Military Personnel Reassignments: Services Are Exploring Opportunities to
Reduce Relocation Costs (Letter Report, 02/16/96, GAO/NSIAD-96-84).

In fiscal year 1995, the military spent nearly $3 billion to move
850,000 service members and their families. GAO has found that few
opportunities exist to reduce the costs of permanent change-of-station
moves. Overseas commitments and other laws also require the military to
move many service members each year. Despite these constraints, the
military is trying to cut annual costs by reducing the number of
permanent change-of-station moves. To further reduce costs, the services
are encouraging consecutive assignments in some geographic areas and
increasing tour lengths where possible. Finally, the Defense Department
can further decrease its overseas military requirements by hiring
overseas contractors. The number of relocations, but not their costs,
decreased in proportion to the defense downsizing from fiscal year 1987
through fiscal year 1995. The main reasons that permanent
change-of-station moves did not decrease were inflation, changes in some
entitlements, and an increase in the number of service members with
dependents. According to military officials, the frequency of permanent
change-of-station moves is only a minor contributor to readiness
problems in military units. Other factors, especially the increase in
deployments for operations other than war, have a greater impact on
readiness.

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

 REPORTNUM:  NSIAD-96-84
     TITLE:  Military Personnel Reassignments: Services Are Exploring 
             Opportunities to Reduce Relocation Costs
      DATE:  02/16/96
   SUBJECT:  Military downsizing
             Military cost control
             Employee transfers
             Military personnel
             Relocation allowances
             Personnel management
             Armed forces abroad
             Combat readiness
             Defense contingency planning
             Human resources utilization
IDENTIFIER:  Europe
             Asia
             Japan
             South Korea
             Navy Homestead Program
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Military Personnel, Committee
on National Security, House of Representatives

February 1996

MILITARY PERSONNEL REASSIGNMENTS -
SERVICES ARE EXPLORING
OPPORTUNITIES TO REDUCE RELOCATION
COSTS

GAO/NSIAD-96-84

Military Personnel Reassignments

(703101)


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

  DOD - Department of Defense
  PCS - permanent change-of-station

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


B-270790

February 16, 1996

The Honorable Robert K.  Dornan
Chairman
Subcommittee on Military Personnel
Committee on National Security
House of Representatives

Dear Mr.  Chairman: 

In fiscal year 1995, the military services spent $2.9 billion to move
nearly 850,000 servicemembers and their families.  In response to
your request, we reviewed the services' practices for relocating
personnel.  Our objectives were to determine whether

  -- opportunities exist to reduce the costs of permanent
     change-of-station moves,

  -- the number of moves and related costs have decreased in
     proportion to the reductions in military end strengths, and

  -- frequent reassignments significantly impair military readiness. 


   BACKGROUND
------------------------------------------------------------ Letter :1

According to federal laws and Department of Defense (DOD) policy,
servicemembers are entitled to permanent change-of-station (PCS)
benefits--paid moving expenses--when assigned to a location for
longer than 20 weeks.  These moving expenses are paid from each
service's military personnel appropriation.  For fiscal year 1995,
the $2.9 billion in PCS expenditures represented nearly 4 percent of
DOD's total military personnel appropriation. 

The services classify each PCS move into one of six budget
categories:  accessions, separations, organized unit moves, overseas
rotational moves, operational moves, and training moves.  Accessions
and separations refer to servicemembers' entrance into and departure
from the service.  Organized unit moves occur when facilities are
closed or moved (for example, due to Base Realignment and Closure
Commission decisions).  The remaining three categories include moves
to and from overseas locations (rotational), moves that occur between
installations and do not require transoceanic travel (operational),
and moves to and from training schools.  Appendix I contains a full
description of each PCS budget category and elements of PCS
expenditures within the military personnel appropriation. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Few opportunities exist to reduce PCS costs because federal laws
entitle servicemembers to certain relocation benefits.  Overseas
commitments and other laws also require the services to move a large
number of servicemembers each year.  Despite these constraints, the
services are taking steps to reduce the number of PCS moves and
thereby reduce annual costs.  Each service has already made at least
one major assessment of its PCS policies and practices and has
changed some of them to create efficiencies.  To further reduce
costs, the services are encouraging consecutive assignments in
certain geographic locations and increasing tour lengths where
possible.  Finally, according to an October 1995 Defense task force
report, DOD could further decrease its overseas military requirements
and costs by hiring overseas contractors. 

The number of relocations, but not their costs, decreased in
proportion to the large reductions in military end strengths from
fiscal year 1987 (the beginning of military downsizing) through
fiscal year 1995.  Some variation exists among the categories of PCS
moves and the military services.  For example, PCS moves within the
United States increased slightly in recent years because of
turbulence caused by military downsizing and personnel returning from
Europe.  The main reasons PCS costs did not decrease were inflation,
changes in some entitlements, and an increase in the number of
servicemembers with dependents. 

According to service officials, the frequency of PCS moves is only a
minor contributor to readiness problems in military units.  Other
factors, especially the increase in deployments for operations other
than war, have a greater impact on readiness. 


   PCS ENTITLEMENTS ARE PROVIDED
   BY LAW, AND FEW OPPORTUNITIES
   EXIST TO REDUCE COSTS
------------------------------------------------------------ Letter :3

The military services have limited control over the costs of
relocating servicemembers because most relocation entitlements are
provided in U.S.  laws and DOD policies.  The services also have
limited control over the number of servicemembers they must move each
year because of agreements with foreign countries and requirements of
some U.S.  laws.  Other moves are made to maintain readiness
throughout the force. 

Title 37 of the United States Code provided that, without regard to
the comparative costs of the various modes of transportation, a
member of a uniformed service is entitled to travel and
transportation allowances for travel performed under authorized
orders.  Title 37 specifies several conditions for such allowances,
including a permanent change of station, enlistment or induction into
a uniformed service, and separation or retirement from active duty. 

Accordingly, DOD policies require the services to pay the cost of
moving recruits to their first duty station.  The services must also
pay relocation costs for members separating from the service, whether
involuntarily or voluntarily.  Nearly 58 percent of the PCS moves in
fiscal year 1995 were for personnel entering and leaving the
military.  Another 3 percent required the movement of entire units
because of force structure changes, such as the changes resulting
from the Base Realignment and Closure Commission decisions. 

U.S.  national security commitments require the services to station
about 250,000 military personnel overseas for tours of 1 to 3 years. 
Mutual defense agreements between the United States and members of
the North Atlantic Treaty Organization require the United States to
maintain about 100,000 uniformed servicemembers in Europe.  Similar
agreements with Asian-Pacific nations require the United States to
maintain nearly 100,000 servicemembers in Asia, especially Korea and
Japan.  Each overseas position requires two PCS moves:  one to fill
the position and one for the servicemember leaving the position. 
About 22 percent of the PCS moves in fiscal year 1995 were for
overseas rotational moves in direct support of the military services'
required overseas presence. 

As table 1 shows, cumulatively, accessions, separations, unit moves,
and overseas rotational moves accounted for almost 83 percent of the
services' PCS moves in fiscal year 1995 and over three-quarters of
their costs. 



                                     Table 1
                     
                       Number and Cost of PCS Moves for All
                           Services (fiscal year 1995)

                              (Dollars in thousands)


Budget        Number  Percentage  Cumulative              Percentage  Cumulative
category    of moves    of moves  percentage       Costs    of costs  percentage
--------  ----------  ----------  ----------  ----------  ----------  ----------
Accessio     208,821        24.7        24.7    $234,763         8.2         8.2
 ns
Separati     277,581        32.8        57.5     491,226        17.2        25.4
 ons
Unit          25,513         3.0        60.5      95,656         3.3        28.7
 moves
Overseas     186,754        22.1        82.6   1,371,150        48.0        76.7
 rotatio
 nal
 moves
U.S.         108,141        12.8        95.4     515,367        18.0        94.7
 operati
 onal
 moves
Training      39,760         4.7       100\a     151,259         5.3         100
 moves
================================================================================
Total        846,570       100\a              $2,859,421         100
--------------------------------------------------------------------------------
\a Total does not add due to rounding. 

Source:  Service budget submission data. 

As table 1 also shows, reassignments of servicemembers between
military installations within the United States (operational moves)
make up nearly 13 percent of all PCS moves.  Sometimes, these
operational moves are required to fill about 21,000 joint duty
positions required under the Goldwater-Nichols Department of Defense
Reorganization Act of 1986.\1

Each service also must move personnel within the United States to
meet requirements placed upon them by law and DOD and service
policies.  For example, the Army anticipates relocating nearly 5,000
active duty personnel to help train reserve forces as required under
the Army National Guard Combat Readiness Reform Act of 1992.  Other
moves occur to fill positions the services designate as having high
priority duties, such as recruiters, drill instructors, and command
infrastructure and management positions. 

In addition, personnel separations and overseas reassignments have a
ripple effect on units based in the United States and may require
other PCS moves to ensure readiness at all levels.  For example,
personnel returning from overseas assignments cannot always fill the
specific position of another individual selected to go overseas.  The
services must match grades, skills, and experience requirements of
positions with the personnel being assigned.  Thus, some additional
PCS moves may occur as the services make such matches. 

Finally, table 1 shows that nearly 5 percent of the services' PCS
moves in fiscal year 1995 were for servicemembers to attend
specialized schools or training courses for 20 weeks or longer.  Some
training is necessary to meet the educational requirements of
selected military positions and the minimum standards established by
the services. 


--------------------
\1 Joint duty positions include those controlled by the Chairman,
Joint Chiefs of Staff and other positions in consolidated defense
agencies and activities.  Title IV of the Goldwater-Nichols
Department of Defense Reorganization Act of 1986 specifically
requires the Secretary of Defense to define a joint duty assignment
and publish a list of such assignments.  According to the act, joint
duty has to provide significant experience in "joint matters" and
cannot be in an officer's own military department. 


      SERVICES HAVE TAKEN STEPS TO
      REDUCE PCS COSTS
---------------------------------------------------------- Letter :3.1

The services acknowledge that limiting the frequency of PCS moves
would reduce costs and improve the quality of life for
servicemembers.  Consequently, the services are reviewing and
revising their PCS policies and practices.  Each service is examining
ways to increase the time a servicemember remains in a geographic
area, also known as time-on-station.  In some instances, changes have
been made. 


      SERVICES HAVE IMPLEMENTED
      SOME POLICY CHANGES
---------------------------------------------------------- Letter :3.2

In February 1995, the Air Force began restricting the ability of
major command officials to transfer military personnel between
installations within the command unless the receiving installation
was staffed below the Air Force's average "fill rate."\2 The Air
Force estimates that, as a result of this change, it reduced its
fiscal year 1995 PCS expenditures by $8 million, or about 4 percent
of total Air Force operational PCS costs. 

The Chief of Naval Operations encourages multiple tours in the same
geographic location whenever possible--commonly referred to as
"homesteading." In September 1995, the Navy initiated a program to
permit eligible enlisted sailors stationed at south Texas
installations to homestead when possible.  The Chief of Naval
Operations instructed the Bureau of Naval Personnel to develop
options expanding homesteading to as many Navy locations as possible. 
In December 1995, several options were given to the Chief of Naval
Operations for review. 

In October 1995, the Commandant of the Marine Corps directed
personnel managers to increase the number of enlisted personnel
assigned to consecutive tours in three geographic locations--North
Carolina, Southern California, and the Washington, D.C., National
Capital area.  They believe this program will increase the time a
marine is stationed in a geographic area, improve the family's
quality of life, reduce the number of PCS moves, and save money. 


--------------------
\2 "Fill rate" refers to the percentage of authorized positions with
personnel assigned to them. 


      SERVICES ARE STUDYING
      ADDITIONAL PCS POLICY
      CHANGES
---------------------------------------------------------- Letter :3.3

In June 1995, the Air Force initiated a systematic review of its PCS
program to identify ways to reduce expenditures.  The initial phase
of this study will examine tour lengths.  The goal is to reduce the
number of positions with maximum tour lengths.  Maximum tour lengths
limit how long a person may stay in one location.  In addition, the
Air Force is considering increasing the number of minimum tour
lengths where practicable.  Longer tours mean fewer PCS moves and
reduced expenditures. 

The Army contracted with the Rand Corporation to help determine how
the Army could address personnel management issues, including
suggestions to help reduce its PCS moves.\3 Only one of the
alternatives studied reduced the number of PCS moves and saved costs. 
That alternative was to reduce the number of soldiers stationed
overseas.  Rand Corporation's December 1995 draft report noted,
however, that the number of soldiers the Army must station overseas
is beyond the Army's control. 

All services offer incentives to personnel on overseas tours if they
extend their tour or remain for a second tour.  Servicemembers
electing to remain overseas for a second tour receive one round-trip
airfare for themselves and their authorized dependents to their home
in the United States.  Servicemembers electing to extend their tour
by 1 year receive either additional monthly pay, 30 days of special
leave, or 15 days of special leave and round-trip airfare to the
nearest U.S.  port of entry.  According to service officials, the
collective cost of the incentives is less than the two moves that
would be required to replace the servicemember.  The special leave
and additional monthly pay incentives are funded by the services'
military personnel appropriation.  In some instances, the round-trip
airfare is funded by command operation and maintenance
appropriations. 

For extension programs with allowances funded from their operation
and maintenance appropriation, Army overseas commanders were
reluctant to encourage a soldier to extend a tour.  In these
instances, the commanders believed other items funded from the
operation and maintenance appropriation, such as gasoline, spare
parts, and training, were higher priorities.  Beginning in fiscal
year 1997, all incentives will be funded from the services' military
personnel appropriation, although the Army began implementing the
program in January 1996. 


--------------------
\3 See draft report.  Assignment Stability:  A Briefing on PCS Moves
in the U.S.  Army (Rand Corporation, DRR-1161-A, Dec.  1995).  This
report is the first in a series of four reports for the Army. 


      ADDITIONAL OPPORTUNITIES
      EXIST FOR COST SAVINGS
---------------------------------------------------------- Letter :3.4

The services believe their ongoing studies could lead to reduced
costs and less frequent PCS moves.  We agree with the services.  In
addition, in several of our prior reports on other subjects, we have
identified opportunities to improve operations, which could also
reduce PCS costs. 

We reported in October 1994 that the services could cut military
personnel costs by using civilians for certain positions.\4

Civilians can more effectively provide continuity and institutional
memory because they are less subject to frequent reassignments.  Yet,
the services assign thousands of military personnel to support
functions such as personnel management, finance, and data processing
that are typically performed by civilian personnel and do not require
knowledge or skills acquired through military experience.  In some
instances, valid reasons exist for not replacing military support
personnel with civilians.  For example, some military positions are
needed to provide time in the United States for servicemembers
rotating from tours abroad.  In other instances, replacements that
should be made are impeded by factors such as downsizing and funding. 
In commenting on a draft of this report, service officials expressed
concerns about continuing reductions in funds for civilian personnel. 

We reported, in December 1994, that the services maintain more
recruiting stations throughout the United States than they need.\5

For example, the offices in 50 percent of the counties recruit only
13.5 percent of the recruits.  Closing those less productive offices
and relying on alternatives could eliminate or reduce the need for
2,800 active duty recruiters.  Such closures could also eliminate
over 1,800 PCS reassignments each year--nearly a 2-percent reduction
in operational PCS moves--because the typical tour to a recruiting
station is 3 years. 

In addition, we have just initiated a related review on first- term
attrition.  That review will examine steps DOD and the services are
taking to reduce the attrition rate for first-term enlistees. 
Because many recruits do not complete their first tour of duty, the
services may unnecessarily incur relocation expenses.  Accordingly,
any improvement in the attrition rates should reduce the services'
$700 million PCS budget for accessions and separations.  We expect to
complete this work in late calendar year 1996. 

The Defense Science Board Task Force on Quality of Life reported in
October 1995 that hiring contractors overseas to replace departing
active duty personnel would reduce forward presence requirements and
costs associated with maintaining military personnel in foreign
countries.\6 The task force identified several major U.S.  and
foreign corporations already providing contracted housing and family
services and made several recommendations for additional overseas
contracting opportunities, such as cooking and delivering supplies. 
In commenting on a draft of this report, service officials agreed
that some contracting is possible.  They noted, however, that status
of forces agreements with foreign countries also limit the total
number of employees the United States can maintain within a country. 


--------------------
\4 DOD Force Mix Issues:  Greater Reliance on Civilians in Support
Roles Could Provide Significant Benefits (GAO/NSIAD-95-5, Oct.  19,
1994). 

\5 Military Recruiting:  More Innovative Approaches Needed
(GAO/NSIAD-95-22, Dec.  22, 1994). 

\6 Defense Science Board Task Force on Quality of Life, Final Report
(Oct.  19, 1995). 


   NUMBER OF PCS MOVES DECLINED
   WITH THE SIZE OF THE FORCE, BUT
   VARIATIONS EXIST BY CATEGORY
   AND MILITARY SERVICE
------------------------------------------------------------ Letter :4

For fiscal years 1987 through 1995, total PCS moves declined with the
size of the force and changes in U.S.  overseas presence.  However,
PCS moves between U.S.  installations increased because of turbulence
from the services' downsizing programs, the European drawdown, and
increased personnel demands of joint duty positions.  The Army was
most impacted by the European drawdown, while the Navy had more PCS
moves within the United States than the other services and also
experienced the largest decline in training moves. 


      TOTAL PCS MOVES AND OVERSEAS
      REASSIGNMENTS DECLINED
---------------------------------------------------------- Letter :4.1

For fiscal years 1987 through 1995, PCS moves declined by 26 percent
while the services' end strengths declined by 30 percent.  Figure 1
shows that service end strengths declined from 2.2 million in fiscal
year 1987 to 1.5 million in fiscal year 1995, while the number of PCS
moves declined from 1,145,442 to 846,570. 

   Figure 1:  Comparison of
   Services' End Strengths and PCS
   Moves (fiscal years 1987-95)

   (See figure in printed
   edition.)

   Note:  The spike in fiscal year
   1992 occurred because of
   Operation Desert Storm.

   (See figure in printed
   edition.)

   Source:  DOD Comptroller and
   service budget submission data.

   (See figure in printed
   edition.)

During fiscal year 1991, most Army units in Europe were deployed to
Operation Desert Storm, and the Army delayed overseas PCS moves to
and from all overseas areas until fiscal year 1992.  This delay,
combined with the European drawdown, temporarily increased total PCS
moves during fiscal year 1992. 

PCS moves to and from overseas installations also declined at nearly
the same rate as reductions in U.S.  overseas presence.  As figure 2
shows, overseas PCS moves declined from 306,212 in fiscal year 1987
to 186,754 in fiscal year 1995, or by 39 percent, while overseas
requirements declined by 49 percent, from 593,058 to 304,448 over the
same period. 

   Figure 2:  Comparison of U.S. 
   Overseas Requirements and
   Transoceanic PCS Moves (fiscal
   years 1987-95)

   (See figure in printed
   edition.)

   Note:  Peaks and valleys in
   fiscal years 1991 and 1992
   occurred because of delayed
   relocation of European forces
   and Operation Desert Storm,
   particularly for the Army.

   (See figure in printed
   edition.)

   Source:  DOD Comptroller and
   service budget submission data.

   (See figure in printed
   edition.)

The Army is most impacted by overseas assignments because it must
fill the largest share of the positions, especially in Europe.  In
this regard, we have previously reported that the Army is using the
most advantageous system to fill overseas positions.\7

In that report, we studied several alternatives to the Army's
individual replacement system and determined that it had advantages
over other alternatives for maintaining the Army's European presence. 
The primary reason is that the Army did not have enough units in the
United States to rotate entire units to Europe. 


--------------------
\7 Army Force Structure:  Current System for Assigning Troops to
Europe Has Advantages Over Alternatives (GAO/NSIAD-94-42, Nov.  10,
1993). 


      DOWNSIZING TURBULENCE
      INCREASED MOVES BETWEEN U.S. 
      INSTALLATIONS
---------------------------------------------------------- Letter :4.2

Although overall PCS moves declined since fiscal year 1987, PCS moves
between U.S.  installations increased by 16 percent, from 93,430 in
fiscal year 1987 to 108,141 in fiscal year 1995, as figure 3 shows. 
Service officials predict that, when downsizing concludes in 1999,
there will be fewer operational moves in the United States than there
were in 1987.  The larger increases occurred in fiscal years 1989 and
1991 when downsizing accelerated and in fiscal year 1993 when the
European drawdown accelerated. 

   Figure 3:  PCS Moves Between
   U.S.  Installations DOD-Wide
   (fiscal years 1987-95)

   (See figure in printed
   edition.)

   Source:  Service budget
   submission data.

   (See figure in printed
   edition.)

We reported on the impact of downsizing turbulence from another
perspective in June 1995.\8 We stated that policies for relocating
personnel returning from Europe and general downsizing created
personnel imbalances at some U.S.  military installations that needed
to be corrected.  For example, personnel stationed in Europe less
than a year were reassigned to other units and remained in Europe
when their units were returned to the United States.  Thus, some
units returned to the United States with fewer personnel than
authorized.  Also, some units were under staffed because
participation in the downsizing programs was voluntary and the
services had limited control over who left individual units and
installations.  To correct the shortages and to maintain the
personnel readiness levels of the affected units, the services
relocated personnel from other U.S.  installations--a process called
force leveling. 

Furthermore, part of the increase in U.S.  operational PCS moves
resulted from increased personnel demands on the services to fill
joint positions pursuant to the Goldwater-Nichols Department of
Defense Reorganization Act of 1986.  When DOD centralized several
functions, formerly conducted by the individual services, the
functions became joint duty positions.  In April 1987, the Secretary
of Defense published a joint duty assignment list that contained over
8,000 positions.  By 1994, this list contained over
21,000 positions.  While directly under the services' control, the
functions were often staffed at less than 100 percent of their
authorized levels; the same functions must be filled at 100 percent
under joint duty.  In addition, the services must fill these
positions from a smaller pool of personnel and may incur more PCS
moves to meet the staffing demands. 

As shown in figure 4, the Navy consistently had the largest number of
PCS moves between U.S.  installations.  This is because the Navy
routinely rotates sailors between an assignment aboard a ship (sea
duty) and a port or an inland installation (shore duty) approximately
every 3 years.  In many instances, these rotations require a PCS move
because the Navy's major U.S.  ports have more sea duty positions
than shore duty positions.  When the sea-to-shore rotation occurs in
the same geographic location, such as Norfolk, Virginia, a no-cost
PCS move results.  In fiscal year 1995, about 27,000 no-cost,
sea-to-shore rotations were made, but these figures are not included
in the PCS data shown in figure 4. 

   Figure 4:  PCS Moves Between
   U.S.  Installations by Service
   (fiscal years 1987-95)

   (See figure in printed
   edition.)

   Source:  DOD Comptroller and
   service budget submission data.

   (See figure in printed
   edition.)


--------------------
\8 Military Personnel:  High Aggregate Personnel Levels Maintained
Throughout Drawdown (GAO/NSIAD-95-97, June 2, 1995). 


      PCS TRAINING MOVES DECLINED
---------------------------------------------------------- Letter :4.3

For fiscal years 1987 through 1995, the percentage of servicemembers
relocated to attend training for 20 weeks or longer declined from 3.1
percent to 2.6 percent.  This represents a 41-percent decrease in PCS
training moves. 

As figure 5 shows, the Navy had the largest decline in PCS training
moves, while training moves in the other services remained fairly
constant.  The number of sailors relocated for training declined from
35,338 (6 percent of the Navy's end strength) in fiscal year 1987 to
16,940 (3.9 percent in 1995)--a 52-percent change compared with 41
percent DOD-wide.  In the past, the Navy's practice was to send
sailors to school before their next sea tour.  Due to budgetary
constraints, the Navy began using more on-the-job training and
relying less on formal training. 

   Figure 5:  PCS Training Moves
   by Service (fiscal years
   1987-95)

   (See figure in printed
   edition.)

   Source:  DOD Comptroller and
   service budget submission data.

   (See figure in printed
   edition.)


   SEVERAL FACTORS ACCOUNT FOR
   INCREASE IN AVERAGE COST OF
   EACH MOVE
------------------------------------------------------------ Letter :5

The actual expenditures for PCS moves and the average cost of each
move increased between fiscal year 1987 and fiscal year 1995.  When
the cost data were adjusted for inflation, however, total costs
decreased slightly and the cost per move still increased.\9 For
instance, actual expenditures increased from $2.3 billion in fiscal
year 1987 to $2.9 billion in fiscal
year 1995, but the inflation-adjusted total costs decreased from $2.3
billion to $2.2 billion over the same period. 

Average cost per move increased from $2,006 in fiscal year 1987 to
$3,378 in fiscal year 1995, a 68-percent increase.  When the increase
due to inflation was removed, the average cost of a PCS move still
increased by 30 percent, from $2,006 in fiscal year 1987 to $2,611 in
fiscal year 1995, as figure 6 shows. 

   Figure 6:  Comparison of Actual
   Cost of Each PCS Move With
   Costs Adjusted for Inflation
   (fiscal years 1987-95)

   (See figure in printed
   edition.)

   Source:  GAO computation based
   on service budget data.

   (See figure in printed
   edition.)

According to service officials, changes in relocation entitlements
accounted for most of the 30-percent cost increase.  In fiscal year
1989, for instance, the Congress authorized increases in the shipping
weights for household goods.  Recently, the basis for determining
allowances to cover incidental expenses doubled (called a dislocation
allowance), a temporary lodging expense was added as an entitlement,
and servicemembers were allowed to move two privately owned vehicles
instead of one. 

An increase in the number of dependents that moved with
servicemembers accounts for the remainder of the increase.  Service
officials stated that the average age of force members increased
because of downsizing and that older servicemembers are more likely
to have dependents.  Therefore, the percentage of servicemembers with
dependents increased and the number of servicemembers moving with
dependents also increased.  For instance, in fiscal year 1989, 33
percent of the Navy's servicemembers moved with dependents; that
number increased to 48 percent in fiscal year 1994.  Personnel
officers in the other services noted that their services also
experienced an increase in the number of servicemembers moving with
dependents, but to a lesser degree than the Navy. 


--------------------
\9 To account for inflation, each year's total PCS costs were
adjusted to 1987 constant dollars using the Gross Domestic Product
Deflator. 


   PCS MOVES HAVE LIMITED IMPACT
   ON UNIT READINESS
------------------------------------------------------------ Letter :6

While personnel changes within a military unit (including PCS
reassignments) influence that unit's readiness, PCS moves are not a
major contributor to readiness problems.\10 According to commanders
and personnel officers at the Army's Fort Hood and Air Force's Dyess
Air Force Base, uncontrolled and unplanned personnel absences, such
as deployments, special duty assignments, and health problems,
adversely impact unit readiness more than PCS moves.  Commanders
receive advance notice of PCS moves and often know precisely when
unit personnel will be replaced.  Thus, the commanders can control
the impact of such moves on their units' readiness.  According to
Marine Corps officials, however, the frequency of staff turnover
associated with 12-month unaccompanied tours adversely affects the
readiness of some support units, especially those in Japan. 

A major cause of personnel turbulence in recent years has been
deployments for operations other than war.  We previously reported
that the rate of deployments for peace operations is beginning to
challenge service capabilities to remain ready to respond to major
conflicts.\11 In some instances, the services have transferred
individuals from nondeployed units to ensure that deployed units were
fully staffed.  Thus, units providing personnel to the deploying
units experience personnel shortages that degrade their readiness. 


--------------------
\10 "Unit readiness" is an assessment of a unit's capability to
complete a specific mission.  Such assessments consider the number of
personnel assigned to the unit, the availability and capability of
equipment, and the training level of unit members. 

\11 Peace Operations:  Heavy Use of Key Capabilities May Affect
Response to Regional Conflicts (GAO/NSIAD-95-51, Mar.  8, 1995). 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

In oral comments, DOD agreed with this report's findings and
conclusions.  The comments dealt primarily with technical accuracy
and clarification.  We have changed the report, as appropriate, to
respond to these comments. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8

We interviewed DOD and service officials and reviewed policies,
regulations, procedures, related DOD studies, and data on the number
and costs of PCS moves.  We analyzed PCS cost data by budget
category, officer and enlisted status, and by service for fiscal
years 1987 through 1995.  We adjusted the nominal dollars to constant
fiscal year 1987 dollars using the Gross Domestic Product
Deflator.\12 We developed and analyzed various categories of trend
data and interviewed service officials to explain anomalies. 

Information was obtained from the following Washington, D.C.,
metropolitan area DOD officials:  the Assistant Secretary of Defense
for Force Management Policy; Office of the Secretary of Defense's
Under Secretary of Defense for Personnel and Readiness; the DOD
Comptroller; the Army's Deputy Chief of Staff for Personnel, the Army
Budget Office, and the U.S.  Army Total Personnel Command; the Air
Force's Deputy Chief of Staff for Personnel and the Air Force's
Budget Office; the Navy's Bureau of Naval Personnel and the Navy's
Budget Office; and the Marine Corps' Operation and Support Branch. 

To obtain operational perspectives on the impact of PCS moves on unit
readiness, we visited the following locations:  Dyess Air Force Base,
Texas; Fort Hood, Texas; and Army's Forces Command, Fort McPherson,
Georgia.  We discussed the key factors affecting unit readiness and
obtained some limited readiness data from operational groups and
personnel officers at each location.  We also reviewed several of our
prior reports on this subject. 

We performed our review from May through November 1995 in accordance
with generally accepted government auditing standards. 


--------------------
\12 The Gross Domestic Product Deflator is a broad-based price index
of all goods and services produced in the United States.  We used
this index to provide the most comprehensive picture of changes in
the purchasing power of the dollar over the 9-year period covered by
our review because it includes all goods and services produced in the
United States. 


---------------------------------------------------------- Letter :8.1

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 II. 

Sincerely yours,

Mark E.  Gebicke
Director, Military Operations
 and Capabilities Issues


PERMANENT CHANGE-OF-STATION BUDGET
CATEGORIES
=========================================================== Appendix I

All PCS moves are classified into one of six budget categories.  The
following three categories account for permanent change-of-station
(PCS) moves associated with end strengths and force structure
changes. 

  -- Accessions include moves from a servicemember's home of record
     upon entry into the service to the member's first permanent duty
     station, including assignments overseas or in schools for 20
     weeks or longer. 

  -- Separations include moves from the servicemember's duty station
     at the time of the member's separation or retirement from the
     service, including overseas assignments, to either a home of
     record or point of entry into the service.  Members retiring
     from the service can select another city that is neither a home
     of record nor an original hometown. 

  -- Unit moves occur when servicemembers assigned to organizations
     that are relocated because of force structure changes, Base
     Closure and Realignment Commission decisions, or decisions
     associated with the changing security environment. 

The remaining three budget categories make up the majority of PCS
moves that can be considered as reassignments from one installation
to another.  Those budget categories include the following: 

  -- Rotational moves occur between duty stations outside the
     continental United States (defined as overseas or transoceanic
     locations, including Alaska and Hawaii). 

  -- Operational moves are made between two continental U.S.  duty
     stations or non-transoceanic moves between two duty stations
     outside the continental United States.  The majority of
     operational moves occur within the United States. 

  -- Training moves are made to and from training schools or courses
     lasting more than 20 weeks. 

The order in which the budgeted categories are listed indicates their
relative importance when determining which one to select in
situations where more than one category may apply.  For instance, if
a servicemember was returned from an overseas assignment to a school
of over 20 weeks, the PCS move would be categorized as rotational. 

The costs of PCS moves are paid from each service's military
personnel appropriation.  While numerous categories of expenses are
covered, the larger categories include the following: 

  -- travel to the new location, specifically mileage or costs of
     common carrier and per diem allowance for subsistence while in a
     travel status for the military member;

  -- travel for dependents, that is, mileage or cost of common
     carrier;

  -- transportation of household goods and privately owned vehicles;

  -- packing, crating, handling, and storage of household effects;

  -- incidental costs associated with relocating one's household,
     such as security deposit or activating a telephone or other
     utilities; and

  -- temporary lodging. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Sharon A.  Cekala
Valeria G.  Gist
James A.  Driggins
Mae F.  Jones
Julio A.  Luna
Charles W.  Perdue

DALLAS REGIONAL OFFICE

Thomas W.  Barger, Jr.
Robert D.  Malpass


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