DOD Aviator Positions: Training Requirements and Incentive Pay Could Be
Reduced (Letter Report, 02/19/97, GAO/NSIAD-97-60).

GAO reviewed certain Department of Defense (DOD) nonflying positions,
focusing on: (1) the number of aviators (pilots and navigators) that are
assigned to nonflying positions in the Army, Navy, Marine Corps, and Air
Force; (2) the amount of aviation career incentive pay (ACIP) and
aviation continuation pay (ACP) paid to aviators in nonflying positions;
(3) whether the services implement ACIP and ACP uniformly; and (4)
whether the nonflying positions affect the number of aviators the
services plan to train to meet future requirements.

GAO found that: (1) for fiscal year (FY) 1996, the Army, Navy, Marine
Corps, and Air Force designated 11,336 positions, or about 25 percent of
all aviator positions, as nonflying positions to be filled by aviators;
(2) since FY 1994, the number of nonflying positions has decreased and
this decrease is expected to continue through 2001 when the number of
such positions is estimated to be 10,553; (3) for fiscal years 1994
through April 30, 1996, the Army, Navy, Marine Corps, and Air Force paid
$739.7 million in ACIP, of which $179.1 million was paid to aviators in
nonflying positions; (4) additionally, the Navy, Marine Corps, and Air
Force paid $169.4 million in ACP, of which $31.9 million was paid to
aviators in nonflying positions; (5) the Army does not pay ACP; (6) ACIP
is payable to all aviators who meet certain flying requirements and all
the services implement it in a consistent fashion; (7) with ACP,
however, the services have a great deal of latitude in deciding who
receives it, the length of time it is paid and the amount that is paid;
(8) in determining their aviator training requirements, the services
consider both flying and nonflying positions; (9) including nonflying
positions increases the total aviator requirements and results in the
services projecting aviator shortages in the upcoming fiscal years; (10)
however, GAO's analysis showed that there are more than enough aviators
available to satisfy all flying position requirements; (11) to the
extent that the number of nonflying positions filled by aviators can be
reduced, the number of aviators that need to be trained also could be
reduced, saving training costs of about $5 million for each Navy, Marine
Corps, and Air Force pilot candidate and about $2 million for each
navigator candidate; and (12) the savings to the Army would be about
$366,000 for each pilot training requirement eliminated.

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

 REPORTNUM:  NSIAD-97-60
     TITLE:  DOD Aviator Positions: Training Requirements and Incentive 
             Pay Could Be Reduced
      DATE:  02/19/97
   SUBJECT:  Military aviation
             Aircraft pilots
             Military personnel
             Military cost control
             Defense economic analysis
             Military pay
             Flight training
             Personnel management
             Variable incentive pay
             Defense contingency planning

             
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Cover
================================================================ COVER


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

February 1997

DOD AVIATOR POSITIONS - TRAINING
REQUIREMENTS AND INCENTIVE PAY
COULD BE REDUCED

GAO/NSIAD-97-60

DOD Aviator Positions

(703139)


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

  ACIP - aviation career incentive pay
  ACP - aviation continuation pay
  CBO - Congressional Budget Office
  DOD - Department of Defense

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


B-275138

February 19, 1997

The Honorable C.  W.  Bill Young
Chairman, Subcommittee on National Security
Committee on Appropriations
House of Representatives

Dear Mr.  Chairman: 

The services designate certain positions as nonflying positions to be
filled by aviators.  According to service officials, the duties of
the nonflying positions require skills that only aviators possess. 
Additionally, the positions provide career diversification
opportunities for aviators.  Incumbents in nonflying positions
receive the same compensation benefits as aviators in flying
positions. 

Our review of nonflying positions focused on (1) the number of
aviators (pilots and navigators) that are assigned to nonflying
positions in the Army, the Navy, the Marine Corps, and the Air Force;
(2) the amount of aviation career incentive pay (ACIP) and aviation
continuation pay (ACP) paid to aviators in nonflying positions; (3)
whether the services implement ACIP and ACP uniformly; and (4)
whether the nonflying positions affect the number of aviators the
services plan to train to meet future requirements.  We performed
this review under our basic legislative authority and are addressing
this report to you because of your continuing interest in military
personnel matters.  The scope and methodology of our review are
described in appendix I. 


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

ACIP, commonly referred to as flight pay, is intended as additional
pay to attract and retain officers in a military aviation career. 
The amount of ACIP varies from $125 a month for an aviator with 2
years or less of aviation service to $650 a month for 6 years to 18
years of service.  After 18 years, the amount gradually decreases
from $585 a month to $250 a month through year 25.  After 25 years,
aviators do not receive ACIP unless they are in operational flying
positions. 

ACP, which has existed for all services since 1989, is considered a
bonus and is intended to entice aviators to remain in the service
during the prime of their flying career.  An ACP bonus can be given
to aviators below the grade 0-6 with at least 6 years of aviation
service and who have completed any active duty service commitment
incurred for undergraduate aviator training.  However, it cannot be
paid beyond 14 years of commissioned service.  The services believe
that it is during the 9-year to 14-year period of service that
aviators are most sought after by the private sector airlines. 
Therefore, to protect their aviation training investment,\1 all
services, except the Army, which is currently not using the ACP
program, offer ACP contracts to experienced aviators. 


--------------------
\1 According to Air Force and Navy officials, it costs about $5
million to train a pilot up to an experienced pilot level--between 3
and 5 years--and about $2 million to train a navigator up to an
experienced navigator level.  In contrast, the Army spends about
$366,000 to train its helicopter pilots. 


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

For fiscal year 1996, the Army, the Navy, the Marine Corps, and the
Air Force designated 11,336 positions, or about 25 percent of all
aviator positions, as nonflying positions to be filled by aviators. 
Since fiscal year 1994, the number of nonflying positions has
decreased and this decrease is expected to continue through 2001 when
the number of such positions is estimated to be 10,553. 

For fiscal years 1994 through April 30, 1996, the Army, the Navy, the
Marine Corps, and the Air Force paid $739.7 million in ACIP, of which
$179.1 million was paid to aviators in nonflying positions. 
Additionally, the Navy, the Marine Corps, and the Air Force paid
$169.4 million in ACP, of which $31.9 million was paid to aviators in
nonflying positions.  The Army does not pay ACP. 

ACIP is payable to all aviators who meet certain flying requirements
and all the services implement it in a consistent fashion.  With ACP,
however, the services have a great deal of latitude in deciding who
receives it, the length of time it is paid, and the amount that is
paid.  For example, the Navy and the Marine Corps restrict ACP to
eligible pilots and/or navigators of specific aircraft types that
have critical aviator shortages.  In contrast, the Air Force offers
ACP to all eligible pilots in fixed-wing and/or rotary-wing aircraft
if there is a projected pilot shortage in any one of those respective
aircraft. 

In determining their aviator training requirements, the services
consider both flying and nonflying positions.  Including nonflying
positions increases the total aviator requirements and results in the
services projecting aviator shortages in the upcoming fiscal years. 
However, our analysis showed that there are more than enough aviators
available to satisfy all flying position requirements.  Therefore, to
the extent that the number of nonflying positions filled by aviators
can be reduced, the number of aviators that need to be trained also
could be reduced, saving training costs of about $5 million for each
Navy, Marine Corps, and Air Force pilot candidate and about $2
million for each navigator candidate.  The savings to the Army would
be about $366,000 for each pilot training requirement eliminated. 


   NUMBER OF NONFLYING POSITIONS
------------------------------------------------------------ Letter :3

In fiscal year 1996, the Army, the Navy, the Marine Corps, and the
Air Force designated 11,336 positions as nonflying positions to be
filled by aviators.  These nonflying positions represent about 25
percent of all authorized aviator positions.  As shown in table 1,
the total number of nonflying positions has decreased since fiscal
year 1994 and is expected to continue to decrease slightly up through
fiscal year 2001. 



                                     Table 1
                     
                     Number of Flying and Nonflying Positions
                            for Fiscal Years 1994-2001

           Army           Navy       Marine Corps     Air Force        Total
          aviator        aviator        aviator        aviator        aviator
         positions      positions      positions      positions      positions
       -------------  -------------  -------------  -------------  -------------
Fisca
l      Flyi  Nonflyi  Flyi  Nonflyi  Flyi  Nonflyi  Flyi  Nonflyi  Flyi  Nonflyi
year     ng       ng    ng       ng    ng       ng    ng       ng    ng       ng
-----  ----  -------  ----  -------  ----  -------  ----  -------  ----  -------
1994     \a       \a  9,14    4,548  2,93    1,645  15,5    5,067  27,6   11,260
                         3              3             29             05
1995     \a       \a  8,69    4,269  2,93    1,622  15,1    5,017  26,8   10,908
                         0              3             99             22
1996   7,88      582  8,60    4,209  2,91    1,645  14,7    4,900  34,1   11,336
          6              6              0             16             18
1997   7,96      473  8,24    4,004  2,91    1,645  14,4    4,702  33,5   10,824
          3              5              0             42             60
1998   8,10      555  8,29    4,036  2,88    1,664  14,1    4,533  33,4   10,788
          8              7              7             68             60
1999   8,10      555  8,29    4,036  2,88    1,664  14,1    4,386  33,4   10,641
          8              7              7             22             14
2000   8,10      555  8,29    4,036  2,88    1,664  14,1    4,380  33,4   10,635
          8              7              7             26             18
2001   8,10      555  8,30    4,039  2,88    1,664  14,2    4,377  33,5   10,635
          8              5              7             81             81
--------------------------------------------------------------------------------
\a The Army was not able to provide requirements data for fiscal
years 1994 and 1995. 

Service officials told us that they have been able to reduce the
number of nonflying positions primarily through force structure
reductions and reorganization of major commands.  The services,
however, have not developed criteria for determining whether there
are nonflying positions that could be filled by nonaviators.  The
officials said that a justification is prepared for each nonflying
position explaining why an aviator is needed for the position.  These
justifications are then approved by higher supervisory levels.  The
officials believe that this process demonstrates that the position
must be filled by an aviator.  In our view, the preparation of a
written justification for filling a particular position with an
aviator does not, in and by itself, demonstrate that the duties of a
position could not be performed by a nonaviator.  Because the
services' position descriptions for nonflying positions do not show
the specific duties of the positions, we could not determine whether
all or some part of the duties of the nonflying positions can only be
performed by aviators.  Consequently, we could not determine whether
the number of nonflying positions could be further reduced. 

In commenting on a draft of this report, an Air Force official said
that the Air Force Chief of Staff has directed that all nonflying
positions be reviewed and a determination made by July 1997 as to
which positions can be filled by nonaviators. 


   ACIP AND ACP PAID TO AVIATORS
   IN FLYING AND NONFLYING
   POSITIONS
------------------------------------------------------------ Letter :4

All aviators receive ACIP, regardless of whether they are in flying
or nonflying positions, if they meet the following criteria. 

  -- Eight years of operational flying during the first 12 years of
     aviation service entitles the aviator to receive ACIP for 18
     years. 

  -- Ten years of operational flying during the first 18 years of
     aviation service entitles the aviator to receive ACIP for 22
     years. 

  -- Twelve years of operational flying during the first 18 years of
     aviation service entitles the aviator to receive ACIP for 25
     years. 

ACP criteria are more flexible than ACIP in deciding who receives it,
the amount paid, and the length of the contract period.  According to
service officials, ACP is an added form of compensation that is
needed to retain aviators during the prime of their flying career
when the aviators are most attractive to private sector airlines.  To
protect their training investment, all the services believe it is
necessary to offer ACP contracts.  The Army does not offer ACP
contracts because, according to Army officials, it has not had a
pilot retention problem. 

For fiscal years 1994 through April 30, 1996, the Army, the Navy, the
Marine Corps, and the Air Force made ACIP and ACP payments to their
aviators totaling $909.1 million.  Of this total amount, $211
million, or about 23 percent, was paid to aviators in nonflying
positions by the Air Force, the Navy, and the Marine Corps.  The
following table shows ACIP and ACP payments by each service for each
of the fiscal years. 



                                      Table 2
                      
                        ACIP and ACP Payments by Service and
                                    Fiscal Year

                               (Dollars in millions)

                           ACIP                                ACP
            ----------------------------------  ----------------------------------
                                Aviators in                         Aviators in
                                 nonflying                           nonflying
              All aviators       positions        All aviators       positions
            ----------------  ----------------  ----------------  ----------------
Se
rv
ic  Fiscal
e     year   Number   Amount   Number   Amount   Number   Amount   Number   Amount
--  ------  -------  -------  -------  -------  -------  -------  -------  -------
Ar    1994   13,186    $40.5
 m
 y
 \
 a
      1995   15,061     57.5
    1996\b   14,587     36.9      582     $0.4
Na    1994   15,634     78.6    4,498     25.4    1,770    $11.2      378     $2.2
 vy
      1995   16,007     79.2    3,837     23.3    1,500      9.7      318      1.8
    1996\b   14,924     45.8    3,778     13.4      715      5.6      112      0.6
Ma    1994    4,665     19.3      814      4.8      145      0.9       20      0.1
 r
 i
 n
 e
 C
 o
 r
 p
 s
      1995    5,045     22.4      877      5.5      245      1.4       47      0.3
    1996\b    4,910     13.2      861      3.2      206      1.2       36      0.2
Ai    1994   22,165    129.9    6,330     41.8    4,922     60.6    1,067     11.1
 r
 F
 o
 r
 c
 e
      1995   20,964    128.4    5,477     37.9    4,730     46.2    1,176     11.0
    1996\b   20,480     88.0    5,044     23.8    3,037     32.6      694      4.6
==================================================================================
To                    $739.7            $179.5            $169.4             $31.9
 t
 a
 l
----------------------------------------------------------------------------------
\a The Army was not able to provide the number of aviators in
nonflying positions or the amount of ACIP paid in fiscal years
1994-95. 

\b As of April 30, 1996. 


   SERVICES IMPLEMENT ACP
   DIFFERENTLY
------------------------------------------------------------ Letter :5

The services view ACP as a retention incentive for their experienced
aviators.  However, the way the services implement this incentive
varies widely in terms of who receives ACP, the length of time over
which it is paid, and how much is paid.  To illustrate,

  -- The Army does not offer ACP to its aviators because it has not
     had a pilot retention problem that warrants the use of the ACP
     program. 

  -- The Navy offers long-term ACP contracts of up to 5 years and a
     maximum of $12,000 a year to eligible pilots in aircraft types
     with a critical pilot shortage. 

  -- The Marine Corps offered short-term ACP contracts of 1 or 2
     years at $6,000 a year through fiscal year 1996.  Beginning in
     fiscal year 1997, the Marine Corps plans to offer long-term ACP
     contracts of up to 5 years at $12,000 a year to its eligible
     pilots and navigators in aircraft types that have critical
     personnel shortages.\2

  -- The Air Force offers long-term ACP contracts of up to 5 years at
     a maximum of $12,000 a year to all eligible pilots if there is a
     pilot shortage for any fixed- or rotary-wing aircraft. 

Table 3 shows the number and dollar amount of ACP contracts awarded
by the services for fiscal years 1994 through 1996. 



                                Table 3
                
                  Number and Value of ACP Contracts by
                     Service, Fiscal Years 1994-96

                         (Dollars in millions)

                             Navy        Marine Corps     Air Force
                        --------------  --------------  --------------
Fiscal year             Number  Amount  Number  Amount  Number  Amount
----------------------  ------  ------  ------  ------  ------  ------
1994                       158    $4.7     147    $1.7     593   $46.2
1995                        78     2.6     224     1.3     334    20.4
1996                        87     2.9     317     3.7     683    39.7
======================================================================
Total                      323   $10.2     688    $6.7   1,610  $106.3
----------------------------------------------------------------------
As shown above, the Air Force greatly exceeds the other services in
the number of ACP contracts awarded as well as the value of the
contracts.  This is because the Air Force does not restrict ACP
contracts just to pilots of particular aircraft that are experiencing
critical pilot shortages.  Instead, if there is an overall shortage
in fixed-wing or rotary-wing pilots, all eligible pilots in those
respective aircraft are offered ACP.  According to Air Force
officials, the reason for offering ACP contracts to all fixed-wing
and/or rotary-wing pilots rather than specific aircraft is because
they want to treat all their pilots equally and not differentiate
between pilots based on the type of aircraft they fly.  In their
opinion, if they were to only offer ACP to pilots of certain aircraft
types, morale could be adversely affected. 

The point in an aviator's career at which ACP is offered generally
coincides with completion of the aviator's initial service
obligation--generally around 9 years.  By this time, the aviator has
completed pilot or navigator training and is considered to be an
experienced aviator, and according to service officials, is most
sought after by private sector airlines.  For this reason, the
services believe that awarding an ACP contract is necessary to
protect their training investment and retain their qualified
aviators.  For example, the Air Force estimates that by paying ACP to
its pilots, it could retain an additional 662 experienced pilots
between fiscal years 1995 and 2001. 

The issue of whether ACP is an effective or necessary retention tool
has been brought into question.  For example, an April 1996 Aviation
Week and Space Technology article\3 pointed out that in the previous
7 months, 32 percent of the 6,000 new pilots hired by private sector
airlines were military trained pilots.  This is in contrast with
historical airline hiring patterns where 75 percent of the airline
pilots were military pilots.  The concern about military pilots being
hired away by the airlines was also downplayed in a June 1995
Congressional Budget Office (CBO) report.\4 The report stated that
employment in the civilian airlines sector is far from certain. 
Airline mergers, strikes, or failures have made the commercial
environment less stable than the military.  Consequently, military
aviators may be reluctant to leave the military for the less stable
employment conditions of the airline industry.  CBO concluded that
short-term civilian sector demands for military pilots may not
seriously affect the services' ability to retain an adequate number
of pilots. 


--------------------
\2 The Marine Corps defines critical shortage as a situation where
the requirements exceed the inventory by at least 5 percent and the
situation is not expected to improve within 3 years. 

\3 Proctor, Paul, "Airlines Increase Hiring From Civil Ranks,"
Aviation Week and Space Technology, April 8, 1996. 

\4 Congressional Budget Office memorandum, Pilot Retention Bonuses in
the Air Force, June 1995. 


   EFFECT OF NONFLYING POSITIONS
   ON AVIATOR TRAINING
   REQUIREMENTS
------------------------------------------------------------ Letter :6

The services include nonflying positions in their aviator
requirements for determining future aviator training needs. 
Therefore, aviator training requirements reflect the number of
aviators needed to fill both flying and nonflying positions.  As
shown in table 4, of all the services, the Air Force plans the
largest increase in the number of aviators it will train between
fiscal years 1997 and 2001--a 60-percent increase.  The reason for
the large training increase in Air Force aviators is because it
believes that the number of aviators trained in prior years was
insufficient to meet future demands. 



                                      Table 4
                      
                       Number of Pilots and Navigators to Be
                         Trained, Fiscal Years 1997 to 2001

           Army                Navy            Marine Corps         Air Force
    ------------------  ------------------  ------------------  ------------------
Fi
sc
al
ye
ar  Pilots  Navigators  Pilots  Navigators  Pilots  Navigators  Pilots  Navigators
--  ------  ----------  ------  ----------  ------  ----------  ------  ----------
19     436          \a     569         355     307          30     654         300
 97
19     576          \a     633         329     322          36     900         300
 98
19     570          \a     645         320     322          36   1,025         300
 99
20     570          \a     645         320     322          36   1,025         300
 00
20     570          \a     645         320     322          36   1,050         300
 01
==================================================================================
To   2,722          \a   3,137       1,644   1,595         174   4,654       1,500
 t
 a
 l
----------------------------------------------------------------------------------
\a The Army does not have navigator positions. 

Because nonflying positions are included in the total aviator
requirements, the Navy and the Marine Corps project aviator shortages
for fiscal
years 1997-2001 and the Air Force projects aviator shortages for
fiscal
years 1998-2001.  As shown in table 5, there are more than enough
pilots and navigators available to meet all flying position
requirements.  Therefore, to the extent that the number of the
nonflying positions filled by aviators could be reduced, the number
of aviators that need to be trained, as shown in table 4, could also
be reduced.  This, in turn, would enable the Navy, the Marine Corps,
and the Air Force to reduce their aviator training costs by as much
as $5 million for each pilot and $2 million for each navigator that
the services would not have to train.  The savings to the Army would
be less because its aviator training costs are about $366,000 for
each pilot. 



                                       Table 5
                       
                         Flying Requirements Versus Available
                         Pilots and Navigators, Fiscal Years
                                      1997-2001

                               Pilot                           Navigator
                  --------------------------------  --------------------------------
Fi
sc                                Flying                            Flying
al                            requiremen   Percent              requiremen   Percent
ye  Service        Inventory           t    filled   Inventory           t    filled
ar  ------------  ----------  ----------  --------  ----------  ----------  --------
19  Air Force         14,492      11,162     129.8       5,473       3,280     166.9
 97
    Navy               7,768       5,766     134.7       4,257       2,479     171.7
    Marine Corps       3,229       2,641     122.3         338         269     125.7
    Army              10,382       8,998     115.4          \a           a        \a
19  Air Force         13,785      11,040     124.9       5,230       3,128     167.2
 98
    Navy               7,821       5,780     135.3       4,318       2,517     171.6
    Marine Corps       3,250       2,618     124.1         350         269     130.1
    Army              10,017       9,162     109.3          \a          \a        \a
19  Air Force         13,270      11,051     120.1       5,015       3,071     163.3
 99
    Navy               7,822       5,780     135.3       4,352       2,517     172.9
    Marine Corps       3,257       2,618     124.4         368         269     136.8
    Army               9,817       9,162     107.2          \a          \a        \a
20  Air Force         13,085      11,051     118.4       4,864       3,075     158.2
 00
    Navy               7,864       5,780     136.1       4,364       2,517     173.4
    Marine Corps       3,250       2,618     124.1         385         269     143.1
    Army               9,679       9,162     105.6          \a          \a        \a
20  Air Force         13,074      11,168     117.1       4,715       3,113     151.5
 01
    Navy               7,912       5,788     136.7       4,376       2,517     173.9
    Marine Corps       3,240       2,618     123.8         400         269     148.7
    Army               9,583       9,162     104.6          \a          \a        \a
------------------------------------------------------------------------------------
\a The Army does not have navigators. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :7

We recommend that the Secretary of Defense direct the Secretaries of
the Army, the Navy, and the Air Force to develop criteria and review
the duties of each nonflying position to identify those that could be
filled by nonaviators.  This could allow the services to reduce total
aviator training requirements. 

In view of the recent articles and studies that raise questions about
the need to incentivize aviators to remain in the service, the
abundance of aviators as compared to requirements for flying
positions, and the value of ACP as a retention tool, we recommend
that the Secretary of Defense direct the service secretaries to
reevaluate the need for ACP.  If, the reevaluation points out the
need to continue ACP, we recommend that the Secretary of Defense
determine whether the services should apply a consistent definition
in deciding what groups of aviators can receive ACP. 


   AGENCY COMMENTS AND OUR
   RESPONSE
------------------------------------------------------------ Letter :8

In commenting on a draft of this report, Department of Defense (DOD)
officials said that it partially agreed with the report and the
recommendations.  However, DOD also said that the report raises a
number of concerns.  DOD said that it did not agree that only flying
positions should be considered in determining total aviator
requirements.  In its opinion, operational readiness dictates the
need for aviator expertise in nonflying positions, and nonflying
positions do not appreciably increase aviator training requirements. 

The report does not say or imply that only flying positions should be
considered in determining total aviator requirements.  The purpose of
comparing the inventory of aviators to flying positions was to
illustrate that there are sufficient pilots and navigators to meet
all current and projected flying requirements through fiscal year
2001.  We agree with DOD that those nonflying positions that require
aviator expertise should be filled with aviators.  The point,
however, is that the services have not determined that all the
nonflying positions require aviator expertise.  Furthermore, to the
extent that nonflying positions could be filled by nonaviators, the
aviator training requirements could be reduced accordingly. 

DOD also said that the report, in its opinion, does not acknowledge
the effectiveness of the processes used for determining aviator
training requirements or the use of ACP in improving pilot retention. 

The issue is not whether ACP has improved retention--obviously it
has--but whether ACP is needed in view of the data showing that the
civilian airline sector is becoming less dependent on the need for
military trained pilots and that military pilots are becoming less
likely to leave the service to join the civilian sector. 

DOD further commented that the articles cited in the report as
pointing to a decrease in civilian sector demand for military trained
pilots contain information that contradicts this conclusion.  DOD
believes that the fact that the airlines are currently hiring a
smaller percentage of military trained pilots is an indication of a
decrease in pilot inventory and the effectiveness of ACP as a
retention incentive. 

The articles cited in our report--Aviation Weekly and Space
Technology and the June 1995 CBO report--do not contain information
that contradicts a decreasing dependence on military trained pilots. 
The Aviation Weekly and Space Technology article points out that
about 70 percent of the recent pilot hires by the civilian airlines
have been pilots with exclusively civilian flying backgrounds.  This
contrasts to previous hiring practices where about 75 percent were
military trained pilots.  The CBO report also discusses expected
long-term hiring practices in the civilian airline sector.  The
report points out that while the number of new hires is expected to
double (from 1,700 annually to 3,500 annually) between 1997 and 2000,
the Air Force's efforts to retain its pilots may not be affected
because the industry's new pilots could be drawn from an existing
pool of Federal Aviation Agency qualified aviators. 

Furthermore, the issue is not whether the pilot inventory is
decreasing and whether ACP is an effective retention tool.  The point
of the CBO report was that because of private sector airline mergers,
strikes, or failures, the commercial environment is less stable than
the military.  As a result, there is a ready supply of pilots in the
civilian sector and the short-term demands for military pilots may be
such that the Air Force's quest to retain an adequate number of
pilots is not seriously affected. 

In commenting on why the Air Force's method of offering ACP contracts
differs from the Navy's and the Marine Corps' methods, DOD stated
that while morale and equity are vital to any retention effort, it is
not the primary determinant in developing ACP eligibility. 

We agree and the report is not meant to imply that morale and equity
is the primary determinant for developing ACP eligibility.  The
report states that the reason cited by Air Force officials for not
restricting ACP contracts to just those pilots in aircraft that have
personnel shortages, as do the Navy and the Marine Corps, is because
of the morale and equity issue.  Another reason cited by Air Force
officials was the interchangability of its pilots.  However, the Navy
and the Marine Corps also have pilot interchangability.  Therefore,
interchangability is not a unique feature of the Air Force. 

DOD agreed with the recommendation that the services review the
criteria and duties of nonflying aviator positions.  However, DOD did
not agree that the nonflying positions should be filled with
nonaviators or that doing so would appreciably reduce aviator
training requirements. 

DOD also agreed with the recommendation that the services need to
continually review and reevaluate the need for ACP, including whether
there should be a consistent definition in deciding what groups of
aviators can receive ACP.  In DOD's opinion, however, this review and
affirmation of the continued need for ACP is already being done as
part of the services' response to a congressional legislative report
requirement. 

We agree that the services report annually on why they believe ACP is
an effective retention tool.  However, the reports do not address the
essence of our recommendation that the need for ACP--a protection
against losing trained pilots to the private sector--should be
reevaluated in view of recent studies and reports that show that
private sector airlines are becoming less dependent on military
trained pilots as a primary source of new hires.  The annual reports
to Congress also do not address the issue of why the Air Force,
unlike the Navy and the Marine Corps, does not restrict ACP to those
aviators in aircraft that have aviator personnel shortages.  A
complete text of DOD's comments is in appendix II. 


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

We are sending copies of this report to the Secretaries of Defense,
the Army, the Navy, and the Air Force; the Director, Office of
Management and Budget; and the Chairmen and the Ranking Minority
Members, House Committee on Government Reform and Oversight, Senate
Committee on Governmental Affairs, House and Senate Committees on
Appropriations, House Committee on National Security, Senate
Committee on Armed Services, and House and Senate Committees on the
Budget. 

Please contact me on (202) 512-5140 if you have any questions
concerning this report.  Major contributors to this report are listed
in appendix III. 

Sincerely yours,

Mark E.  Gebicke
Director, Military Operations
 and Capabilities Issues


SCOPE AND METHODOLOGY
=========================================================== Appendix I

To accomplish our objectives, we reviewed legislation, studies,
regulations, and held discussions with service officials responsible
for managing aviator requirements.  Additionally, we obtained data
from each of the services' manpower databases to determine their
flying and nonflying position requirements.  Using this information,
we developed trend analyses comparing the total number of aviator
positions to the nonflying positions for fiscal years 1994-2001.  The
Army was not able to provide requirements data for fiscal years 1994
and 1995. 

To determine the benefits paid to aviators serving in nonflying
positions, we obtained an automated listing of social security
numbers for all aviators and, except for the Army, the services
identified the aviators serving in nonflying positions.  The data
were submitted to the appropriate Defense Financial Accounting System
offices for the Army, the Air Force, and the Marine Corps to identify
the amounts of aviation career incentive pay (ACIP) and aviation
continuation pay (ACP) paid to each aviator.  The Navy's financial
data was provided by Defense Manpower Data Center. 

To assess whether the services implement ACIP and ACP uniformly, we
obtained copies of legislation addressing how ACIP and ACP should be
implemented and held discussions with service officials to obtain and
compare the methodology each service used to implement ACIP and ACP. 

To determine how the services compute aviator requirements and the
impact their flying and nonflying requirements have on training
requirements, we held discussions with service officials to identify
the methodology used to compute their aviator and training
requirements.  We also obtained flying and nonflying position
requirements, available inventory, and training requirements from the
services' manpower databases.  We then compared the flying and
nonflying requirements to the respective services' available aviator
inventory to identify the extent that the available inventory of
aviators could satisfy aviator requirements. 

We performed our work at the following locations. 

  -- Defense Personnel and Readiness Military Personnel Policy
     Office, Washington, D.C.;

  -- Defense Financial Accounting System, Kansas City, Missouri;
     Denver, Colorado; and Indianapolis, Indiana;

  -- Defense Manpower Data Center, Seaside, California;

  -- Air Force Directorate of Operations Training Division,
     Washington, D.C.;

  -- Air Force Personnel Center, Randolph Air Force Base, Texas;

  -- Air Force Directorate of Personnel Military Compensation and
     Legislation Division and Rated Management Division, Washington,
     D.C.;

  -- Air Combat Command, Langley Air Force Base, Virginia;

  -- Bureau of Naval Personnel, Office of Aviation Community
     Management, Washington, D.C.;

  -- Navy Total Force Programming, Manpower and Information Resource
     Management Division, Washington, D.C.;

  -- Navy Manpower Analysis Team, Commander in Chief U.S.  Atlantic
     Fleet, Norfolk, Virginia;

  -- Marine Corps Combat Development Command, Force Structure
     Division, Quantico, Virginia;

  -- Marine Corps Deputy Chief of Staff for Manpower and Reserve
     Affairs Department, Washington, D.C.;

  -- Army Office of the Deputy Chief of Staff for Plans Force
     Integration and Analysis, Alexandria, Virginia;

  -- Army Office of the Deputy Chief of Staff for Personnel,
     Washington, D.C.; and

  -- Congressional Budget Office, Washington, D.C. 

We performed our review from March 1996 to December 1996 in
accordance with generally accepted government auditing standards. 




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



(See figure in printed edition.)



(See figure in printed edition.)


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III


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

Sharon A.  Cekala
Robert J.  Lane


   OFFICE OF GENERAL COUNSEL,
   WASHINGTON, D.C. 
------------------------------------------------------- Appendix III:2

Richard Seldin


   NORFOLK FIELD OFFICE
------------------------------------------------------- Appendix III:3

Norman L.  Jessup, Jr.
Patricia F.  Blowe
Patricia W.  Lentini

*** End of document. ***