General and Flag Officers: DOD's Draft Study Needs Adjustments
(Testimony, 04/08/97, GAO/T-NSIAD-97-122).

GAO discussed the preliminary results of its review of the Department of
Defense's (DOD) draft general and flag officer requirements report.

GAO noted that: (1) variations of two job evaluation methodologies were
readily available and were used on the 1997 general and flag officer
studies; (2) both methodologies are based on subjective judgments about
positions reviewed and allow management to override the results; (3) to
save time, the Office of the Secretary of Defense (OSD) permitted each
of the services and the Joint Staff to independently and individually
study its own general and flag officer requirements with the methodology
they selected; (4) although using one methodology would have been a more
consistent and comparable approach than using different methodologies,
the individual results would not necessarily have been much different
with a single methodology, due to the inherent subjectivity involved;
(5) accordingly, GAO does not believe that much would be gained by
redoing the services' and Joint Staff's studies; (6) GAO believes that
some adjustments to DOD's draft report are in order, however; (7) GAO
was concerned that: (a) actual requirements were unknown since the
service secretaries adjusted their respective service study
recommendations on general and flag officer requirements without
explanation; (b) 35 general and flag officer requirements were counted
twice when OSD developed its draft consolidated recommendations; and (c)
the service studies did not fully consider the potential to convert
military positions to civilian positions that may not be
military-essential; (8) if Congress provided the additional general and
flag officer positions that DOD's draft recommendations called for, the
estimated increase in cost would be $1.2 million annually for
compensation paid to the new general or flag officers and assistants and
plus a relatively small amount for the one-time purchase of new office
furniture and other items and another $713,000 annually for the 12 new
general and flag officers provided to the Marine Corps in 1996; (9)
GAO's estimate is conservative because DOD provided no information about
nine new active component general or flag officer positions and
incomplete information about new reserve positions; and (10) in its
draft report, DOD committed to eliminating as many colonels'/Navy
captains' positions as it is creating for brigadier generals/rear
admirals (lower half), although there is no mechanism that would cause
that substitution to occur automatically.

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

 REPORTNUM:  T-NSIAD-97-122
     TITLE:  General and Flag Officers: DOD's Draft Study Needs 
             Adjustments
      DATE:  04/08/97
   SUBJECT:  Military downsizing
             Personnel management
             Military officers
             Officer personnel
             Military reserve personnel
             Civilian employees
             Military cost control
IDENTIFIER:  DOD Quadrennial Defense Review
             
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Cover
================================================================ COVER


Before the Subcommittee on Military Personnel, Committee on National
Security, House of Representatives

For Release at
2:00 pm, EST
Tuesday,
April 8, 1997

GENERAL AND FLAG OFFICERS - DOD'S
DRAFT STUDY NEEDS ADJUSTMENTS

Statement of Mark E.  Gebicke, Director, Military Operations and
Capabilities Issues, National Security and International Affairs
Division

GAO/T-NSIAD-97-122

GAO/NSIAD-97-122T


(703177)


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

  DOD -
  OSD -
  QDR -

============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

I am pleased to provide the preliminary results of our review of
DOD's draft general and flag officer requirements report.  I will
discuss the process DOD and the services used to do their respective
studies and areas where we believe the resulting draft DOD report and
recommendations could be improved.  DOD's draft report asks for more
new active and reserve component general and flag officer positions
above their current authorizations.  I should stress the
recommendations are preliminary and do not represent DOD's official
position at this time. 

Most of my remarks will deal with the results of the study of active
component requirements.  DOD has delayed release of its draft report
until sometime after the release of the Quadrennial Defense Review
(QDR) report, which is scheduled for May 15, 1997.  We hope DOD views
the delay as an opportunity to adjust its draft report to address our
concerns.  With that introduction, let me provide a brief overview of
those concerns and then go back and discuss each of them in a little
more detail. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:1

Variations of two job evaluation methodologies were readily available
and were used on the 1997 general and flag officer studies.  Both
methodologies are based on subjective judgments about positions
reviewed and allow management to subjectively override the results. 
To save time, the Office of the Secretary of Defense (OSD) permitted
each of the services and the Joint Staff to independently and
individually study its own general and flag officer requirements with
the methodology they selected.  Although using one methodology would
have been a more consistent and comparable approach than using
different methodologies, the individual study results would not
necessarily have been much different with a single methodology, due
to the inherent subjectivity involved.  Accordingly, we do not
believe that much would be gained by redoing the services' and Joint
Staff's studies.  We think that some adjustments to DOD's draft
report are in order, however. 

We have three concerns about DOD's draft report recommendations.  We
are concerned that (1) actual requirements are unknown since the
service secretaries adjusted their respective service study
recommendations on general and flag officer requirements without
explanation, (2) 35 general and flag officer requirements were
counted twice when OSD developed its draft consolidated
recommendations, and (3) the service studies did not fully consider
the potential to convert military positions to civilian positions
that may not be military-essential. 

If Congress provided the additional general and flag officer
positions that DOD's draft recommendations call for, the estimated
increase in cost would be about $1.2 million annually for
compensation paid to the new general or flag officers and assistants,
a relatively small amount for the one-time purchase of new office
furniture and other items, and $713,000 annually for the 12 new
general and flag officers provided to the Marine Corps in 1996.  Our
estimate is conservative because DOD provided no information about
nine new active component general or flag officer positions and
incomplete information about new reserve positions.  In its draft
report, DOD committed to eliminating as many colonels'/Navy captains'
positions as it is creating for brigadier generals/rear admirals
(lower half), although there is no mechanism that would cause that
substitution to occur automatically. 


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

General and flag officer authorizations had remained constant from
fiscal year 1981 to 1991, even as troop strength has changed.  In
1981, with the defense build-up underway, general and flag officer
authorizations dropped by 46 to 1,073.  They remained at 1,073 for a
decade even as the build-up continued and peaked, and as the drawdown
began.  In the National Defense Authorization Act for Fiscal Year
1991, Congress required DOD to reduce its general and flag officer
positions in two increments, first to 1,030 by the end of fiscal year
1994 and secondly to 858 by the beginning of fiscal year 1995.  That
number was subsequently changed to 865.  General and flag officer
authorizations are set forth in title 10 of the U.S.  Code. 

In fiscal year 1996, a contractor studied Marine Corps general
officer requirements and concluded that the Marine Corps had
requirements for between 104 and 118 general officers (compared to
the 68 authorized for the Marine Corps at that time).  Using the
study as justification, the Marine Corps requested 14 new general
officer authorizations and Congress granted 12 (in the National
Defense Authorization Act for Fiscal Year 1997), raising the DOD-wide
ceiling to 877 general and flag officers. 

Congress has actually authorized more than 877 for fiscal year 1997. 
First, Congress has added 12 general and flag officer positions above
the 877 and specified that they must be used for joint duty.  These
positions are controlled by the Chairman of the Joint Chiefs of Staff
for allocation to the services and are commonly referred to as the
"Chairman's 12." Also, Congress has permitted the services to
"frock"--elevate the person in rank but not immediately provide the
accompanying compensation increase--up to 75 colonels or Navy
captains to the rank of brigadier general or rear admiral (lower
half).  Thus, in total, the title 10 active duty authorization,
Chairman's 12, and current frocking ceiling together provide for 964
general and flag officer positions.  This total will drop to 912 by
fiscal year 1999 because the Chairman's 12 is a temporary authority
that expires on October 1, 1998, and the frocking ceiling is
scheduled to drop by 20 to 55 on October 1, 1997, and by another 20
to 35 on October 1, 1998. 

I would like to make one other point about current authorizations. 
The joint community does not need congressional approval to change
the number of general and flag officers it needs, it merely levies
its requirements on the services.  To help the services cope with the
mandated reduction in general and flag officers in the early 1990s,
the Chairman of the Joint Chiefs of Staff reduced joint community
general and flag officer requirements from 280 to 218.  However, in
1996, the joint community added 11 new general and flag officer
positions, and in 1997, the joint community added another 15, for a
total of 244.  Since 1996, only the Marine Corps has been granted any
new general and flag officer authorizations, and of the 12 positions
authorized, the Marine Corps plans to commit only 4, or one-third, to
joint activities.  Thus, of the 26 new joint general and flag
officers, the Army, Navy, and Air Force will have to provide 22 from
existing authorizations. 


   THE SERVICES USED VARIOUS
   APPROACHES TO STUDY GENERAL AND
   FLAG OFFICER REQUIREMENTS
---------------------------------------------------------- Chapter 0:3

Since the mid-1980s, a number of studies of general and flag officer
requirements have been done DOD-wide, for a specific service, or for
the joint community.  These studies have been done using one of two
job evaluation methodologies. 

The first methodology was developed by the Hay Group, Incorporated,
and is proprietary.  This methodology is most commonly used for
studies of compensation practices in organizations, according to
company literature.  The Hay methodology requires panels of officials
from the organization whose positions are being reviewed to score
positions on the job factors of "know-how," "problem solving," and
"accountability." The methodology's developers believe that these
factors are the most significant in distinguishing among jobs.  Using
the panel scores, positions are ranked from most to least important. 
Hay Group officials told us that "natural cut points" usually become
apparent and that these are the thresholds between ranks of the
positions evaluated. 

The other methodology was developed by Kapos Associates,
Incorporated.  The Kapos methodology groups positions into categories
of positions with similar responsibilities (in effect creating
different definitions of a general and flag officer for each group)
and looks for up to 25 different attributes of a general or flag
officer in each position evaluated.  These attributes include the (1)
rank of the official to whom the position reports, (2) number of
personnel and commands under the position, (3) inventories
controlled, and (4) duties involving representation before Congress. 

To conduct its mandated study of general and flag officer
requirements in 1997, DOD used a four-level study structure.  The
levels consisted of a Working Committee based in OSD; a Steering
Committee made up primarily of the service personnel chiefs; an
Executive Committee made up of senior civilian leaders in DOD; and
the Secretary of Defense, who was the final approval authority.  At
DOD's invitation, we attended meetings of the Steering and Executive
Committees as observers. 

DOD's approach to its study had six steps--five of which have been
completed.  First, each service (including the joint community) did,
or contracted for, a study of requirements.  The Air Force used a
version of the Hay methodology.  The Joint Staff simply reported the
number of joint community requirements determined by the Hay Group in
1994 and 1996, and supplemented that number by scoring additional
positions on its own.  The Army used a version of the Kapos
methodology to do its study.  The Navy contracted with Kapos in 1997
for its study.  The Marine Corps reported the results of a
Kapos-conducted study of Marine Corps requirements completed in 1996. 
Second, the service secretaries adjusted the study results and
forwarded recommendations to the Working Committee.  Third, the
Working Committee compiled overall recommendations and wrote a draft
consolidated report.  Fourth, the Steering Committee accepted the
draft report and forwarded it to the Executive Committee.  Fifth, the
Executive Committee approved the draft report and forwarded it to the
Secretary of Defense.  The process has stopped at this point while
DOD awaits the recommendations of the QDR.  DOD may adjust its
recommendations for general and flag officer positions in light of
QDR recommendations and complete the sixth and final step of
approving and issuing the report at some time in the future. 

Job evaluation is an inherently subjective process, and the use of
job evaluation methodologies cannot overcome subjectivity.  In our
review of the scholarly literature on job evaluation techniques, the
theme of subjectivity was repeated in a number ways.  For example,
the factors selected for measurement are based on subjective
judgment, and the factors chosen can influence the results.  The
process of scoring the positions is subjective, as is the overriding
of the results by management.  Judgment comes into play throughout
the process.  As a result, while we believe that a single
methodology, consistently applied, would have been a better approach
than using different methodologies, we have no reason to believe that
the recommendations would have been much different.  Accordingly, we
do not believe that the services and Joint Staff necessarily need to
redo their studies. 


   THE SERVICE SECRETARIES
   ADJUSTED THEIR RESPECTIVE
   RECOMMENDATIONS WITHOUT
   EXPLANATION
---------------------------------------------------------- Chapter 0:4

The service and joint community study results do not track to the
recommendations made by the service secretaries, and the
discrepancies are unexplained in DOD's draft report.  Overall, the
service studies concluded in the aggregate that 1,118 general and
flag officers were needed to meet service-specific and joint needs. 
However, the service secretaries recommended only 995 general and
flag officers be authorized, a difference of 123. 

The service secretaries respectively overrode their service's study
results in developing their recommendations but did not explain the
basis for the adjustments.  For example, Kapos Associates concluded
that the Navy had flag officer requirements of 328 (compared with the
220 currently authorized\1 ) but the Secretary of the Navy only
recommended 249\2 flag officers be approved.  DOD's draft report and
other documents that we had access to indicated that "pragmatic
decisions" were made to reduce the service studies' recommendations
because it would be difficult to convince Congress that so many
general and flag officers were needed.  The unexplained adjustments
raise questions regarding the services' actual requirements. 


--------------------
\1 Section 526 of title 10 authorizes 216 flag officers for the Navy
and the Navy has 4 of the Chairman's 12. 

\2 The Navy recommended a title 10 ceiling of 240 plus frocking
authority of 9. 


   SOME REQUIREMENTS WERE COUNTED
   TWICE
---------------------------------------------------------- Chapter 0:5

The service secretaries and Chairman of the Joint Chiefs of Staff
developed their recommendations and provided them to the Working
Committee.  Once the Working Committee had the five reports and
recommendations, it had to compile them into a single DOD report and
set of consolidated recommendations.  However, the manner in which
the consolidated draft report handled the recommended new title 10
ceiling, Chairman's 12, and frocking, led to the double-counting of
35 positions. 

First, the Working Committee accepted the service secretaries' title
10 ceiling recommendations without modification, which in effect made
them the draft DOD recommendations on title 10 ceilings. 

Second, the service studies, assuming the repeal of the Chairman's
12, created 12 new requirements.  Their logic was that if the
Chairman's 12 was repealed and the services still had to fill these
joint positions, they had to ask for more general and flag officer
positions and did so by including them in their recommended
respective title 10 ceilings.  However, DOD's draft proposed
legislative changes did not recommend repeal of the Chairman's 12 at
the time that the first recommendation on the title 10 ceiling would
be adopted.  Without concurrent repeal, the services would, in
effect, have increased their title 10 ceilings to account for the
loss of the Chairman's 12, and the Chairman's 12 would remain
available until expiration on October 1, 1998.  To avoid double
counting, either the Chairman's 12 would have to be repealed at the
time title 10 authority is increased, or the new ceilings would have
to become effective on or after October 1, 1998.  We briefed the
Working Committee on our observation that 12 positions had been
double counted.  We were told that the count was an oversight and DOD
would recommend repeal of the Chairman's 12 in the final proposed
legislative change to avoid double counting.  Because DOD has not
finalized its recommendations, we do not know whether the repeal has
been included. 

Finally, the Army has handled the frocking ceiling differently from
the other services.  Only the Army recommended that the DOD-wide
frocking ceiling be frozen at 75 to avoid the loss of 17 of its
authorizations over the next 2 years and developed its recommended
title 10 ceiling with that in mind.  On the other hand, the other
services made no recommendations on frocking and would have permitted
the DOD total to drop to 35 on schedule, a loss of 23 frocking
authorizations from the Navy, Air Force, and Marine Corps.  With the
reduction in frocking ceilings in mind, the Air Force and Navy (in
1997) and Marine Corps (in 1996) recommended increasing their title
10 active component ceiling to counteract the loss.  The Working
Committee had to reconcile the Army's recommendation to maintain the
frocking ceiling at 75 with the other services' willingness to let
frocking drop to 35 and make up the difference with higher title 10
ceilings.  The Working Committee opted to recommend that frocking be
maintained at 75 but did not adjust the Navy's, Air Force's, or
Marine Corps' recommended title 10 ceiling downward to account for
the greater frocking authority they would have under the
recommendation.  Therefore, OSD's frocking recommendation counts 23
positions twice because the Navy, Air Force, and Marine Corps had
recommended new title 10 ceilings to account for the loss of 23
frocking authorizations, while OSD's draft recommendations would
prevent the loss of the 23 frocking authorizations, if accepted by
Congress. 

Table 1 displays current general and flag officer limits, the
services' study results, service secretaries' recommendations, and
DOD's recommendations. 



                                     Table 1
                     
                      Breakdown of General and Flag Officer
                     Requirements Under Current and Proposed
                                      Levels

          Current title 10
            ceiling of 877
                  plus the
             Chairman's 12
               and current    Results of the           Service
            frocking limit         services'      secretaries'       DOD's draft
Service              of 75           studies   recommendations   recommendations
--------  ----------------  ----------------  ----------------  ----------------
Army                   336               353               355               355
Navy                   242               328               249               262
Air                    299               319               308               314
 Force
Marine                  87               118                83                87
 Corps
================================================================================
Total                  964             1,118               995             1,018
--------------------------------------------------------------------------------
Note:  If all of OSD's draft recommendations were adopted as
currently written, DOD would actually have 1,030 general and flag
officers until October 1, 1998, due to double counting of the
Chairman's 12, and 1,018 on and after that date. 

The services also studied reserve component general and flag officer
requirements.  DOD's draft recommendations would increase reserve
component general and flag officers by 35 to 457, excluding those
serving as state adjutants general, assistant adjutants general, or
serving in the National Guard Bureau.  Congress has exempted general
officers serving in those positions from the ceilings, allowing for
another 178 general officers, as of March 1997.  We did not find
evidence of double counting of reserve requirements.  It should be
pointed out that frocking and other exemptions available for active
force management are not available in the reserves. 


   SOME POSITIONS COULD BE
   CANDIDATES FOR
   MILITARY-TO-CIVILIAN CONVERSION
---------------------------------------------------------- Chapter 0:6

The services may be able to reduce their need for new general and
flag officer authorizations by converting some non military-essential
positions to civilian status and transferring the incumbents to
military-essential jobs.  A number of positions that we examined may
be candidates for conversion.  In 1996, we examined the possible
military-to-civilian conversion of officers in the ranks of colonel
and Navy captain and below and developed criteria to use for our
evaluation.\3 Our criteria were closely based on DOD Directive
1100.4, which provides the characteristics of military-essential
positions. 

Using our criteria, we identified 12 general and flag officer
positions for conversion opportunities.  For example, the position of
the Army's Director of the Center for Military History is filled with
a brigadier general.  Using our criteria, we believe that position
may be a candidate for conversion.  The other services have similar
positions but use civilians to fill them.  Also, the Army, Navy, Air
Force, and Defense Finance and Accounting Service together use seven
general and flag officers ranked as high as major general or rear
admiral (upper half) in various financial management positions, that
are potential candidates for conversion based on the criteria.  We
asked the services and Joint Staff why these positions are military
essential.  The explanations ranged from military regulations--but no
laws--requiring the position be military to the individual's
travelling to foreign countries periodically on official business. 
But military regulations are not impediments to conversion because
the military issues its own regulations and can modify or repeal
them.  Likewise, the need for foreign travel on official business is
not an impediment.  Federal civilian employees and contractors
routinely travel to foreign destinations on official business. 

The Army was the only service that identified positions for
conversion.  The Army converted three positions in the acquisition
area and one in base operations at its Training and Doctrine Command. 
Other general and flag officer positions in all the services and the
joint community may also be conversion candidates. 


--------------------
\3 DOD Force Mix Issues:  Converting Some Support Officer Positions
to Civilian Status Could Save Money (GAO/NSIAD-97-15, Oct.  23,
1996). 


   DOD'S DRAFT RECOMMENDATIONS AND
   ACTIONS ALREADY TAKEN WOULD
   COST ABOUT $1.9 MILLION
---------------------------------------------------------- Chapter 0:7

We estimate that the annual cost increase will be about $1.2 million
if the Congress accepts all of DOD's draft recommendations plus about
$713,000 annually for the 12 new general officers already provided to
the Marine Corps.  The annual cost includes (1) an increase in
military compensation for the new general or flag officers; (2)
compensation for officer aides and civilian assistants such as
secretaries; and (3) entertainment (to which some but not all general
or flag officers are entitled).  In addition, the joint community
would incur one-time costs for the purchase of office furniture and
other equipment.  Our estimate is conservative because DOD provided
no information for nine new joint general and flag officer positions. 

Our total cost estimate assumes that the services would reduce the
number of colonels'/Navy captains' positions by the same number of
added general and flag officer positions, as DOD's draft report said
would happen.  If not, added costs could be much higher.  For
example, the Marine Corps retained 12 colonel positions and deleted 6
first lieutenant's, 5 captain's, and 1 major's positions to account
for its 12 new general officer positions in 1996.  The Marine Corps
will incur additional military compensation costs of about $713,000
per year with 12 new general officers over what it would have been
with the 12 lower ranked officers.  As demonstrated by the Marine
Corps example, the promised decrease in colonels/Navy captains is not
automatic.  The numbers of colonels/Navy captains are governed by
limits in the Defense Officer Personnel Management Act (P.L.  96-513,
Dec.  12, 1980) and are related to the overall size of the
commissioned officer corps, not the number of general and flag
officers.  Thus in the absence of a mechanism that would cause a
one-to-one substitution for existing colonels/Navy captains to occur
automatically, the services would have to take specific action to
reduce the colonel/Navy captain positions. 

It should be noted that permitting a higher frocking ceiling, rather
than increasing title 10 ceilings, would not cost additional money
because frocked officers do not receive the pay of the higher grade
until promoted. 


   WAITING FOR THE QDR BEFORE
   CHANGING GENERAL AND FLAG
   OFFICER AUTHORIZATIONS IS
   PRUDENT
---------------------------------------------------------- Chapter 0:8

The services' force structure, roles and missions, deployment
strategies, and other matters are periodically reassessed and changed
to meet emerging threats and missions.  For example, the bottom-up
review strategy has led to changes in the force structure that were
projected, at the time, to take up to 6 years to implement, although
general and flag officer authorizations did not change in response. 
More recently, Congress required DOD to conduct the QDR and issue a
report by May 15, 1997.  The report is mandated to include (1) the
threats examined in doing the QDR, (2) the defense strategy and force
structure needed to execute the strategy, (3) the effect on the force
structure of participation in peace operations and operations other
than war, (4) the anticipated roles of the reserves, and (5) the
appropriate ratio of combat-to-support forces and a number of related
issues.  As with the bottom up review, the QDR may recommend changes
in roles and missions, force structure, and other defense strategies. 
Such changes could result in a change in the numbers or ranks of
general or flag officers needed to lead military organizations. 
Thus, we concur with DOD's decision to wait until the QDR results are
known before submitting a final report on general and flag officer
requirements.  This will allow DOD flexibility to adjust its draft
recommendations in light of QDR recommendations.  It also provides
DOD an opportunity to address the areas of concern that we have
raised.  To that end, we offer the following recommendations. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:9

Before the final report on general and flag officer requirements is
sent to the Congress, we recommend the Secretary of Defense modify
the current draft report to include

  -- an explanation of the criteria used by the service secretaries
     to modify the results of the services' studies, and a statement
     about whether the numbers represent the actual requirements for
     general and flag officers,

  -- an adjustment to the consolidated draft recommendations to
     eliminate double-counting,

  -- an evaluation of the potential to convert non military-essential
     general and flag officer positions to civilian status, and

  -- an explanation of the mechanism to ensure that the number of
     colonel's/Navy captain's positions are reduced by the same
     number of added general and flag officers. 

This concludes my statement and I would be pleased to answer your
questions. 

*** End of document. ***