the Army, Navy, and Air Force; the Office of the Secretary 
of Defense for Personnel and Readiness; Director of Program Analysis 
and Evaluation; and the TRICARE Management Activity within the Office 
of the Assistant Secretary of Defense for Health Affairs on their 
military medical to civilian conversion programs. 

To determine the extent to which the military departments addressed the 
certification and reporting requirements of the John Warner National 
Defense Authorization Act for Fiscal Year 2007, we obtained and 
reviewed each of the military departmentsï¿½ certification letters and 
supporting reports. We also identified the certification and reporting 
requirements of the 2007 National Defense Authorization Act. We 
analyzed each of the military departmentsï¿½ certification letters and 
supporting reports to determine whether they addressed the 
certification and reporting requirements of the 2007 National Defense 
Authorization Act. We also interviewed officials from each of the 
military departments to discuss their certification letters and 
supporting reports. 

To determine the extent to which the military departments had 
documentation to support their assessments of the potential effects of 
planned conversions, we requested from each of the military departments 
the documentation they used to support their assessments of the 
potential effects of conversions on medical readiness, cost, quality of 
care, access to care, and recruitment and retention of military medical 
and dental personnel. We reviewed supporting documentation from each of 
the military departments to identify analyses or additional data they 
had used to make their assessments. We also interviewed officials from 
each of the military departments to discuss the assumptions they used 
in making their assessments. 

To determine the extent to which the military departments have 
developed and implemented plans to convert military medical positions, 
we obtained data from the offices of the Surgeons General for the Army, 
Navy, and Air Force on their actual conversions for fiscal years 2005 
through 2007, their planned conversions for fiscal years 2008 and 2009, 
and the current status of their efforts to hire civilian employees to 
fill converted positions. We reviewed the data to identify, by military 
department, the number of actual conversions during fiscal years 2005 
through 2007, the number of planned conversions for fiscal years 2008 
and 2009, and the number of civilian employees hired to fill converted 
positions. We also interviewed officials from the offices of the 
Surgeons General for the Army, Navy, and Air Force concerning their 
departmentsï¿½ plans to convert military medical positions and the 
current status of their efforts to hire civilian employees to fill 
converted positions. Based on our review of the data and interviews 
with cognizant military officials about the data, we determined the 
data used in this report to be sufficiently reliable for our purposes. 

We conducted this performance audit from August 2007 to February 2008 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of enclosure] 

Military Health Care Positions Converted to Civilian Positions by Type 
of Position and Grade, Fiscal Years 2005-2007: 

As shown in tables 3 and 4, the military departments have converted and 
plan to convert a relatively low number of officer positions. For 
example, during fiscal years 2005 to 2007, conversions included only 
1,099 officer positions in the total of 5,351[Footnote 22] positions 
converted from military to civilian. Included within these officer 
positions were 152 physician and 11 psychologist positions. Similarly, 
during fiscal years 2008 and 2009, planned conversions include only 684 
officer positions in the total of 4,417[Footnote 23] positions planned 
for conversion. Included within these officer positions were 86 
physician and 12 psychologist positions. 

Table 3: Military Health Care Positions Converted to Civilian Positions 
by Type of Position and Grade, Fiscal Years 2005-2007: 

Type of position/grade: Officers, Physicians; 
Air Force: 0; 
Army: 0; 
Navy: 152; 
Total: 152; 
Percent: 2.8. 

Type of position/grade: Officers, Physician assistant; 
Air Force: 3; 
Army: 0; 
Navy: 39; 
Total: 42; 
Percent: 1.0. 

Type of position/grade: Officers, Nurse; 
Air Force: 177; 
Army: 70; 
Navy: 97; 
Total: 344; 
Percent: 6.4. 

Type of position/grade: Officers, Dentist; 
Air Force: 0; 
Army: 32; 
Navy: 176; 
Total: 208; 
Percent: 3.9. 

Type of position/grade: Officers, Pharmacists; 
Air Force: 6; 
Army: 13; 
Navy: 29; 
Total: 48; 
Percent: 0.9. 

Type of position/grade: Officers, Optometrists; 
Air Force: 5; 
Army: 10; 
Navy: 3; 
Total: 18; 
Percent: 0.3. 

Type of position/grade: Officers, Psychologists; 
Air Force: 2; 
Army: 8; 
Navy: 1; 
Total: 11; 
Percent: 0.2. 

Type of position/grade: Officers, Social workers; 
Air Force: 11; 
Army: 6; 
Navy: 0; 
Total: 17; 
Percent: 0.3. 

Type of position/grade: Officers, Other medical positions[A]; 
Air Force: 24; 
Army: 22; 
Navy: 91; 
Total: 137; 
Percent: 2.6. 

Type of position/grade: Officers, Other DHP positions[B]; 
Air Force: 15; 
Army: 40; 
Navy: 67; 
Total: 122; 
Percent: 2.3. 

Type of position/grade: Total Officers; 
Air Force: 243; 
Army: 201; 
Navy: 655; 
Total: 1,099; 
Percent: 20.5. 

Type of position/grade: Total Enlisted[C]; 
Air Force: 967; 
Army: 1,264; 
Navy: 2,021; 
Total: 4,252; 
Percent: 79.5. 

Type of position/grade: Total; 
Air Force: 1,210; 
Army: 1,465; 
Navy: 2,676; 
Total: 5,351; 
Percent: 100. 

Source: GAO analysis of Air Force, Army, and Navy data. 

[A] Other military medical positions include dieticians, physical 
therapists, biomedical scientists, biomedical lab officers, 
occupational therapists, industrial hygiene officers, environmental 
health officers, medical technicians, radiation specialists, medical 
department staff, interns, oral diagnosis staff, physiologists, 
emergency medical specialists, audiologists, and microbiologists. 

[B] Other Defense Health Program (DHP) military positions include 
administrative and engineering positions. 

[C] Enlisted positions include corpsmen, medics, aerospace, medical 
services, dental assistants and technicians, other medical positions, 
and other DHP positions. 

[End of table] 

Table 4: Military Health Care Positions Planned for Conversion to 
Civilian Positions by Type of Position and Grade, Fiscal Years 2008-
2009: 

Type of position/grade: Officers, Physicians; 
Air Force: 40; 
Army: 0; 
Navy: 46; 
Total: 86; 
Percent: 1.9. 

Type of position/grade: Officers, Physician assistant; 
Air Force: 10; 
Army: 0; 
Navy: 17; 
Total: 27; 
Percent: 0.6. 

Type of position/grade: Officers, Nurse; 
Air Force: 150; 
Army: 15; 
Navy: 60; 
Total: 225; 
Percent: 5.1. 

Type of position/grade: Officers, Dentist; 
Air Force: 5; 
Army: 0; 
Navy: 80; 
Total: 85; 
Percent: 1.9. 

Type of position/grade: Officers, Pharmacists; 
Air Force: 2; 
Army: 1; 
Navy: 5; 
Total: 8; 
Percent: 0.2. 

Type of position/grade: Officers, Optometrists; 
Air Force: 5; 
Army: 6; 
Navy: 4; 
Total: 15; 
Percent: 0.3. 

Type of position/grade: Officers, Psychologists; 
Air Force: 4; 
Army: 0; 
Navy: 8; 
Total: 12; 
Percent: 0.3. 

Type of position/grade: Officers, Social workers; 
Air Force: 15; 
Army: 2; 
Navy: 1; 
Total: 18; 
Percent: 0.4. 

Type of position/grade: Officers, Other medical positions[A]; 
Air Force: 27; 
Army: 9; 
Navy: 55; 
Total: 91; 
Percent: 2.1. 

Type of position/grade: Officers, Other DHP positions[B]; 
Air Force: 31; 
Army: 23; 
Navy: 63; 
Total: 117; 
Percent: 2.6. 

Type of position/grade: Total Officers; 
Air Force: 289; 
Army: 56; 
Navy: 339; 
Total: 684; 
Percent: 15.5. 

Type of position/grade: Total Enlisted[C]; 
Air Force: 1,087; 
Army: 927; 
Navy: 1,719; 
Total: 3,733; 
Percent: 84.5. 

Type of position/grade: Total; 
Air Force: 1,376; 
Army: 983; 
Navy: 2,058; 
Total: 4,417; 
Percent: 100. 

Source: GAO analysis of Air Force, Army, and Navy data. 

[A] Other military medical positions include dieticians, physical 
therapists, biomedical scientists, biomedical lab officers, 
occupational therapists, industrial hygiene officers, environmental 
health officers, medical technicians, radiation specialists, medical 
department staff, interns, oral diagnosis staff, physiologists, 
emergency medical specialists, audiologists, and microbiologists. 

[B] Other Defense Health Program (DHP) military positions include 
administrative and engineering positions. 

[C] Enlisted positions include corpsmen, medics, aerospace, medical 
services, dental assistants and technicians, other medical positions, 
and other DHP positions. 

[End of table] 

[End of enclosure] 

Enclosure V: 

The Assistant Secretary Of Defense: 
Health Affairs: 
1200 Defense Pentagon: 
Washington, DC 20301-1200: 

January 29, 2008: 

Ms. Brenda S. Farrell: 
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Farrell: 

This is the Department of Defense (DoD) response to the Government 
Accountability Office (GAO) draft report, GAO-08-370R, 'Military 
Personnel: Guidance Needed for Any Future Conversions of Military 
Medical Positions to Civilian Positions,' dated January 7, 2008 (GAO 
Code 351087). 

Thank you for the opportunity to review and comment on the draft 
report. Overall, I concur with draft report's findings and conclusions. 

The ability to convert military positions to civilian/contractor 
positions is an important tool that enables the Department to achieve 
the right balance of military, civilian, and contractor personnel. We 
have worked hard with the Service Secretaries, the Service Surgeons 
General and their respective staffs to identify, select, and execute 
viable conversions that will ultimately benefit the Department and, 
most importantly, the beneficiary. Overall, I believe we have been 
successful in this endeavor. 

I support the GAO's recommendation that a consistent full-cost 
methodology for comparing the cost of military and civilian personnel 
be utilized, and for requiring documentation to support assertions 
regarding the potential effects of planned conversions on medical 
readiness, cost, quality of care, access to care, and recruitment and 
retention of military medical and dental personnel. However, there are 
some inaccuracies in the GAO report that are addressed in both our 
comments to the recommendation and in our technical comments. 

My points of contact on this audit are Mr. Jon Rychalski (Functional) 
at (703) 681-4693, and Mr. Gunther Zimmerman (Audit Liaison) at (703) 
681-4360. 

Sincerely, 

Signed by: 

S. Ward Casscells, MD: 

Enclosures: As stated: 

Government Accountability Office (GAO) Draft Report Dated January 7, 
2008: 
GAO-08-370R (GAO CODE 351087): 

"Military Personnel: Guidance Needed For Any Future Conversions Of 
Military Medical Positions To Civilian Positions" 

Department Of Defense Comments To The Recommendation: 

Recommendation: To help ensure that the Military Departments provide 
Congress with reasonable assurances that any future conversions would 
not increase costs or decrease access to care and quality of care, we 
recommend that the Secretary of Defense direct the Under Secretary of 
Defense (Personnel and Readiness) (USD (P&R)), in coordination with the 
Assistant Secretary of Defense (Health Affairs) (ASD (HA)), and Service 
Secretaries, to develop operating guidance for the Military Departments 
to use when justify future conversions of military medical and dental 
positions to civilian positions. This guidance should stipulate 
requirements to: 

1. Utilize a consistent full-cost methodology for comparing the cost of 
military and civilian personnel, as we had recommended in our May 2006 
report; and; 

2. Provide documentation to support assertions regarding the potential 
effects of planned conversions on medical readiness, cost, quality of 
care, access to care, and recruitment and retention of military medical 
and dental personnel. 

Response: 

1. We support a standard methodology for comparing the full costs of 
military and civilian personnel. It is important to note, however, that 
using the full cost of military personnel may have the consequence of 
making military medical conversions more compelling because the cost of 
military manpower would be even more expensive as compared to 
civilians. In most certifications to date, a composite rate (not full 
cost) was generally used which resulted in an extremely conservative 
outcome. Full-costing will likely drive a business case to pursue more 
conversions. Additionally, the Government Accountability Office (GAO) 
has erred in assigning this responsibility exclusively to USD (P&R) and 
ASD (HA). USD (P&R)'s directive on manpower management implements 10 
United States Code (U.S.C.) ï¿½129a by requiring Department of Defense 
(DoD) Components to "use the least costly form of personnel (military, 
civilian and contractor) consistent with military requirements and 
other needs of the Department." USD (P&R) also issues instructions for 
determining the appropriate workforce mix. However, the Under Secretary 
of Defense (Comptroller) (USD (C)), and the Director, Program Analysis 
and Evaluation (PA&E), are responsible for developing the tools and 
guidance necessary for determining the costs of military, civilian, and 
contractor personnel. For this reason, the GAO should include USD (C) 
and PA&E as responsible parties in completing Recommendation 1. Until 
this is completed, USD (C) composite rates are being used, in 
conjunction with guidance from PA&E on additional cost factors, to 
fully account for costs of Government personnel. 

2. We agree that the Military Departments should provide rationale for 
their conclusions, as appropriate. However, it's important to recognize 
that there are many variables affecting quality, access, and cost of 
health care that are unrelated to military-to-civilian conversions. In 
many cases it's impossible to isolate the impact that conversions have 
from the impact that these other factors have on health care. Decisions 
concerning the effects of military medical conversions will always 
entail a degree of judgment on the part of the health care community 
and must be made in consideration of the Department's overall approach 
to managing its workforce. For example, the Department routinely 
rotates military medical and dental personnel at military treatment 
facilities (MTFs) to other assignments within the Department and 
replaces civilian personnel who retire or separate. This is all managed 
without adverse consequences to health care delivery. As a result, it 
is not unreasonable for the Military Departments to presume that 
quality and access to care will not be adversely impacted by the 
conversion of military medical and dental personnel, so long as 
civilian replacements are fully qualified, the rate of conversion is in 
keeping with the military rotation rate, the fill rate of vacated 
positions is fairly consistent with the routine fill rates at the MTFs, 
and requirements for skill levels are not changed at the time of the 
conversions. 

[End of enclosure] 

Enclosure VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Brenda S. Farrell, (202) 512-3604 or [email protected]. 

Acknowledgments: 

In addition to the individual named above, Marion Gatling, Assistant 
Director; John R. Beauchamp; Nicole Harms; Maggie G. Holihan; Joanne 
Landesman; Susan J. Mason; Clara C. Mejstrik; Terry L. Richardson; 
Joseph A. Rutecki; and John C. Wren made key contributions to this 
report. 

[End of enclosure] 

Footnotes: 

[1] For the purposes of this report, military health care positions 
include medical, dental, and other personnel associated with the 
delivery of health care in the Defense Health Program. 

[2] Hereafter, we will refer to federal civilian or contract positions 
as "civilian positions." 

[3] DOD Directive 1100.4, Guidance for Manpower Management (Feb. 12, 
2005). 

[4] Medical inflation refers to an increase in the cost of medical 
services such as prescription drugs, medical supplies, physician 
services, dental services, inpatient care, and outpatient care. TRICARE 
for Life is supplemental coverage for TRICARE beneficiaries, who are 
entitled to Medicare Part A and have Medicare Part B coverage, 
regardless of age. It serves as a secondary insurance policy to pay for 
medical costs not paid by the beneficiaries' Medicare coverage. 

[5] Pub. L. No. 109-163, ï¿½744 (2006). 

[6] GAO, Military Personnel, Military Departments Need to Ensure That 
Full Costs of Converting Military Health Care Positions Are Reported to 
Congress, GAO-06-642 (Washington, D.C.: May 1, 2006). 

[7] The military departments consist of the Army, the Navy, and the Air 
Force. The Navy is responsible for providing medical and dental support 
to the Marine Corps. 

[8] Pub. L. No. 109-364, ï¿½742 (2006). 

[9] The military departments' submissions for fiscal year 2008 also 
contained information related to planned conversions for fiscal year 
2009. 

[10] Toward the end of our review, the National Defense Authorization 
Act for Fiscal Year 2008 was passed. Public Law Number 110-181, ï¿½721 
(2008) prohibits all conversions of military medical positions to 
civilian positions beginning October 1, 2007, and extending until 
September 30, 2012. The Act also repeals the certification requirement 
set forth in section 742 of the John Warner National Defense 
Authorization Act for Fiscal Year 2007. 

[11] According to The John Warner National Defense Authorization Act 
for Fiscal Year 2007, full cost would include expenses for recruiting, 
salary, benefits, training, and any other costs the department 
identifies. 

[12] Specifically, the Navy applied a percentage factor recommended by 
OSD (PA&E) to approximate the full costs of military and civilian 
personnel. 

[13] The Air Force did use a more complete cost methodology for fiscal 
year 2008 conversions, which included training costs for a portion of 
its fiscal year 2008 conversions. In October 2007, Army officials 
stated that they had completed work on a full cost methodology for 
certifications prepared after fiscal year 2008. 

[14] Each of the military departments stated that medical readiness was 
based on DOD's most recent Medical Readiness Review (MRR) and that 
planned conversions are in excess of those positions required for the 
readiness mission. However, we have not reviewed the assumptions and 
data used in the conduct of the MRR. 

[15] In addition to credentialing and licensing, these performance 
measures would include how well the health care system performed with 
respect to measurable processes and outcomes of care for clinical 
performance measures and in response to surveys to measure how well the 
health care system is viewed by the beneficiaries, military leadership, 
and Congress. 

[16] See GAO, Standards for Internal Control in the Federal Government, 
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). 

[17] In our May 2006 report, we reported a total 5,507 conversions for 
fiscal year 2005 through 2007. The reduction in conversions resulted 
from a reevaluation of conversions while the departments were 
developing their certifications. For this report, there is a difference 
between the number of positions converted (5,305) and the detailed list 
of converted positions by type of position and grade (5,351)--a total 
of 46 positions. This resulted from changes in the number of positions 
certified for fiscal year 2006 by the Army and Air Force. At the time 
of recertification, a revised detailed list of converted positions was 
not provided to Congress. 

[18] For fiscal year 2008, the Army certified 438 medical and dental 
positions within the Defense Health Program for conversion. The Army is 
converting an additional 300 positions within the Defense Health 
Program that are administrative and were not included in the 
certification. In addition, there is a difference between the positions 
planned for conversion (4,426) and the detailed list of converted 
positions by type of position and grade (4,417)--a total of 9 
positions. This resulted because 9 positions were not included in the 
Army's detailed list of conversions for fiscal year 2009. 

[19] The National Defense Authorization Act for Fiscal Year 2008, Pub. 
L. No. 110-181, ï¿½721 (2008). 

[20] Section 721 of the Act also states that in the case of any 
military medical or dental position that is converted to a civilian 
medical or dental position during the period beginning on October 1, 
2004, ending on September 30, 2008, if the position is not filled by a 
civilian by September 30, 2008, the Secretary of the military 
department concerned shall restore the position to a military medical 
or dental position that can be filled only by a member of the Armed 
Forces who is a health professional. 

[21] GAO, Military Personnel, Military Departments Need to Ensure That 
Full Costs of Converting Military Health Care Positions Are Reported to 
Congress, GAO-06-642 (Washington, D.C.: May 1, 2006). 

[22] The number of converted positions for fiscal years 2005 through 
2007 included in this detailed analysis varies by 46 from the 
certified conversion numbers presented on page 7 and in table 1 on page 
28. The difference resulted because of changes in the actual number 
of certified conversions in fiscal year 2006 within the Army and Air 
Force. 

[23] The number Of positions planned for conversion in fiscal years 
2008 and 2009 varies slightly from the planned conversions presented 
on page 7 and in table 1 on page 28. This difference resulted because 
nine positions within the Army's planned conversions for fiscal 
year 2009 were not included in the detailed list of conversions by type 
of position and grade. 

[End of section] 

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