Military Downsizing: Balancing Accessions and Losses Is Key to Shaping
the Future Force (Chapter Report, 09/30/93, GAO/NSIAD-93-241).

Although the military services have significantly reduced accession
levels over those of previous years, they are also recruiting large
numbers of personnel to better ensure a balanced force across the
various pay grades and skill areas.  Congress has prescribed reduction
targets and provided other guidance to the Pentagon to facilitate
downsizing, minimize involuntary separations, and preserve a balanced
force.  This report examines the Defense Department's (DOD) adherence to
congressional guidance and authorization in military downsizing.  GAO
discusses (1) what progress DOD has made toward meeting reduction
targets, (2) how downsizing actions are affecting new recruiting or
accessions, (3) what range of voluntary and involuntary reduction
actions are being taken to meet downsizing objectives, (4) how
downsizing is being accomplished across various groupings of officer and
enlisted personnel by years of service and how this is affecting future
force profiles, and (5) what issues might be important to future
reduction decisions.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-93-241
     TITLE:  Military Downsizing: Balancing Accessions and Losses Is Key 
             to Shaping the Future Force
      DATE:  09/30/93
   SUBJECT:  Military downsizing
             Reductions in force
             Personnel management
             Enlisted personnel
             Defense capabilities
             Military discharges
             Military officers
             Employee incentives
             Military recruiting
             Employee retirement plans
IDENTIFIER:  DOD Bottom-Up Review
             DOD Special Separation Benefit
             DOD Voluntary Separation Incentive Program
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Force Requirements and
Personnel, Committee on Armed Services, U.S.  Senate

September 1993

MILITARY DOWNSIZING - BALANCING
ACCESSIONS AND LOSSES IS KEY TO
SHAPING THE FUTURE FORCE

GAO/NSIAD-93-241

Military Downsizing

(391181)


Abbreviations
=============================================================== ABBREV

  DMDC - Defense Manpower Data Center
  DOD - Department of Defense
  DOPMA - Defense Officer Personnel Management Act
  GAO - General Accounting Office
  OSD - Office of the Secretary of Defense
  RIF - reduction-in-force
  SERB - Selected Early Retirement Board
  SSB - Special Separation Benefit
  VSI - Voluntary Separation Incentive

Letter
=============================================================== LETTER


B-254058

September 30, 1993

The Honorable Richard Shelby
Chairman, Subcommittee on Force
 Requirements and Personnel
Committee on Armed Services
United States Senate

Dear Mr.  Chairman: 

This report highlights the progress that the Department of Defense
has made in downsizing its active duty force using various force
management tools and legislative authorities.  It identifies several
policy issues and questions that are key to future force reduction
decision-making.  It also identifies matters for consideration by the
Congress to facilitate future reduction actions. 

We plan no further distribution of this report until 15 days after
its issue date.  At that time we will send copies to the Chairmen of
the House and Senate Committees on Appropriations; the Chairmen of
the House and Senate Committees on Armed Services; the Director,
Office of Management and Budget; and the Secretaries of Defense, the
Air Force, the Army, and the Navy.  Copies will also be made
available to other interested parties upon request. 

Please contact me at (202) 512-5140 if you or your staff have any
questions concerning this report.  Major contributors to this report
are listed in appendix V. 

Sincerely yours,

Mark E.  Gebicke
Director, Military Operations and
 Capabilities Issues


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

The Congress, in exercising initial oversight regarding the planned
downsizing of U.S.  military forces, prescribed reduction targets,
and provided other guidance and legislative authorities to the
Department of Defense (DOD) to facilitate downsizing, minimize
involuntary separations, and preserve a balanced force. 

The Chairman of the former Subcommittee on Manpower and Personnel,
Senate Committee on Armed Services, asked GAO to examine DOD's
adherence to congressional guidance and authorizations in military
downsizing.  GAO determined (1) what progress DOD has made toward
meeting reduction targets, (2) how downsizing actions are affecting
new recruiting or accessions, (3) what range of voluntary and
involuntary reduction actions are being taken to meet downsizing
objectives, (4) how downsizing is being accomplished across various
groupings of officer and enlisted personnel by years of service and
how this is affecting force profiles, and (5) what issues might be
important to future reduction decisions. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

At the end of fiscal year 1987, the active duty U.S.  military was at
its post-Vietnam peak of 2,174,217 positions.  The National Defense
Authorization Act for Fiscal Year 1991 called for a fiscal year 1995
end strength of 1,613,000 positions, about a 25-percent reduction, or
561,000 positions less than the fiscal year 1987 end-strength level. 
A greater reduction target was subsequently put in place by the
previous administration, which, as of January 1993, was projecting an
end strength of 1,607,000 by the end of fiscal year 1995 and further
reductions in succeeding years.  The current administration is
reassessing its out-year reduction plans beyond its fiscal year 1994
end-strength goal of 1,621,000.  The military personnel system is
highly structured, with specific legal and regulatory requirements
governing career advancement and service continuation.  Thus, under
this system, the services, even before the current downsizing period
began, would expect to lose and replace large numbers of personnel
each year. 

The large multiyear Defense downsizing effort meant a period of
greater personnel turbulence than would otherwise exist and the
potential for significant numbers of persons to be separated
involuntarily.  Thus, the Congress, concerned about the impact of
force reductions, required that the services, before carrying out
involuntary reductions of career members who were not eligible for
retirement, implement procedures to limit accessions and to reduce
the populations of personnel having less than
6 years of service as well as the population of retirement eligible
personnel.  Also, the Congress authorized certain measures, including
the use of financial separation incentives and other transition
assistance to facilitate downsizing and minimize the impact on
individuals. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

DOD has accomplished a majority of its previously planned active duty
force reductions; however, further reductions are likely as the
result of a recently completed DOD review.  In examining how DOD is
accomplishing this downsizing, GAO found: 

  -- DOD and the services have reduced accession levels over previous
     years, but they are still recruiting large numbers of personnel
     each year as part of their efforts to sustain a balanced force. 

  -- DOD has given priority to achieving voluntary reductions.  It
     has used various force shaping authorities or "tools" as well as
     financial separation incentives to help draw down the military
     forces across various skill and seniority groups.  With many of
     those persons most inclined to leave voluntarily having done so,
     and the base of persons eligible for separation incentives
     decreasing, DOD officials believe that significant additional
     increases in end-strength reductions would likely result in more
     involuntary reductions. 

  -- DOD's approach to force reductions, along with its continued
     emphasis on accessions, has helped to control, although not
     entirely contain, some proportional personnel growth in years of
     service and rank.  A negative consequence of such growth is
     increased relative cost; however, a positive aspect is increased
     experience levels--two important trade-offs in force shaping. 

  -- Some policy issues and questions identified during the recent
     downsizing could become more important in future force reduction
     decisions.  The issues include how quickly the force can be
     reduced, what accession levels should be, and what cost
     trade-offs are most desirable between a younger or a more
     experienced force. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      REDUCTION GOALS ARE BEING
      MET, BUT FURTHER REDUCTIONS
      ARE EXPECTED
-------------------------------------------------------- Chapter 0:4.1

By the end of fiscal year 1993, DOD expects to have reduced its
active duty force levels by over 446,000 positions, which is a
reduction of nearly 21 percent over fiscal year 1987's end-strength
levels.  Under current drawdown plans, DOD's planned end strength for
fiscal year 1994 (1,621,000) will be just 8,000 positions higher than
the number the Congress had mandated for the end of fiscal year 1995. 
However, further reductions are expected as the result of a recently
completed "Bottom-up Review" of DOD needs and programs for fiscal
years 1995-99. 


   DESPITE REDUCED END-STRENGTH
   LEVELS, ACCESSION RATES REMAIN
   HIGH TO HELP SHAPE THE FORCE
---------------------------------------------------------- Chapter 0:5

DOD's planned accessions in fiscal years 1993 and 1994 are about
225,000 and 207,000, respectively.  While these might appear to be
significant numbers in a period of downsizing, planned accessions in
fiscal year 1993 are down 34 percent compared with fiscal year 1987's
level of nearly 342,000 personnel.  DOD has retained a relatively
high rate of accessions to better assure a balanced force across the
various pay grades and skill areas to preserve future career
opportunities. 


   DOD'S DOWNSIZING INVOLVES A
   SPECTRUM OF VOLUNTARY TO
   INVOLUNTARY REDUCTION ACTIONS
---------------------------------------------------------- Chapter 0:6

Although DOD has emphasized voluntary reductions, it has used various
voluntary and involuntary reduction tools to draw down its military
forces across various pay grades and skill areas.  Among the
voluntary actions are early release of personnel prior to their
normal end of enlistment or use of financial separation incentives to
induce persons to leave.  Additionally, in fiscal year 1993, DOD used
new legislative authority for early retirement of personnel after 15
years of service.  Less voluntary means are used when voluntary tools
do not achieve the necessary reductions.  Less voluntary means of
separation involve tightened retention standards or the use of
special boards to mandate retirement of selected personnel from the
ranks of those already eligible to do so.  These actions have
lessened but not eliminated the need for the services to use
reduction-in-force (RIF) to involuntarily separate career force
personnel who are not yet eligible for any form of retirement. 

As the number of end-strength reductions increases in the coming
years, DOD and service officials believe the number of involuntary
separation actions could increase because the population of persons
eligible for financial separation incentives is decreasing, and those
most willing to leave under such incentives will have done so
already.  Legislation enacted as part of the fiscal year 1992 and
1993 Defense Authorization Act authorized the use of incentives for
fiscal years 1992-95 for those who had completed 6 years of service
at the time the law was enacted.  Service representatives believe
that the number of involuntary reductions could be minimized somewhat
by expanding the eligibility to include service members who have
attained 6 years of service since the incentive legislation was
enacted. 


   DOD HAS IMPLEMENTED MEASURES TO
   INDUCE ATTRITION, BUT SOME
   LONG-TERM CHANGES IN FORCE
   PROFILES ARE NOTED
---------------------------------------------------------- Chapter 0:7

DOD's efforts to manage the drawdown have helped to control, although
not entirely contain, some long-term growth in the proportion of
personnel with higher years of service and rank.  There are positive
and negative aspects of such growth in seniority.  On the positive
side, each of the services, in varying degrees, has largely
maintained a steady, downward trend for over 10 years in the
percentage of personnel having less than
4 years of service.  For example, the percentage of all service
personnel having 4 years or less of service was 53 percent in fiscal
year 1980, and dropped to 39 percent in fiscal year 1992.  This
trend, according to various service officials, creates a more
experienced and better trained work force; one that some DOD
officials cite as being increasingly important in a smaller military. 
On the negative side, a more senior force is relatively more costly. 
The trend toward a more senior force has been reflected in growth, by
several percentage points since fiscal year 1980, in those military
personnel having completed 15 or more years of service and in the
numbers of personnel eligible for retirement.  The increases would
have been greater except for DOD's actions to (1) encourage voluntary
separations; (2) in some instances, mandate retirement of selected
officers and enlisted personnel; and (3) tighten quality standards
governing service continuations among the enlisted population.  DOD's
planned use of early retirement authority for personnel having
completed between 15 and 20 years of service could further contain
growth in that population group. 


   ISSUES AFFECTING FUTURE
   REDUCTION DECISIONS
---------------------------------------------------------- Chapter 0:8

Some policy issues and questions identified during recent downsizing
activities may become more prominent as further reductions occur. 
They include future force profiles, how quickly the reductions should
occur, what accession levels should be, and what cost trade-offs are
most desirable between a younger or a more experienced force. 
However, the recent drawdown experience does more to offer
perspectives on key issues than to suggest simple, fixed answers. 

Optimum force profiles in terms of experience levels, average pay
grades, and officer/enlisted ratios are not clearly established and
would likely be difficult to develop with any degree of uniformity
among the services.  Nevertheless, because of their impact on
readiness and costs, GAO believes that general trends in force
profiles should be considered by the administration and the Congress
in deciding future force levels. 

In considering how quickly reductions should occur, it will be
important to take into consideration the fact that DOD's military
personnel system experiences significant turbulence with high levels
of personnel turnovers during more normal times, when downsizing is
not occurring, and this turbulence can be compounded by the degree
and pace of reductions. 

Another consideration is the impact of personnel reductions on unit
manning levels.  Army officials acknowledge that, during the current
drawdown, personnel reductions have occurred more quickly than have
changes in unit force structure, creating some undesired undermanning
of units.  While they expect this problem to correct itself as future
reductions in unit structure occur, they recognize the problem could
be exacerbated with increases in personnel reduction targets unless
these further reductions are correlated with additional structural
reductions. 

In considering accession levels, it will be important to consider
both the short- and long-term potential impact of reduced accessions
on the forces.  In the short term, significant reductions in
accession levels can be attained, but, in doing so, they result in a
relatively more costly, but more experienced force.  From a long-term
perspective, significantly curtailing accessions poses a greater
potential for force imbalances in the future. 

One additional factor affecting accession levels is the quality of
new recruits. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 0:9

Given that DOD's downsizing is apt to continue for several more
years, the Congress, to the extent it desires a continuing emphasis
on minimizing involuntary separations, may want to consider extending
the use of special separation incentive programs beyond the current
deadline of fiscal year 1995.  Also, the authority for use of the
separation incentives limits their use to those who had attained 6
years of service at the time the legislation was enacted in December
1991.  Therefore, the Congress may also want to amend the legislation
to include all who have attained 6 years of service within the time
frame for which the incentives are authorized as a means of
broadening the pool of persons eligible for the incentives and
minimizing the potential for greater involuntary separations in the
future. 


   AGENCY COMMENTS
--------------------------------------------------------- Chapter 0:10

DOD fully concurred with the report's findings and matters for
congressional consideration.  (See app.  IV.)


INTRODUCTION
============================================================ Chapter 1

The United States is in the process of implementing the largest
drawdown of its military forces since the end of the Vietnam
conflict.  Both the Congress and the Department of Defense (DOD) have
established various targets and objectives to guide that drawdown in
a balanced manner, in keeping with the nature of the military
personnel system.  The military personnel system is highly
structured, with specific legal and regulatory requirements governing
career advancement and service continuation.  Within the parameters
of those regulatory requirements, there exists a number of decision
points where force shaping, design, and reduction actions can be
taken by the services.  Given the magnitude of downsizing underway,
the Congress has provided expanded force shaping authorities and
tools to DOD to facilitate downsizing, minimize involuntary
separations, and preserve a balanced remaining force. 


   REDUCTION TARGETS AND
   OBJECTIVES
---------------------------------------------------------- Chapter 1:1

The National Defense Authorization Act for Fiscal Year 1991 (P.L. 
101-510) authorized end-strength levels totaling 1.613 million active
duty military personnel as of September 30, 1995.  This end strength
represents an overall reduction of 561,217 positions, or nearly 26
percent, from the post-Vietnam peak strength of 2.174 million
positions at the end of fiscal year 1987.  Likewise, the
administration, in annual budget submissions during recent years, has
submitted out-year reduction targets.  The January 1993 budget
submission by the previous administration projected continuing force
reductions through fiscal year 1999 at which time the services
end-strength would be 1.568 million positions. 

The current administration has accelerated some previously planned
personnel reductions but for now has projected future reductions only
through fiscal year 1994; its goal for the end of fiscal year 1994 is
1.621 million positions, within 8,000 positions of the levels that
the Congress had specified for the end of the following year, fiscal
year 1995.  Even so, DOD officials have indicated that further
reductions will be made as the result of a recently completed
"Bottom-up Review" of DOD needs and programs for fiscal years
1995-99; however, new reduction targets by fiscal year were not
available as of early September 1993. 


      POLICY OBJECTIVES
-------------------------------------------------------- Chapter 1:1.1

The Congress has articulated policy objectives to guide force
reductions.  Section 402 of the National Defense Authorization Act
for Fiscal Year 1991 directed the services to carry out well-balanced
force reductions and to limit reductions among career military
personnel (generally those having 6 or more years of service).  The
act stipulated that the services could not involuntarily separate
military personnel without first having implemented procedures to (1)
limit the number of accessions; (2) increase retirements among those
eligible to do so, and (3) limit the number of personnel with more
than 2, but less than 6, years of service.  In emphasizing this, the
conference report to the act stated that

     "the conferees expect the Secretary of Defense to exercise
     prudent judgment in approving accession levels and force
     profiles by grade and years of service to guide the personnel
     strength reduction process in the military services as forces
     draw down over the next five years."

The conferees also stated their expectation that the military
services would maintain the same relationship between officer and
enlisted strengths as existed at the end of fiscal year 1990 in
making active duty end-strength reductions in the future. 

DOD has also articulated policy objectives to reduce the military
forces, maintain a high state of readiness, treat people fairly--both
those who stay and those who leave--and ensure that careful
consideration is given to how today's decisions will affect
tomorrow's force.  Some objectives reaffirmed congressional guidance,
while others were added such as

  -- protecting careerists near retirement, that is, protecting all
     qualified service members with 15 years of service or more until
     they are eligible for retirement;

  -- establishing officer and enlisted accessions at levels necessary
     to sustain the base force;

  -- using the drawdown as an opportunity, wherever possible, to
     balance officer and enlisted skills; and

  -- establishing policies and procedures that are consistent with
     legislative guidelines for officer promotion opportunity and
     timing and, at the same time, controlling senior enlisted grade
     (top 5 grades) growth and maintaining promotion rates. 


   MILITARY FORCE MANAGEMENT
---------------------------------------------------------- Chapter 1:2

The services are unique in terms of how they recruit and retain
personnel, as well as in how they manage military careers.  Within
each service, the military personnel system is a centrally managed,
"closed" system, meaning that persons recruited with no prior
military service are generally brought in at entry level positions
and progress through the ranks, contrasted with an "open" system such
as the private sector, where new hires can be brought into an
organization at various levels depending on the persons'
qualifications and experiences.  The military essentially "grows its
personnel from within." Further, the military personnel system, which
is predicated on maintaining a relatively young and vigorous work
force, operates under an "up-or-out" policy in which members who fail
to receive promotions within specific time frames are limited to how
long they can remain in the service. 

Many persons join the military for the education and training
benefits, particularly in the enlisted ranks, expecting to remain in
the service for only a few years.  Others decide to make the military
a career; for those individuals, service continuation involves a
periodic renewal or extension of their contracted service time. 
Accordingly, the military services lose significant numbers of
personnel through a variety of loss programs each year, and
therefore, must recruit enough new members to replace losses and
ensure that the services will have enough well trained personnel to
meet and sustain future years' seniority, grade, and experience
requirements.  DOD data indicate that it has not been unusual for the
services to replace more than 15 percent of their active duty
personnel each year, even when the authorized end-strength levels are
at a relatively "steady state," neither increasing or decreasing
significantly. 


      SEPARATE PERSONNEL
      MANAGEMENT SYSTEMS FOR
      OFFICER AND ENLISTED
      PERSONNEL
-------------------------------------------------------- Chapter 1:2.1

The services essentially have two personnel systems for active duty
military personnel, one for officers and one for enlisted personnel. 
The officer community is basically governed by the Defense Officer
Personnel Management Act (DOPMA), while enlisted personnel management
is governed by specific DOD regulations. 


         OFFICER FORCE MANAGEMENT
------------------------------------------------------ Chapter 1:2.1.1

DOPMA was enacted in 1980, establishing key parameters to managing
the officer force with the intent of maintaining a continuous flow of
officers through the military personnel system over a 20- to 30-year
career path, based on normal attrition from voluntary resignations
and retirements.  The DOPMA legislation outlines standards and
procedures relating to the appointment, promotion, separation and
retirement of officers in the armed forces.  For example, it
stipulates how long officers of various ranks may remain on active
duty beyond normal retirement eligibility at 20 years.  It also
prescribes the number of officers each service is authorized in each
of the senior ranks from the 0-4 to the 0-6 pay grades, a number that
will vary depending on officer end strengths authorized by the
Congress. 

Central to DOPMA is the up-or-out promotion system in which officers
generally advance in groups or cohorts originally determined by the
year of their commissioning and compete for promotion against other
members of the group at set years or zones of consideration for each
paygrade.  For example, an officer commissioned in 1983 would
normally be considered for promotion to paygrade 0-4 in 1993, at the
year 10 mark along with other officers in that year group or cohort. 
Under the DOPMA system, a select group of the 0-3 officers from a
particular cohort can be considered for promotion "below the zone,"
that is at year 9 (or earlier in selected instances) along with
members from that year's cohort of officers.  However, most of the
1983 commissioned officers would have their greatest potential for
promotion "in the zone" at year 10.  Failing to be selected for
promotion at year 10, the officers in this cohort could have an
additional opportunity to be considered for promotion in the
following year (or later in selected instances) "above the zone,"
along with that year's cohort.  Failure to be selected for promotion
then would mean these officers could be involuntarily separated. 
Thus, it is essential that the force at large be managed in such a
manner that personnel are able to compete for, attain, and complete
key assignments at the right points in their career progression. 


         ENLISTED FORCE MANAGEMENT
------------------------------------------------------ Chapter 1:2.1.2

DOD Directive 1304.20, dated December 19, 1984, and DOD Instruction
1300.14, dated January 29, 1985, provide guidance and outline the
basic parameters to enlisted force management.  The directive sets
constraints on the pay grade mix and career content (personnel with
more than 4 to 6 years of service) of the enlisted force and
establishes broad goals for elements such as recruitment, career
progression and timing of promotions, service continuation, and
military occupation specialty balance.  The instruction requests the
services to undertake specific enlisted force planning to incorporate
long-range personnel goals.  These plans provide the Office of the
Secretary of Defense (OSD) with the means to monitor the services'
progress toward meeting the objectives of the enlisted personnel
management system. 

Promotions for enlisted personnel at various pay grades are affected
by time in grade or service requirements that vary by service, and
may involve the use of selection boards.  Promotions may also be
affected by such things as tests, schools attended, evaluations
(ratings), and awards. 


   FORCE MANAGEMENT AND SHAPING, A
   CONTINUAL PROCESS
---------------------------------------------------------- Chapter 1:3

Theoretically, the services could simply increase or decrease
recruiting, modifying it to take into consideration normal attrition
and retirement levels, in order to increase or decrease authorized
end-strength levels.  However, given the structure and the nature of
military career management programs, such actions, according to DOD
officials, could create imbalances in the force in terms of age,
skill levels, and right numbers of personnel by specialty area. 
Thus, constant management of the force at various career points is
required to avoid these problems and stay within force management
regulations. 

As previously discussed, the services must replace many personnel
each year, even where no changes in authorized end strength are
planned.  Many personnel losses are voluntary and attributable to
completion of initial periods of obligation, and decisions by service
members over whether to continue and make the military a career
choice.\1 At the other end of the personnel pipeline, many voluntary
losses each year are due to retirement decisions.  Involuntary
reductions can occur anywhere along this personnel pipeline due to
misconduct.  (App.  II shows the services' loss rates by specific
categories for fiscal year 1992.)

Unique to the military personnel system is a variety of military
personnel requirements and actions, in addition to regular accessions
and losses, that may be used to help shape the force, ensure balanced
manning by rank and specialties, and preserve needed career
advancement opportunities.  These actions include: 

  -- using early release programs to permit individuals to separate
     in advance of their scheduled end of enlistment period;

  -- tightening quality controls, such as physical weight standards,
     governing those who will be permitted to reenlist;

  -- limiting the maximum number of years that members at a given
     rank may continue in the service before being denied
     re-enlistment opportunities;

  -- selecting certain nonretirement eligible personnel to be
     involuntarily separated through use of formal reduction-in-force
     (RIF) boards; and

  -- selecting certain retirement eligible personnel to retire before
     the normal mandatory time frame through use of formal Selected
     Early Retirement Boards (SERB). 


--------------------
\1 Initial periods of obligation for officers or enlistments for
enlisted personnel generally range from
4 years to 6 years and will vary depending on such factors as
prerequisite schooling obligations and military specialty.  The
concept of career status is not uniformly defined by the services;
however, it often refers to those personnel with at least 6 years of
service. 


   ADDITIONAL AUTHORITIES PROVIDED
   BY THE CONGRESS TO FACILITATE
   DOWNSIZING AND FORCE SHAPING
---------------------------------------------------------- Chapter 1:4

In completing action on the National Defense Authorization acts for
fiscal years 1991, 1992, and 1993, the Congress authorized certain
additional measures to induce downsizing, and minimize the adverse
affects on individuals as they transition to civilian life.  These
actions included: 

  -- expanding reduction-in-force (RIF) authority to include certain
     officers previously exempt from RIF action related to the source
     of their commissions;

  -- expanding authority for use of SERBs for officers;

  -- reducing certain time in grade requirements for voluntary
     retirements at current grades among officers having already
     completed the 20 years of total service needed to retire;

  -- extending lump-sum separation pay and transition assistance to
     enlisted personnel who are involuntarily separated, having
     completed 6 years or more of service--only officers were
     previously eligible to receive this benefit;\2

  -- authorizing two special categories of separation pay to induce
     voluntary separations, the lump sum Special Separation Benefit
     (SSB)\3 and the Voluntary Separation Incentive (VSI),\4 to
     induce voluntary separations among those having completed 6 or
     more years of service at the time the legislation was enacted;
     and

  -- providing, effective with fiscal year 1993, DOD with the
     authority to offer a 15-year retirement option for selected
     members of the military. 

Persons separating under SSB and VSI provisions are also entitled to
the same transition assistance programs available to persons
receiving pay under condition of involuntary separation.\5


--------------------
\2 Involuntary separation pay is based on a service member's monthly
basic pay rate and years of service.  Within this formula, a service
member is entitled to either one-half or full separation pay
depending on the reason for involuntary separation and type of
discharge.  For example, an individual separating under a RIF action,
or denied reenlistment, who is otherwise fully qualified for service,
would receive full separation pay.  A service member who failed to
meet certain qualifications, such as drug abuse rehabilitation
failure, could be involuntarily separated and receive one-half
separation pay.  A person involuntarily discharged for reasons such
as misconduct is ineligible for any separation pay. 

\3 SSB is a one time lump-sum payment equal to 15 percent of a
service member's basic pay rate times the years of service. 

\4 This incentive involves annual payments for twice the number of
years of service equal to 2.5 percent of a service member's basic pay
times the years of service.  (See app.  III for illustrative examples
of separation pay for military personnel under the various separation
pay categories.)

\5 These transition assistance programs include such programs as
counseling and job placement services, transition health care, and
expanded travel and transportation allowances and leave allowances. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:5

The Chairman of the former Subcommittee on Manpower and Personnel of
the Senate Committee on Armed Services asked us to examine DOD's
implementation of military downsizing in accordance with legislative
guidance and authorizations.  We determined (1) what progress DOD has
made toward meeting reduction targets, (2) how downsizing actions are
affecting new recruiting or accessions, (3) what range of voluntary
and involuntary reduction actions are being taken to meet downsizing
objectives, (4) how downsizing is being accomplished across various
groupings of officer and enlisted personnel by years of service and
how this is affecting force profiles, and (5) what issues might be
important to future reduction decisions. 

We reviewed congressional legislation, budget documents, manpower
statistical data, and individual service personnel plans.  We also
interviewed appropriate officials at the following organizations: 

  -- Office of the Deputy Assistant Secretary of Defense, Personnel
     and Readiness, Military and Manpower Personnel Policy
     Directorate, and Personnel Support Policy and Service
     Directorate;

  -- Office of the DOD Comptroller;

  -- Department of the Air Force, Deputy Chief of Staff for
     Personnel, Directorate of Personnel Programs;

  -- Department of the Army, Deputy Chief of Staff for Personnel,
     Directorate of Manpower;

  -- Department of the Navy, Bureau of Naval Personnel, Officer Plans
     and Career Management Division, and Enlisted Plans and Career
     Management Division; and

  -- Department of the Navy, Office of the Deputy Chief of Staff for
     Manpower and Reserve Affairs (Marine Corps), Manpower Plans and
     Policies Division. 


      SPECIAL NOTES REGARDING
      PERSONNEL STATISTICS
-------------------------------------------------------- Chapter 1:5.1

In completing this review, we made use of manpower and personnel data
from budget documents and other data sets from the Office of the
Secretary of Defense (OSD), the individual services, and the Defense
Manpower Data Center (DMDC).  In portraying historical data, fiscal
year 1980 was chosen because it reflected the beginning point for the
defense build-up of the 1980s; fiscal year 1987 was chosen because it
reflected the post-Vietnam peak year of active duty end-strength
levels just prior to the onset of recent downsizing activities. 

Our comparison of data showed inconsistences in common data sets
among the services, OSD, and DMDC.  We found inconsistencies within
singular documents, such as budget justification documents submitted
to the Congress, where the same information was presented in more
than one section of the document.  These inconsistencies were more
prevalent when the data were related to future personnel actions, but
also affected DOD reports summarizing prior year actions to some
extent. 

Time did not permit a detailed examination of the services' and DOD's
data systems to fully document the validity of the data and the bases
for inconsistencies.  Where discrepancies where noted, we conferred
with DOD officials for their judgments as to the most appropriate
data source.  We attempted to use the best available information in
all cases, recognizing that numbers used in this report may vary
slightly from other reported sources.  Thus, data presented in this
report dealing with accessions and losses should be viewed as
approximations, not final and absolute numbers.  We have added
special notes to tables used in this report to further highlight data
limitations as warranted. 

We conducted our review from April 1992 to July 1993 in accordance
with generally accepted government auditing standards. 


REDUCTION TARGETS ARE BEING MET,
BUT SIGNIFICANT RECRUITING IS
STILL REQUIRED
============================================================ Chapter 2

By the end of fiscal year 1993, DOD expects to have reduced its
active duty force levels more than 446,000 positions below
end-strength levels that existed at the end of fiscal year 1987, when
the military was at its post-Vietnam peak of 2.174 million positions. 
At the same time, and possibly contrary to public perception, DOD is,
and expects to continue, recruiting a large number of personnel each
year in order to maintain and sustain a balanced force to meet future
operational requirements.  As a consequence, a much greater degree of
personnel turnover is occurring than is generally recognized.  Given
the extent of personnel turbulence involved in downsizing and shaping
the force, and uncertainties over future force levels, service
officials indicate that flexibility and periodic reassessment are
required in managing accession levels. 


   STATUS OF REDUCTION EFFORTS
---------------------------------------------------------- Chapter 2:1

At the end of fiscal year 1993, DOD end-strength levels are expected
to be down to 1.728 million positions, a 21-percent reduction over
fiscal year 1987's end-strength levels; by the end of fiscal year
1994, DOD expects end-strength levels to be at 1.621 million, a
reduction of 25 percent.  Table 2.1 shows the reductions accomplished
and expected by the services through fiscal year 1994. 



                               Table 2.1
                
                End-Strength Levels for Selected Fiscal
                                 Years

                         (Numbers in thousands)


Service                           1987\a    1992\a    1993\b    1994\b
------------------------------  --------  --------  --------  --------
Army                                 781       611       575       540
Navy                                 587       542       526       481
Marine Corps                         200       185       182       174
Air Force                            607       470       445       426
======================================================================
Total\c                            2,174     1,808     1,728     1,621
----------------------------------------------------------------------
\a Figures for fiscal years 1987 and 1992 are actual. 

\b Figures for fiscal years 1993 and 1994 are projected as of March
1993. 

\c Numbers may not add due to rounding. 

Sources:  OSD and individual military services. 

The largest of the reductions are occurring in the Army and the Air
Force, which, by the end of fiscal year 1994, are slated to reduce
their levels by
31 and 30 percent, respectively, over fiscal year 1987 end-strength
levels; lesser reductions are occurring in the Navy and the Marine
Corps, which are to reduce their end strengths by 18 and 13 percent,
respectively, by the end of fiscal year 1994.  Selected Reserve force
levels will be reduced from 1.15 million in fiscal year 1987 to 1.02
million at the end of fiscal year 1994--an 11-percent reduction. 
(App.  I more completely summarizes current planned changes in DOD
force levels by service and active and reserve components from fiscal
years 1980 through 1994.) However, as previously discussed,
reductions are planned beyond fiscal year 1994, although complete
out-year reduction targets have not yet been finalized by the
administration. 


   ACCESSION LEVELS REMAIN
   RELATIVELY HIGH, DESPITE
   DOWNSIZING, TO HELP SHAPE THE
   FORCE
---------------------------------------------------------- Chapter 2:2

DOD's recruiting plans for fiscal years 1993 and 1994 call for
recruiting about 225,000 and 206,000 persons, respectively.  Table
2.2 contrasts the levels of accessions in fiscal years 1987 and 1988
with actual accessions in fiscal year 1992 and those projected for
fiscal years 1993 and 1994. 



                               Table 2.2
                
                Service Accession Levels by Fiscal Year

                         (Numbers in thousands)


Service                   1987\a   1988\a   1992\a    1993\b    1994\b
-----------------------  -------  -------  -------  --------  --------
Army                       142.2    124.0     84.0      83.3      79.4
Navy                        99.9    101.4     64.9      69.3      59.5
Marine Corps                36.6     37.8     33.4      36.1      32.6
Air Force                   62.9     48.4     40.0      36.4      34.9
======================================================================
Total 341.6                311.5             222.2     225.1     206.3
----------------------------------------------------------------------
\a Figures for fiscal years 1987, 1988, and 1992 are actual. 

\b Figures for fiscal years 1993 and 1994 are projections as of July
1993. 

Note:  Totals may not add due to rounding. 

Sources:  DOD and the services. 

DOD officials have reported greater difficulties in recruiting during
this period of downsizing; some service officials have attributed
these difficulties to a perception of some young people that the
military is not recruiting during downsizing or a view that the
military no longer affords as viable a career option as it once
did.\1 DOD officials also cite some early signs of reduced quality in
recent recruits.  In spring 1993, DOD officials reported that the
number of new personnel with high school diplomas dropped DOD-wide
during the first half of fiscal year 1993 to 94 percent, from a high
of 99 percent in 1992; for the Army, the reduction was greater, down
to 89 percent.  However, an Army official expressed optimism that the
rate could rise closer to the Army's target of 95 percent during the
remainder of the year, the prime time for recruiting new high school
graduates.  DOD officials subsequently reported in September 1993,
that the number of new military personnel DOD-wide with diplomas
during the first 9 months of fiscal year 1993 was 95 percent.  While
this level is still lower than the 99-percent level achieved in
fiscal year 1992, it compares favorably with the 89-percent average
achieved for the period 1980 through 1992. 

The Army's current accession levels shown for fiscal year 1993
reflect a 7,000-reduction from planned levels at the beginning of the
fiscal year.  However, Army officials told us that the decreased
accession levels were related primarily to faster paced reductions
than originally planned, which resulted in fewer accessions being
needed, and were not related to any decrease in quality of recruits. 

Projected accession levels for fiscal years 1993 and 1994 might be
considered to be relatively high for a time of such significant
downsizing; however, total accessions planned for fiscal year 1993
are down 34 percent in relation to fiscal year 1987's level. 


--------------------
\1 Some service officials also attribute recruiting difficulties to
reductions in recruiting advertising budgets.  We are not in a
position to either validate or refute this concern.  However, we are
initiating a review of DOD recruiting practices to assess the
potential for more cost-effective recruiting practices in a downsized
and fiscally constrained environment. 


   PERSONNEL TURBULENCE IS MUCH
   GREATER THAN NET REDUCTIONS
---------------------------------------------------------- Chapter 2:3

Unless actual loss rates for the services each year are closely
examined, it can be concluded that the number of persons leaving the
services during these years of force downsizing is reflected simply
in the changes in service end strength.  Our March 25, 1992,
testimony before a Subcommittee of the Senate Armed Services
Committee noted that shaping the force requires a larger number of
accessions and attritions than would be the case if the focus were
primarily on limiting the recruitment of personnel to achieve end-
strength reduction goals.\2 Total numbers of persons leaving the
services during fiscal years 1992 and 1993 were projected to be about
3 times the amount of net reductions in end strength.  For fiscal
year 1994, DOD expects to recruit about 206,000 new personnel and the
departure of 313,000, for a net end-strength reduction of about
107,000 positions.  Using beginning fiscal year 1994 end-strength
levels as a base, DOD expects, during that fiscal year, to separate
19 percent of its people, recruit 13 percent new personnel, and
achieve a 6-percent net end-strength reduction by the end of that
year.  The numbers of personnel entering and leaving the services
during this period of downsizing, compounded by uncertainties and
heightened anxiety levels over future careers of others who remain,
add to what many military officials have characterized as a high
degree of turbulence affecting their forces. 

While downsizing actions have of necessity resulted in significant
personnel turnover levels and turbulence, they aggravate to some
extent, already significant turnover levels associated with the
services' systems of rotating personnel from one assignment, unit,
and location to another, including between the United States and
overseas assignments.  Our previous reports on Army and Marine Corps
training have noted that senior leaders have described this personnel
turbulence as one of the most significant problems affecting the
Army's ability to maintain a trained force.\3


--------------------
\2 Defense Force Management:  Status of Military Force Downsizing
(GAO/T-NSIAD-92-20, Mar.  25, 1992). 

\3 Army Training:  Various Factors Create Uncertainty About Need for
More Land (GAO/NSIAD-92-203, Apr.  22, 1991) and Operation Desert
Storm:  War Offers Important Insights into Army and Marine Corps
Training Needs (GAO/NSIAD-92-240, Aug.  25, 1992). 


   ESTABLISHING ACCESSION LEVELS
   DURING DOWNSIZING IS DIFFICULT
---------------------------------------------------------- Chapter 2:4

The Congress and DOD have provided guidance to the services in
establishing accession levels.  Some DOD guidance suggests a greater
degree of precision is available in establishing fixed accession
levels than the services have found practical during downsizing. 
However, with congressional authorizations for use of financial
separation incentives to induce voluntary attritions, DOD encouraged
the services to retain relatively high levels of accessions.  It did
so in order to build and sustain a more balanced force for the
future, minimize the potential for skill imbalances and promotion
stagnation, and protect career options for remaining personnel. 
DOD's action also reflects budgetary decisions to increase the ratio
of entry level to more senior personnel in the career force to reduce
the cost of the force. 

The conferees to the fiscal year 1991 defense authorization act
expressed an expectation that the Secretary of Defense would exercise
prudent judgment in approving accession levels.  OSD established the
objective of programming accessions to a level not greater than that
required to sustain out-year force levels.  It also stated that
accessions should not be programmed to less than 85 percent of the
level required to sustain the out-year force levels. 

In establishing accession rates to sustain a future force, the
services must examine historical trends in attrition and replacement
rates, factor in the probabilities of how long individuals are likely
to remain on active duty, and apply a mathematical formula to
calculate replacement or accession rates per year.  Service officials
point out that such forecasting can be very imprecise without stable
long-term force levels and retention patterns, two factors that have
not been present during the current downsizing.  Accordingly, service
officials indicate that accession levels need to be reassessed
frequently, based on changing conditions, and adjusted to replace
losses and meet end-strength requirements.  One such adjustment has
already been alluded to regarding the change in fiscal years 1993 and
1994 accession levels due to the more rapid drawdown than previously
planned. 


VARIOUS TOOLS USED TO DOWNSIZE THE
FORCE ACROSS CAREER GROUPS, BUT
SOME LESS THAN VOLUNTARY
REDUCTIONS ARE REQUIRED
============================================================ Chapter 3

The services have used a number of authorities or "tools" to reduce
and shape its force by various year groupings of officer and enlisted
personnel.  These tools have ranged from use of voluntary early
release programs and financial separation incentives to induce
separations to involuntary RIFs. 

The services vary in the extent to which they have experienced losses
under each of these categories.  (See app.  II for a summary of
losses occurring during fiscal year 1992 by service.)

To achieve reductions in a balanced manner across pay grades and
skill areas, the reductions have of necessity fallen along a spectrum
ranging from voluntary, to induced, to involuntary reductions--the
most adverse being RIFs. 


   VOLUNTARY SEPARATIONS
---------------------------------------------------------- Chapter 3:1

DOD has initiated a number of actions to facilitate voluntary
separations for persons wanting to do so.  The more significant
actions have involved use of financial separation incentives and
early release programs; additionally, beginning with this fiscal
year, DOD has authority to offer early retirement for personnel with
at least 15 years of service. 


      SEPARATION INCENTIVES
-------------------------------------------------------- Chapter 3:1.1

The most publicly visible tools the services have used to achieve
downsizing objectives have centered on the use of financial
separation incentives--SSB, a lump-sum separation incentive, as well
as VSI, a variable annuity payment.  Both have been used to induce
separations for persons whose eligibility is based on having
completed between 6 and
20 years of service at the time the legislation became effective in
December 1991.  However, DOD data on fiscal year 1992 separations
show that the median length of service for those persons separating
under SSB and VSI programs was 11 years.  Table 3.1 summarizes the
number of persons by service separating under SSB and VSI during
fiscal years 1992 and 1993, and summarizes projected SSB and VSI
separations in fiscal year 1994. 



                               Table 3.1
                
                 Personnel Separating Under SSB And VSI

                                            Marine       Air
Fiscal year               Army      Navy     Corps     Force     Total
--------------------  --------  --------  --------  --------  ========
1992\a                  29,134     4,177       944    17,323    51,578
1993\b                  12,205     4,114     1,565    11,482    29,366
1994\b                  10,545     6,581       700       503    18,329
======================================================================
Total                   51,884    14,872     3,209    29,308    99,273
----------------------------------------------------------------------
\a Numbers shown are actual. 

\b Numbers shown are projections as of June 1993. 

Source:  OSD and the services. 

Our March 1992 testimony on military force downsizing pointed out the
much greater long-term value of VSI to the recipient but also
indicated that initial trends showed an overwhelming majority of
persons were opting for the smaller value, but single lump-sum
payment, of SSB;\1 our analysis shows that this trend continues.  Of
those opting for the financial incentive separations in fiscal year
1992, 87 percent chose SSB.  DOD officials expect this trend to
continue.  (App.  III contrasts the differing values of the
separation incentive pay options with involuntary separation pay and
indicates the costs to DOD for fiscal year 1992.)

Of all the services, the Army has made the greatest use of the
separation incentives, reflecting the fact that it has the largest
reductions of any service, both in terms of numbers and percentages. 
However, each of the services has used the incentives in varying
degrees to achieve downsizing objectives as well as to shape its
officer and enlisted forces. 

Army officials explained that the Army has offered the incentives to
all eligible officers, except for those in the medical skills area. 
In some instances, the Army has offered the incentives to officers in
certain year groups; this was predicated on the knowledge that if
sufficient numbers of persons did not elect to accept the incentives,
a RIF would be required.  During fiscal year 1993, the Army targeted
officers in pay grade 0-3 who were in year groups 1983 and 1984; in
fiscal year 1994, it expects to target 0-3s in year group 1985.  The
Army will also offer the incentives to officers who fail their first
board consideration for promotion to 0-4 during the respective fiscal
years. 

The Navy did not begin using the incentives for its officers until
fiscal year 1993, when it offered them to various officer communities
within pay grades 0-3 and 0-4.  In fiscal year 1994, the Navy plans
to offer the incentives to various officer communities in pay grades
0-3 through 0-5.  The Marine Corps originally targeted officers in
overstrength specialties in pay grade 0-4 to improve promotion flows. 
In fiscal years 1993 and 1994, it has offered and expects to continue
offering incentives to persons in the 0-3 pay grade as well.  The Air
Force has made offers to most of its 0-3s and 0-4s, except pilots. 
In fiscal year 1994, the Air Force is planning to target its 0-4s,
including pilots. 

In terms of enlisted personnel, all of the services are using the
incentives to help reduce personnel in overstrength skill areas and
in other areas in some cases.  The Army has offered the incentives to
enlisted members in over-strength skills and to members who are
subject to separation under changing policies limiting how long
personnel can remain on active duty without being promoted.  The Navy
originally used the incentives to target mid-grade (pay grades E-5
and E-6) members in overstrength specialties, and in fiscal year
1994, it is expanding the eligibility to target overstrength
specialties in pay grades E-4 through E-9.  The Marine Corps has used
the incentives to target enlisted members who were in skill areas no
longer needed and to reduce overstrength areas.  The Air Force
initially offered the incentives primarily to mid-grade (pay grades
E-4 and E-5) personnel who had more than 9 years of service and were
in less critical skill areas, but for fiscal year 1994, it plans to
target personnel in pay grade E-5.  It also plans to open up the
eligibility criteria incrementally, as necessary. 

The services' use of these incentives accounted for 13 percent of
overall service separations in fiscal year 1992, and their use is
expected to account for 9 percent and 6 percent, respectively, in
fiscal years 1993 and 1994.  According to OSD, the decreasing numbers
in fiscal years 1993 and 1994 reflect the fact that most persons
interested in the incentives have taken them and that the base of
eligible personnel is lessening.  The base of eligible persons grows
smaller each year since a service member must have had between 6 and
20 years of service as of December 5, 1991, when the legislation
became law.  Thus, the total population of potentially eligible
personnel is decreasing yearly.  Additionally, this legislation only
authorizes the use of these incentives through fiscal year 1995.  As
of now, the Navy is projecting that its 0-3 officer population in the
1987 year group is in excess of requirements.  Regardless of
additional reductions in authorized end-strength levels resulting
from the recent Bottom-up Review, the 1987 year group contains
approximately 2,000 officers more than DOPMA 0-4 limitations will
allow to be promoted without causing an imbalance.  This means that
around fiscal year 1996 the Navy will be faced with either
implementing RIF actions or seeking temporary legislative waivers to
DOPMA grade tables to permit the promotion of a greater number of
personnel than would otherwise occur.  An extension of authority for
the incentives and the window of eligibility would offer another
option for dealing with this situation; an option already used by the
Army in fiscal years 1992 and 1993. 


--------------------
\1 Defense Force Management:  Status of Military Force Downsizing
(GAO/T-NSIAD-92-20,
Mar.  25, 1992). 


      EARLY RELEASE PROGRAMS
-------------------------------------------------------- Chapter 3:1.2

Under early release programs, the services permit individuals to
separate in advance of their scheduled end of enlistment period; the
early releases generally occur in the same year that personnel are
scheduled to separate, but there have been instances where they have
occurred earlier.  They are used most often to separate persons
during their first term of enlistment, generally those who fall
within 2 to 6 years of service.  These programs have been used in
recent years by all of the services, except for the Marine Corps (see
table 3.2). 



                               Table 3.2
                
                   Separations Through Early Release
                 Programs in Fiscal Years 1992 and 1993

                                            Marine       Air
Fiscal year               Army      Navy     Corps     Force     Total
--------------------  --------  --------  --------  --------  ========
1992\a                  34,705     3,743         0     1,770    40,218
1993\b                     300     2,132         0     1,071     3,503
======================================================================
Total                   35,005     5,875         0     2,841    43,721
----------------------------------------------------------------------
\a Numbers shown are actual. 

\b Numbers shown are projections as of June 1993. 

Source:  Service officials. 

Service officials report that they have had to make less use of the
programs in fiscal years 1992 and 1993 than in earlier years, before
the availability of financial separation incentives.  However,
service officials indicate that this is still an important tool to
use as needed to help reduce and shape that portion of the force
having less than 6 years of service; it can be a particularly
attractive tool from a cost saving standpoint, since it can help
reduce salary costs in the year in which it is used and does not
involve any severance pay. 


      EARLY RETIREMENT
-------------------------------------------------------- Chapter 3:1.3

In the National Defense Authorization Act for Fiscal Year 1993, the
Congress authorized DOD to temporarily approve the retirement of
military personnel with at least 15, but less than 20, years of
service to further facilitate downsizing and avoid involuntary
separations.  DOD's implementing guidance gives each of the services
authority to prescribe criteria for eligibility for early retirement,
including such factors as grade, years of service, and skill area. 
The guidance stipulates that the authority should be used to retire
members who are excess to the services' short- and long-term needs
and that, if possible, the services should manage their programs so
those members nearest 20 years of service are offered early
retirement first.  Authorizing legislation stipulates that retirement
pay for those personnel leaving under this program will reflect a
reduction of 1 percent for each year short of 20 years.  Table 3.3
summarizes the planned use of this authority by each of the services. 



                               Table 3.3
                
                Planned Military Separations Using Early
                  Retirement Authority in Fiscal Years
                             1993 and 1994

                                            Marine       Air
Fiscal year               Army      Navy     Corps     Force     Total
--------------------  --------  --------  --------  --------  ========
1993\a                   1,450         0       100        39     1,589
1994\a                   5,082     1,400         0     4,997    11,479
======================================================================
Total                    6,532     1,400       100     5,036    13,068
----------------------------------------------------------------------
\a Numbers shown are projected as of April 1993. 

Source:  Service officials. 

Each of the services indicates that it is still in the process of
determining how extensively it will use this authority.  However,
this authority is generally being used to target overstrength skill
areas and year groups starting with those close to 20 years of
service.  The Air Force and the Army have each tentatively targeted
the majority use of the early retirement authority toward their
enlisted ranks while the Navy is targeting primarily its officer
force.  The Marine Corps plans to use this authority only during
fiscal year 1993 to separate 100 officers. 


   LESS THAN VOLUNTARY MEANS ALSO
   USED
---------------------------------------------------------- Chapter 3:2

While the various force management tools have been helpful in
minimizing the need for involuntary separations, the services have
still had to separate some personnel having less than 20 years of
service under less than voluntary means, such as through formal RIF
actions, to meet downsizing and force shaping objectives.  Additional
reductions have occurred through the use of SERBs to reduce the ranks
of retirement eligible personnel.  Other controls over service
continuation have also been used to further reduce the force. 


      RIFS
-------------------------------------------------------- Chapter 3:2.1

In fiscal year 1992, the Army was the only service to separate
personnel, those at the 0-4 level, through formal RIF actions; this
included 244 officers.  Early in fiscal year 1993, the Air Force
separated 1,595 officers by RIF actions, principally affecting 0-3
level officers.  The Army also anticipated using RIF actions in
fiscal year 1993 but obtained enough voluntary attritions from
repeated VSI and SSB offers among 0-3 officers in year groups 1983
and 1984.  None of the services has used RIF procedures to date to
separate enlisted personnel.  However, the services can deny
reenlistment to enlisted personnel without the need for RIF action. 


      SERBS
-------------------------------------------------------- Chapter 3:2.2

Each of the services has used available SERB authority to reduce the
population of officers and enlisted personnel already eligible to
retire.  Although a SERB is not technically considered an involuntary
separation, it is considered to be essentially that by the persons
who are selected to retire under this formal board selection
procedure.  In fiscal year 1992, a total of 3,429 officer and
enlisted personnel were formally selected for retirement under SERB
procedures (see table 3.4), and the services project similar numbers
in fiscal years 1993 and 1994 (see tables 3.5 and 3.6). 



                               Table 3.4
                
                  SERB Reductions for Fiscal Year 1992

                                            Marine       Air
                            Army    Navy     Corps     Force     Total
------------------------  ------  ------  --------  --------  ========
Officers                   1,735     350       125       979     3,189
Enlisted                     160       0        80         0       240
======================================================================
Total                      1,895     350       205       979     3,429
----------------------------------------------------------------------
Source:  OSD. 



                               Table 3.5
                
                SERB Reductions Planned for Fiscal Year
                                  1993

                                            Marine       Air
                            Army    Navy     Corps     Force     Total
------------------------  ------  ------  --------  --------  ========
Officers                     807     422        78     1,533     2,840
Enlisted                       0     720        40         0       760
======================================================================
Total                        807   1,142       118     1,533     3,600
----------------------------------------------------------------------
Note:  Numbers shown are projections as of July 1993. 

Source:  OSD. 



                               Table 3.6
                
                SERB Reductions Planned for Fiscal Year
                                  1994

                                            Marine       Air
                            Army    Navy     Corps     Force     Total
------------------------  ------  ------  --------  --------  ========
Officers                     659     400        80       654     1,793
Enlisted                       0     800         0         0       800
======================================================================
Total                        659   1,200        80       654     2,593
----------------------------------------------------------------------
Note:  Numbers shown are projections as of July 1993. 

Source:  OSD. 


      OTHER TOOLS USED TO REDUCE
      THE FORCE
-------------------------------------------------------- Chapter 3:2.3

The services have used other force shaping tools to facilitate
downsizing, including tightening quality control standards for those
persons who are allowed to continue in military service and limiting
the maximum number of years that a member may serve at a given pay
grade before being denied reenlistment rights. 


         TIGHTENED QUALITY CONTROL
         AND RETENTION STANDARDS
------------------------------------------------------ Chapter 3:2.3.1

Each of the services has also tightened quality standards affecting
the ability of military personnel to continue their careers at the
conclusion of their initial periods of obligated service.  Actions
taken have included shifting from decentralized to centralized
approval authority over reenlistments.  In addition, greater
attention is being given to physical fitness and weight standards and
substance abuse.  Service officials told us that tightened standards
are more apt to affect enlisted personnel in their first enlistments
than career personnel.  They indicated that the number of persons in
their first enlistment permitted to reenlist is also affected by a
reduced need for certain skills.  Numbers of persons affected by
these controls are included within the tabulations of all persons
leaving the services each year at the end of their term of service or
contract and are not broken out separately (see app.  II). 


         LIMITING SERVICE
         CONTINUATION WITHOUT
         FURTHER PROMOTIONS
------------------------------------------------------ Chapter 3:2.3.2

Each of the services has reduced time frames or tenure standards
governing how long career enlisted members may stay at a given pay
grade before being denied reenlistment rights. 

  -- The Navy reduced the time that persons in enlisted grades E-6,
     E-7, and E-8 could serve without further promotion from 23 to
     20, 26 to 24, and 28 to 26 years, respectively. 

  -- The Marine Corps changed its tenure rule for only one pay grade,
     E-7, reducing service time from 25 to 22 years. 

  -- The Air Force made changes in tenure rules for pay grades E-4
     and E-6 through E-8; the most significant change being to reduce
     the authorized tenure for an E-4 from 20 to 10 years. 

  -- The Army has changed tenure rules for those in pay grades E-4
     through E-8. 

Service officials indicate that these tightened standards have been
responsible for facilitating the early departure of a number
personnel; however, precise numbers are not available.  Some of these
persons retired, whereas others not eligible for retirement separated
under financial separation incentive programs. 


LONG-TERM CHANGES IN SELECTED
FORCE PROFILES HAVE CONTINUED
MODERATELY DURING DOWNSIZING
============================================================ Chapter 4

DOD's use of its various force shaping tools has helped to control,
though not entirely contain, personnel growth in force profiles such
as years of service and pay grades.  These changing force profiles
are part of a longer term trend dating to before the onset of
downsizing efforts in the late 1980s.  Table 4.1 aggregates these
changing profiles at the DOD level for fiscal years 1980, 1987, and
1992. 



                               Table 4.1
                
                  Changing Force Profiles by Selected
                              Fiscal Years


                                                      1980  1987  1992
----------------------------------------------------  ----  ----  ----
Percent of enlisted personnel having less than 4      57.6  49.7  42.7
 years of service
Percent of enlisted personnel having between 15 and    7.3   8.2  11.6
 20 years of service
Percent of officer personnel having between 15 and    14.7  16.6  17.1
 20 years of service
Percent of enlisted personnel having more than 20      3.2   3.0   3.4
 years of service
Percent of officer personnel having more than 20      11.1  11.4  12.6
 years of service
Officer to enlisted ratios                              1/    1/    1/
                                                       6.3   6.0   5.6
Average enlisted pay grades                            4.0   4.3   4.4
Average officer pay grades                             3.2   3.2   3.3
Percent of enlisted personnel in the top 5 enlisted   39.2  43.0  46.7
 pay grades
----------------------------------------------------------------------
Source:  DMDC. 

There are positive and negative aspects of such changes in force
profiles affecting each of the services. 


   A MORE EXPERIENCED FORCE
---------------------------------------------------------- Chapter 4:1

In recent years, the military services have been widely recognized
and cited by senior military leaders as being more capable and better
trained than ever.  One of the factors contributing to this,
according to various military officials, has been the growth in
experience levels of military personnel, gauged by length of service. 
This situation exists across various groupings of personnel by years
of service ranging from those in their initial tours of duty to those
eligible for retirement. 


      DECREASES IN PERCENTAGES OF
      PRE-CAREER PERSONNEL
-------------------------------------------------------- Chapter 4:1.1

Since fiscal year 1980, each of the services, to varying degrees, has
experienced a continual growth in experience levels, particularly for
enlisted personnel.  This trend is most pronounced in terms of the
decline in percentages of pre-career personnel.  Table 4.2 shows the
decline in enlisted personnel having less than 4 years of service for
each of the services at the end of fiscal years 1980, 1987, and 1992. 



                               Table 4.2
                
                    Percent of Active Duty Enlisted
                 Personnel Having Less Than 4 Years of
                   Service, for Selected Fiscal Years

                                            Marine       Air      DOD-
Fiscal Year               Army      Navy     Corps     Force      wide
--------------------  --------  --------  --------  --------  --------
1980                      60.3      57.9      72.1      48.1      57.6
1987                      53.4      49.8      60.7      40.4      49.7
1992                      46.4      43.4      58.1      30.1      42.7
----------------------------------------------------------------------
Source:  DMDC. 

Similar though less dramatic changes have also occurred within the
officer ranks of each of the services. 


      INCREASES IN PERCENTAGES OF
      PERSONNEL NEARING RETIREMENT
-------------------------------------------------------- Chapter 4:1.2

Growth in service experience levels is seen in proportional increases
in numbers of service members having more than 15, but less than 20,
years of service.  Table 4.3 shows the percentage of enlisted
personnel having between 15 and 20 years of service for each of the
services at the end of fiscal years 1980, 1987, and 1992. 



                               Table 4.3
                
                    Percent of Active Duty Enlisted
                Personnel Having Between 15 and 20 Years
                 of Service, for Selected Fiscal Years

                                            Marine       Air      DOD-
Fiscal year               Army      Navy     Corps     Force      wide
--------------------  --------  --------  --------  --------  --------
1980                       5.6       7.9       3.0      10.7       7.3
1987                       7.5       7.4       5.0      11.2       8.2
1992                      11.7       9.9       7.2      15.4      11.6
----------------------------------------------------------------------
Source:  DMDC. 

Increases have also been noted in the percentage of officer personnel
with more than 15 years of service.  Table 4.4 shows the percentage
of officer personnel having between 15 and 20 years of service for
each of the services at the end of fiscal years 1980, 1987, and 1992. 



                               Table 4.4
                
                Percent of Active Duty Officer Personnel
                   Having Between 15 and 20 Years of
                   Service, for Selected Fiscal Years

                                            Marine       Air      DOD-
Fiscal year               Army      Navy     Corps     Force      wide
--------------------  --------  --------  --------  --------  --------
1980                      14.2      14.3      12.0      16.0      14.7
1987                      14.3      16.4      17.3      18.6      16.6
1992                      16.0      16.1      18.0      18.5      17.1
----------------------------------------------------------------------
Source:  DMDC. 

As indicated in tables 4.3 and 4.4, the percentage of members near
retirement has risen in all four services over the past 12 years. 
One reason for part of the increase is related to an overall trend
toward a more experienced force since the all- volunteer force began
in 1973.  Until 1988, according to DOD officials, service members
with more than 15 years had entered military service prior to the
all-volunteer force system, which drafted a significant portion of
the required accessions.  Another reason is that, in recent years,
the Congress and DOD have emphasized protecting members near
retirement from involuntary separations.  The percentages could
stabilize or decline somewhat within the next 2 years as the services
make use of new temporary authority to offer early retirement for
personnel having completed between 15 and 20 years of service.  All
of the services, however, indicate that they are still in the process
of determining how extensively they will use this new authority. 

While this move toward a more senior force has occurred in each of
the services, the "youth to experience" mix has always differed
significantly among the services.  As high as the percentages are for
services in fiscal year 1992, they are much less than they were at
the end of fiscal year 1980. 

The high number of personnel with relatively few years of experience
points to relatively high personnel turnover rates within the
services.  This is an important addition to the more frequently
recognized turbulence involving the rotation of personnel from one
unit or assignment to another, including to and from overseas
assignments. 

Tradeoffs exist between a force that is more senior and a force that
is more junior and relatively less experienced.  Generally, service
officials believe that the trend indicated by table 4.1 is one
indicator of a better trained force than the one that existed prior
to the all-volunteer force or during the mid- to late-1970s, a time
often referred to as a period of the "hollow force." OSD officials
also share this view.  However, they are also aware that, along with
this growth in experience, there comes an increase in average
personnel costs, and OSD has, during this drawdown, exerted influence
on the services to maintain relatively high accession levels, thereby
having the effect of slowing these recent trends.  For example, while
the relative size of the lower ranking enlisted population dropped
steadily during the 1980s, that level of decline has slowed in recent
years with the DOD average changing from 43.1 percent at the end of
fiscal year 1991 to 42.7 percent at the end of fiscal year 1992. 


      CONTROLLED INCREASES IN
      RETIREMENT ELIGIBLE
      POPULATION
-------------------------------------------------------- Chapter 4:1.3

Since fiscal year 1980, the percentage of members with more than 20
years of service has increased moderately, more so for officer than
enlisted personnel.  Tables 4.5 and 4.6 show the percentages of
enlisted personnel and officers having more than 20 years of service,
for each of the services, at the end of fiscal years 1980, 1987, and
1992. 



                               Table 4.5
                
                    Percent of Active Duty Enlisted
                 Personnel Having More Than 20 Years of
                   Service, for Selected Fiscal Years

                                            Marine       Air      DOD-
Fiscal year               Army      Navy     Corps     Force      wide
--------------------  --------  --------  --------  --------  --------
1980                       2.6       2.7       1.8       5.0       3.2
1987                       2.2       2.9       1.7       4.7       3.0
1992                       2.8       3.1       2.2       5.1       3.4
----------------------------------------------------------------------
Source:  DMDC. 



                               Table 4.6
                
                Percent of Active Duty Officer Personnel
                 Having More Than 20 Years of Service,
                       for Selected Fiscal Years

                                            Marine       Air      DOD-
Fiscal year               Army      Navy     Corps     Force      wide
--------------------  --------  --------  --------  --------  --------
1980                       9.6      12.7      11.2      11.5      11.1
1987                      11.2      11.7      10.4      11.7      11.4
1992                      11.3      13.5      12.2      13.0      12.6
----------------------------------------------------------------------
Source:  DMDC. 

While the percentage of enlisted personnel with more than 20 years of
service increased slightly DOD-wide, the average increase for
officers was more noticeable from fiscal year 1980 through fiscal
year 1992, with the greatest increase occurring between fiscal years
1985 and 1988.  However, to a certain extent, each of the services
minimized the potential for greater growth during fiscal year 1992 by
the use of SERBs, and each service expects to do so further in coming
fiscal years, with the greatest emphasis on officer personnel. 


   OFFICER TO ENLISTED RATIOS
   CONTINUE TO RISE
---------------------------------------------------------- Chapter 4:2

Congressional conferees, in providing force reduction guidance,
indicated a desire to see the services maintain the same relationship
between officer and enlisted ranks as existed at the end of fiscal
year 1990.  However, as shown in table 4.7, some moderate growth in
the ratio of officers to enlisted personnel has occurred. 



                               Table 4.7
                
                  Officer/Enlisted Ratios for Selected
                              Fiscal Years

                                            Marine       Air      DOD-
Fiscal year               Army      Navy     Corps     Force      wide
--------------------  --------  --------  --------  --------  --------
1980                     1/6.8     1/7.2     1/9.4     1/4.7     1/6.3
1987                     1/6.2     1/7.1     1/8.9     1/4.6     1/6.0
1990                     1/5.9     1/6.9     1/9.0     1/4.3     1/5.8
1992                     1/5.4     1/6.8     1/8.6     1/4.2     1/5.6
----------------------------------------------------------------------
Source:  DMDC. 

The changes occurring since fiscal year 1990 are reflected in a
longer term trend as indicated by the change between fiscal years
1980 and 1992.  Some service officials believe that some shift in
officer to enlisted ratios is inherent in downsizing.  That is,
officer to enlisted ratios typically rise during downsizing as
reductions are made to the proportionally larger enlisted ranks and
fall during a build-up as proportionately more enlisted personnel are
added.  Army officials also point to congressionally mandated
increases in medical personnel manning levels that have required
retention of more officer personnel.\1


--------------------
\1 The National Defense Authorization Act for Fiscal Year 1991
restricted the services' abilities to reduce medical personnel. 


   AVERAGE PAY GRADES INCREASE
---------------------------------------------------------- Chapter 4:3

Changes have also been noted in the average pay grades of officer and
enlisted personnel during downsizing, as well as being part of a
longer term trend, evidenced by changes since fiscal year 1980. 
Table 4.8 shows changes in average enlisted pay grades for fiscal
years 1980, 1987, and 1992. 



                               Table 4.8
                
                Average Enlisted Pay Grades for Selected
                              Fiscal Years

                                            Marine       Air      DOD-
Fiscal year               Army      Navy     Corps     Force      wide
--------------------  --------  --------  --------  --------  --------
1980                      3.99      4.06      3.50      4.27      4.03
1987                      4.29      4.26      3.85      4.40      4.27
1992                      4.44      4.43      3.89      4.63      4.43
----------------------------------------------------------------------
Source:  DMDC. 

Table 4.8 and additional data we examined for each of the intervening
years show an upward trend in average enlisted pay grades, with a
9.98 percent increase DOD-wide, since fiscal year 1980, with little
differentiation in the degree of change occurring annually during the
current downsizing period from earlier years. 

In comparison with enlisted personnel pay grades for these three
fiscal years, a less significant change occurred in officer pay
grades (see table 4.9). 



                               Table 4.9
                
                Average Officer Pay Grades for Selected
                              Fiscal Years

                                            Marine       Air      DOD-
Fiscal year               Army      Navy     Corps     Force      wide
--------------------  --------  --------  --------  --------  --------
1980                      3.19      3.18      2.88      3.20      3.17
1987                      3.21      3.15      2.94      3.24      3.19
1992                      3.27      3.24      3.00      3.37      3.28
----------------------------------------------------------------------
Source:  DMDC. 

However, as with enlisted personnel, officer pay grades show little
difference in the degree of annual change during the current
downsizing period from earlier years. 


      GROWTH IN TOP FIVE ENLISTED
      PAY GRADES
-------------------------------------------------------- Chapter 4:3.1

DOD's guidance to the services in planning for downsizing stipulated
that they should control growth in the top five enlisted pay grades. 
Table 4.10 shows the percentages of enlisted personnel in the top
five enlisted pay grades (E-5 through E-9) for fiscal years 1980,
1987, and 1992. 



                               Table 4.10
                
                Percentages of Enlisted Personnel in The
                    Top Five Enlisted Pay Grades for
                         Selected Fiscal Years

                                            Marine       Air      DOD-
Fiscal year               Army      Navy     Corps     Force      wide
--------------------  --------  --------  --------  --------  --------
1980                      38.0      40.9      28.0      43.4      39.2
1987                      42.3      45.3      30.8      46.0      43.0
1992                      45.4      49.9      31.9      51.0      46.7
----------------------------------------------------------------------
Source:  DMDC. 

The table shows that these top five pay grades have increased by
several percentage points relative to the overall enlisted force
during downsizing; however, this growth is also part of a longer term
growth trend.  Our examination indicates that the greatest degree of
growth is concentrated in pay grades E-6 and E-7. 

OSD and service officials offered a number of observations about the
growth in pay grades.  They stated that the changing technology and
the complexity of today's weapon systems have increased the
requirement for more senior positions.\2 These officials also stated
that a smaller force is a more senior force; however, we do not
necessarily agree that this has to be the case since our examination
of the top officer pay grades shows a much smaller increase in senior
pay grades.  These officials further expressed the view that the
current growth in senior enlisted ranks is temporary and that they
expect some leveling off in the future with the changes in tenure
rules, and use of SERBs and early retirements; they also stated that
OSD and service controllers are watching the increase because of
budgetary concerns.  It is not clear to us that this is necessarily a
temporary situation given the long-term trend shown in table 4.10. 
We do agree, however, that this is a situation that should be watched
from a budgetary standpoint. 


--------------------
\2 The scope of this review did not extend to verifying and
validating DOD and service requirements. 


ISSUES AFFECTING FUTURE REDUCTION
DECISIONS
============================================================ Chapter 5

Although DOD has already achieved much of its previously planned
force reductions, additional reductions are planned.  However, as
indicated in chapter 2, effective downsizing requires more than the
curtailment of recruiting; it requires maintaining significant levels
of recruiting and preserving a continuous personnel stream.  This
situation adds to the importance of using the various force shaping
and downsizing tools discussed in chapter 3 to achieve downsizing
goals in a manner that retains a balanced force and viable career
opportunities for the future.  Use of these tools has helped to shape
and minimize distortions in the force but, as indicated in chapter 4,
there are some continuing changes in selected force profiles that are
part of much longer term trends. 

Collectively, the issues discussed in this report help to focus
attention on some issues we believe are key to future force reduction
decision-making.  These issues include continuing changes in overall
force profiles, pace of future reductions, correlating such
reductions to changes in force structure, and determining what
accession levels should be, factoring in multiple trade-offs. 
However, the recent drawdown experience does more to offer
perspectives on these issues than to suggest simple, fixed answers
for the future. 


   DESIRED FORCE PROFILES
---------------------------------------------------------- Chapter 5:1

Optimum force profiles in terms of experience levels, average pay
grades, and officer/enlisted ratios are not clearly established and
would likely be difficult to develop with any degree of uniformity
among the services.  Nevertheless, because of their impact on
readiness and costs, we believe that general trends in force profiles
should be considered by the administration and the Congress in
deciding future force levels.  At the same time, we believe that
areas such as officer/enlisted ratios and increasing average pay
grades could benefit from more in-depth analyses to determine to what
extent the growth represents validated requirements and how future
downsizing decisions are apt to affect these requirements.  We expect
to complete more in-depth reviews of personnel requirements in the
future. 


   PACE AND BALANCE IN FORCE
   REDUCTIONS
---------------------------------------------------------- Chapter 5:2

In considering how quickly further reductions should occur, it will
be important to consider that DOD's military personnel system
experiences significant turbulence with high levels of personnel
turnovers during normal times and that this turbulence can be
compounded by required reductions to end strength.  The turbulence is
not caused simply by the exodus of personnel; it also includes the
intake of new personnel to be trained and added to units.  Turbulence
also is associated with the normal rotation of personnel from one
assignment or unit to another. 

Another consideration is the impact of personnel reductions on unit
manning levels.  Army officials acknowledge that, during the current
drawdown, personnel reductions have occurred more quickly than have
changes in unit force structure, creating some undesired undermanning
of units.  While they expect this problem to correct itself as future
unit structure reductions occur, they recognize and have some concern
that the problem could be exacerbated with likely increases in
personnel reduction targets unless the targets are well correlated
with additional structural reductions. 


   DETERMINING ACCESSION LEVELS
---------------------------------------------------------- Chapter 5:3

In determining accession levels, it will be important to consider the
short- and long-term potential impact of any significant reduction in
accession levels on the force.  In the short term, significant
reductions in accession levels can be attained but, in doing so, they
can result in a relatively more costly, but more experienced
force--as the average pay grades for the remaining force increase. 
From a long-term perspective, significant curtailment of accessions
today can pose greater potential for force imbalances in the
future--imbalances associated with a higher graded force and reduced
promotion and career opportunities for younger members of the force. 

One additional factor that could affect accession levels is the
quality of new recruits.  DOD has recently noted a drop in the
quality of new recruits during the first half of fiscal year 1993. 
This trend, should it continue, could suggest the need to make some
further trade-offs between high accession levels and the loss of
quality, experienced personnel.  DOD has a number of tools available
to help shape the force as reductions occur, tools that can be used
in combination to produce a balanced force across pay grades, year
groups, and skill areas. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 5:4

DOD has accomplished a majority of its previously planned active duty
force reductions; however, senior DOD officials have indicated that
further reductions are planned as the result of a recently completed
review of future DOD needs.  DOD and the services have reduced
accession levels over previous years, but are still recruiting large
numbers of personnel each year as part of their efforts to preserve
and sustain a balanced force for the future. 

DOD has used various force shaping authorities or tools to help
drawdown the military forces in a balanced manner, with an emphasis
on voluntary reductions.  DOD's ability to meet force reduction
targets while seeking to retain a balanced remaining force has been
enhanced by the various authorities, including incentives and
transition assistance that the Congress has provided.  Many of these
special authorities expire at the end of fiscal year 1995.  Extension
of these authorities is warranted if the Congress desires to continue
its emphasis on minimizing involuntary reductions, as end-strength
reductions continue to occur. 

DOD's approach to force reductions, along with its continued emphasis
on accessions, has helped to control, although not entirely contain,
some proportional personnel growth in years of service and rank.  A
negative consequence of such growth is increased cost; however, a
positive aspect is increased experience levels.  These two issues
will require trade-offs in force shaping. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 5:5

Given that DOD's downsizing is apt to continue for several more
years, the Congress, to the extent it desires a continuing emphasis
on minimizing involuntary separations, may want to consider extending
the use of special financial separation incentive programs beyond the
current deadline of fiscal year 1995.  Also, the original authority
for use of the separation incentives was limited to those who had
attained 6 years of service at the time the legislation was enacted
in December 1991.  Therefore, the Congress may also want to amend the
legislation to include all who have attained 6 years of service
within the time frame for which the incentives are authorized as a
means of broadening the pool of persons eligible for the incentives
and minimize the potential for greater involuntary separations in the
future. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 5:6

DOD fully concurred with the report's findings and matters for
congressional consideration.  (See app.  IV.)


MILITARY END-STRENGTH LEVELS,
FISCAL YEARS 1980 THROUGH 1994
=========================================================== Appendix I

                       (Numbers of personnel in thousands)

                                                  Net change          Net change
                                                     between             between
                                        FY    FY 1980 and FY      FY 1987 and FY
               FY 1980   FY 1987    1994\b              1994                1994
------------  --------  --------  --------  ----------------  ------------------
Active duty
Army             776.5     780.8     540.0     -236.5 (-30%)       -240.8 (-31%)
Navy             527.2     586.8     480.8      -46.4 (-09%)       -106.0 (-18%)
Marine Corps     188.5     199.5     174.1      -14.4 (-08%)        -25.4 (-13%)
Air Force        558.0     607.0     425.7     -132.3 (-24%)       -181.3 (-30%)
================================================================================
Total          2,050.2   2,174.1   1,620.6     -429.6 (-21%)       -553.5 (-25%)
Guard and
 reserves
Army             581.5     765.5     670.0     + 88.5 (+15%)        -95.5 (-12%)
Navy              97.0     148.3     113.4     + 16.4 (+17%)        -34.9 (-24%)
Marine Corps      35.7      42.3      36.9      + 1.2 (+03%)         -5.4 (-13%)
Air Force        155.2     195.0     199.2     + 44.0 (+28%)        + 4.2 (+02%)
================================================================================
Total            869.4   1,151.1   1,019.5     +150.1 (+17%)       -131.6 (-11%)
Combined
 military
Army           1,358.0   1,546.3   1,210.0     -148.0 (-11%)       -336.3 (-22%)
Navy             624.2     735.1     594.2      -30.0 (-05%)       -140.9 (-19%)
Marine Corps     224.2     241.8     211.0      -13.2 (-06%)        -30.8 (-13%)
Air Force        713.2     802.0     624.9      -88.3 (-12%)       -177.1 (-22%)
================================================================================
Total\a        2,919.6   3,325.2   2,640.1     -279.5 (-10%)       -685.1 (-21%)
--------------------------------------------------------------------------------
\a Totals may not add due to rounding. 

\b Prior-year data are actual, while future-year data are projected
as of March 1993. 

Sources:  OSD and individual services.  Prior-year data are actual
while future-year data are projected as of March 1993. 


ACTIVE DUTY MILITARY PERSONNEL
SEPARATIONS DURING FISCAL YEAR
1992
========================================================== Appendix II

                       (Numbers are in thousands)


                                                Marine     Air
Reason                             Army   Navy   Corps   Force   Total
--------------------------------  -----  -----  ------  ------  ======
Expired term of service/           44.9   36.5    21.4    22.3   125.1
 contract
Early out release                  34.7    3.7     0.0     1.8    40.2
SSB incentive                      25.5    3.6     0.7    15.0    44.8
VSI                                 3.6    0.6     0.2     2.3     6.7
SERB                                1.7    0.4     0.2     1.0     3.2
Regular retirement                 18.2    9.2     2.7    16.8    47.0
Involuntary separation
With separation pay                 5.4    0.8     1.9     2.9    11.0
Without separation pay             11.5   20.4     5.4     0.1    37.3
Other\a                            40.0   23.9    10.4    19.4    93.7
======================================================================
Total\b                           185.4   99.0    42.9    81.6   409.0
----------------------------------------------------------------------
\a Individual services vary somewhat in the extent to which they
indicate losses through "involuntary separation" and other
categories.  The other category includes separations for not meeting
physical requirements, hardship, death, trainee losses,
unsuitability, misconduct, desertion, attrition of active duty
reservists, miscellaneous adjustments, and others.  Both other and
involuntary separation without pay categories appear to be closely
related. 

\b Numbers and totals shown will vary somewhat from actual data due
to rounding. 

Source:  Military service officials. 


ILLUSTRATED SEVERANCE PAY OPTIONS
RELATED TO DOWNSIZING FOR SELECTED
PAY GRADES
========================================================= Appendix III

                                         Enlisted--E-6     Officer 0-4
--------------------------------------  --------------  --------------
Years of service                                    15              15
Annual basic pay before separation            $ 21,121        $ 43,376
Severance pay if involuntarily                $ 31,682        $ 65,065
 separated--lump sum\a
SSB option--lump sum\b                        $ 47,523        $ 97,597
VSI option--annuity\c
Annual                                         $ 7,920        $ 16,266
Total                                         $237,614        $487,985
15-year retirement option--monthly\d
Annual                                         $ 7,524        $ 15,453
Total                                         For life        For life
----------------------------------------------------------------------
\a Involuntary separation pay is based on the service member's
monthly basic pay rate and years of service.  This one time lump-sum
payment is equal to the final monthly basic pay times
12 months, times 10 percent, times the years of service.  DOD's
involuntary separation payments in fiscal year 1992 totaled $168.5
million (including separations relating to downsizing actions as well
as other involuntary separations). 

\b SSB is a one time lump-sum payment equal to 15 percent of a
service member's basic pay rate times the years of service.  DOD's
SSB payments in fiscal year 1992 totaled $1,691.6 million. 

\c VSI involves an annual annuity for twice the number of years of
service equal to 2.5 percent of the service member's basic pay times
the years of service.  DOD's VSI payments to individual recipients in
fiscal year 1992 totaled $70.7 million. 

\d Early retirement pay which is paid monthly is based on a service
member's annual basic pay times the years of service, times 2.5
percent, times a reduction factor (1.0 minus 0.01 for each year of
service less than 20).  The 15-year retirement program is being
implemented during fiscal year 1993. 




(See figure in printed edition.)Appendix IV
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
========================================================= Appendix III


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V


   NATIONAL SECURITY AND
   INTERNATIONAL AFFAIRS DIVISION,
   WASHINGTON, D.C. 
--------------------------------------------------------- Appendix V:1

Norman J.  Rabkin, Associate Director
Barry W.  Holman, Assistant Director
David E.  Moser, Evaluator-in-Charge
Jacqueline E.  Snead, Evaluator
James P.  Tallon, Evaluator


*** End of document. ***