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entitled 'Military Personnel: Army Needs to Focus on Cost-Effective Use 
of Financial Incentives and Quality Standards in Managing Force Growth' 
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Report to the Subcommittee on Military Personnel, Committee on Armed 
Services, House of Representatives: 

United States Government Accountability Office: 
GAO: 

May 2009: 

Military Personnel: 

Army Needs to Focus on Cost-Effective Use of Financial Incentives and 
Quality Standards in Managing Force Growth: 

GAO-09-256: 

GAO Highlights: 

Highlights of GAO-09-256, a report to the Subcommittee on Military 
Personnel, Committee on Armed Services, House of Representatives. 

Why GAO Did This Study: 

To ease the pace of overseas deployments, the President announced a 
plan in 2007 to grow the Army’s end strength by about 7 percent by 
2013. GAO was asked to evaluate the Army’s management of this 
growth.Specifically, GAO determined the extent to which the Army has 
(1) made progress in growing the force, (2) awarded cost-effective 
bonuses to attract and retain enlistees, (3) maintained the quality of 
its enlisted force, and (4) directed growth in its officer force to 
areas of need and determined whether trade-offs it has made to 
alleviate shortages will have long-term effects. GAO reviewed the 
Army’s growth plans, bonuses, waivers, and officer promotions, and 
interviewed Defense and Army officials. 

What GAO Found: 

Although the Army’s Grow the Force plan originally called for growth to 
be completed by fiscal year 2013, the Army had met 99 percent of this 
growth goal by the end of fiscal year 2008. Since fiscal year 2005, 
when none of the Army components met recruiting goals, all have made 
steady progress. To achieve this growth, the Army substantially 
increased its number of recruiters and its funding of incentives.In 
addition, the active Army and Army Reserve exceeded their retention 
goals from fiscal years 2005 through 2008; the Army National Guard 
exceeded its goals in fiscal years 2006 and 2008 and achieved retention 
within the allowable margin in fiscal years 2005 and 2007. 

While the Army has increased its expenditures for bonuses by almost 75 
percent since fiscal year 2005, it has not used available research to 
set bonuses at dollar amounts that are most cost-effective. Although a 
substantial body of research exists on how to cost-effectively use 
recruiting resources, the Army has not used this research to calculate 
bonus amounts. During GAO’s review, Army officials stated that the main 
proof of success of the bonus program was that the Army had met its 
goals for accessions and retention. Also, because Defense guidance 
allows the Army to offer bonuses to enlistees in any occupation, the 
Army has been able to award and often has awarded bonuses to 
occupations that are not considered priority. Further, because each 
component makes decisions on bonuses independently, the amounts of 
bonuses awarded by different components vary widely. Since GAO 
completed its audit work, the Army states, however, that it has been 
reducing the numbers and amounts of bonuses offered enlistees. 

In fiscal years 2005 through 2008, the Army did not consistently meet 
quality goals for new recruits, as measured by the percentage who have 
high-school diplomas and who score in the upper half on the Armed 
Forces Qualification Test. The Army implemented some new programs to 
increase the market of eligible recruits, such as programs for 
overweight individuals or those without high-school diplomas. In 
addition, the Army has continued to use conduct waivers for candidates 
who fall short of entrance standards for reasons such as prior criminal 
misconduct.Existing analyses have shown that recruits with conduct 
waivers perform similarly to those without conduct waivers— although 
they are more likely to be separated for adverse reasons; the Army 
lacks data on the cost of enlisting persons who require conduct 
waivers. 

The Army is experiencing shortages of captains, majors, and lieutenant 
colonels and projects that these shortages will continue. The Army has 
offered bonuses to captains; however, it has not offered incentives to 
majors or lieutenant colonels because those ranks are not considered to 
have retention problems. While the Army has research focused on 
incentive packages, this research has not been directed at calculating 
the most cost-effective bonus amounts.Also, the Army has no method of 
determining whether actions it has taken that deviate from 
congressional benchmarks will have any effect on the future Army 
officer corps. 

What GAO Recommends: 

GAO recommends that the Secretary of Defense direct the Secretary of 
the Army to (1) build on currently available analyses to enable the 
Army to set cost-effective bonuses for enlisted personnel, (2) collect 
data on the costs of recruiting and training soldiers with conduct 
waivers who separate early, (3) build on currently available analyses 
that will enable the Army to set cost-effective bonus amounts and other 
incentives, and (4) track the effects on the officer corps of actions 
taken to address shortages that involve deviations from congressional 
benchmarks. The Department of Defense concurred with the first three 
recommendations and partially concurred with the fourth. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/products/GAO-09-256]. For more 
information, contact Brenda S. Farrell at (202) 512-3604 or 
farrellb@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

The Army Is Well Ahead of Schedule in Growing the Force: 

The Army Has Dramatically Increased Bonus Expenditures but Does Not Use 
Available Research to Calculate the Most Cost-Effective Bonus Amounts: 

The Army Has Fallen Short of Its Quality Goals and Has Taken Steps to 
Expand Its Recruiting Market: 

The Army Lacks Support to Gauge the Effect on the Officer Corps of Its 
Actions to Alleviate Shortages: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Enlistment Bonuses for Active Duty Soldiers: 

Appendix III: GAO Review of Felony Waivers: 

Appendix IV: Critical Shortages of Officers by Rank and Branch: 

Appendix V: Comments from the Department of Defense: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Army End Strength Goals and Growth Achieved under Original and 
Accelerated Plans in Fiscal Years 2007-2013: 

Table 2: Enlisted Accessions in Fiscal Years 2005-08, by Component: 

Table 3: Active Army Enlisted Reenlistments, 2005-08: 

Table 4: Enlisted Attrition for the Army Reserve and the Army National 
Guard in Fiscal Years 2005-2008: 

Table 5: Enlistment Bonuses Awarded to New Recruits by Each Army 
Component in Fiscal Year 2008: 

Table 6: Army Progress in Meeting Quality Benchmarks, Fiscal Years 2005-
08: 

Table 7: Numbers of Recruits Accessed in Fiscal Year 2008 through the 
Army's Initiatives to Expand the Recruiting Market: 

Table 8: Number of Captains Participating in the Menu of Incentives, 
September 2007 through November 2008: 

Table 9: Number of Officers Participating in the Precommissioning 
Incentive Program in Fiscal Years 2007-2009: 

Table 10: Levels of Enlistment Bonuses Offered to Active Army Soldiers, 
June 2008: 

Table 11: Occupational Specialties Qualifying for Enlistment Bonuses 
(as of June 2008): 

Table 12: Examples of Felony Offenses Committed by Individuals Who 
Received Waivers for Felony Convictions from the Army in Fiscal Year 
2007: 

Table 13: Fill Rates Below 85 Percent for Officers by Rank and Branch 
at the End of Fiscal Year 2008: 

Figures: 

Figure 1: Numbers of Army Recruiters in Fiscal Years 2005-08: 

Figure 2: The Active Army's Total Bonus Expenditures for Fiscal Years 
2005 through 2008: 

Figure 3: The Army Reserve's Total Bonus Expenditures for Fiscal Years 
2005 through 2008: 

Figure 4: The Army National Guard's Total Bonus Expenditures for Fiscal 
Years 2005 through 2008: 

Figure 5: The Army's Estimate of the Size of the Population Eligible to 
Enlist in Fiscal Year 2008: 

Figure 6: Historical and Projected Shortages of Active Army Captains, 
Majors, and Lieutenant Colonels, Fiscal Years 2003 to 2013: 

Figure 7: Actual or Projected Promotion Rates Compared with Promotion 
Rate Benchmarks in Fiscal Years 2004-2010: 

Abbreviations: 

AFQT: Armed Forces Qualification Test: 

DOD: Department of Defense: 

GED: General Educational Development: 

OSD: Office of the Secretary of Defense: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

May 4, 2009: 

The Honorable Susan A. Davis: 
Chairwoman: 
The Honorable Joe Wilson: 
Ranking Member: 
Subcommittee on Military Personnel: 
Committee on Armed Services: 
House of Representatives: 

The Overseas Contingency Operation[Footnote 1] has dramatically 
increased the scale of U.S. military operations and has accelerated the 
pace of operations for soldiers who must deploy to Iraq and 
Afghanistan. To help alleviate the burden on those most seriously 
affected by these deployments, the President announced a plan in 
January 2007 to grow the Army's end strength by 65,000 active-duty; 
approximately 8,200 Army National Guard; and approximately 1,000 Army 
Reserve personnel by fiscal year 2013.[Footnote 2] These planned 
increases represent about a 7 percent increase in the total size of the 
Army, from approximately 1.04 million personnel to a growth goal of 
over 1.11 million personnel. In 2008, however, recognizing the 
intensified demands on Army forces and the stress associated with their 
long deployments, the Army decided to accelerate this planned growth 
and complete it by fiscal year 2010. As the Army has increased its 
forces, it has been faced with the added challenge of doing so in a 
difficult recruiting environment, partly due to the long and repeated 
deployments expected of Army servicemembers. To meet this challenge and 
to successfully target youth who are qualified for service, the Army 
has invested heavily in recruiting and bonuses. However, the nation is 
now faced with difficult economic circumstances that are straining 
government resources. In this context, all agencies, including the 
Department of Defense (DOD), will need to rethink the way they do 
business and demonstrate the best possible stewardship of federal 
funds. 

Given the extraordinary demands now being placed on the Army, you asked 
us to examine the Army's ability to manage its planned growth in 
personnel and meet its future personnel needs. This report addresses 
the following questions. To what extent is the Army (1) making progress 
in growing the force, (2) awarding cost-effective bonuses to attract 
and retain enlistees in occupations of greatest need, (3) maintaining 
the quality of its enlisted force, and (4) directing the growth in its 
officer force to areas of need and determining whether short-term trade-
offs it has made to alleviate shortages will have any long-term effects 
on its officer corps? 

To assess the Army's progress in growing the force, we reviewed its 
actual and projected end strength under both the original and the 
accelerated Army growth plans. We also analyzed recruiting and 
retention data from the Office of the Secretary of Defense (OSD) for 
active Army, Army Reserve, and Army National Guard servicemembers. To 
assess the extent to which the Army is awarding cost-effective bonuses 
to attract and retain enlistees in occupations of greatest need, we 
reviewed Army data on occupations with personnel shortages and observed 
the Army's processes for allocating bonuses. To assess the efforts that 
the Army is making to maintain the quality of its enlisted personnel, 
we analyzed data from OSD on educational credentials and aptitude test 
scores for these personnel, and we collected data from the U.S. Army 
Recruiting Command and the National Guard Bureau on enlistees who were 
accepted into the Army with waivers--permission to join the service 
despite a formerly disqualifying factor such as prior misconduct. We 
also reviewed the Army's and the RAND Corporation's analyses of the 
outcomes for soldiers who had received waivers. In addition, we 
collected information on the Army programs designed to widen the market 
of eligible recruits. To assess the extent to which the Army is 
directing its growth to areas of need in its officer corps, we reviewed 
data on the shortages that exist within the officer corps and collected 
information on the bonus programs and other incentives used by the Army 
to address officer shortages. To understand the Army's efforts to 
maintain the appropriate rank structure and experience levels of its 
officer corps, we collected information on the officer evaluation 
process and reviewed data on officer promotions from the U.S. Army 
Human Resources Command. The data we reviewed for each of our research 
objectives generally covered fiscal years 2005 through 2008; however, 
our analysis of enlistment waivers was limited to fiscal year 2008 due 
to limitations in waiver data from previous years, such as the system's 
failure to capture some waivers and the overcounting of other waivers. 
[Footnote 3]Except in the case of the enlistment waiver data, we found 
the data for fiscal years 2005 through 2008 to be sufficiently reliable 
for the purposes of this report. In addition to analyzing available 
data and documents, we interviewed officials from the Office of the 
Under Secretary of Defense for Personnel and Readiness and various 
organizations within the Army, including the Army's Office of the Chief 
of Staff for Programs, the Army Office of the Deputy Chief of Staff for 
Personnel, the Army Budget Office, and the Office of the Assistant 
Secretary of the Army for Manpower and Reserve Affairs. Additionally, 
we visited and interviewed officials from the U.S. Army Accessions 
Command, U.S. Army Cadet Command, U.S. Army Recruiting Command, U.S. 
Army Human Resources Command, U.S. Army Reserve Command, and National 
Guard Bureau Headquarters. We conducted this performance audit from 
February 2008 to March 2009 in accordance with generally accepted 
government auditing standards. Those standards require that we plan and 
perform the audit to obtain sufficient, appropriate evidence to provide 
a reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 
More information on our scope and methodology is available in appendix 
I. 

Results in Brief: 

By the end of fiscal year 2008, the Army as a whole had already met 99 
percent of its overall growth goal, whereas it had planned to complete 
the growth by 2013 under the original Grow the Force plan and by 2010 
under the accelerated plan. To attain this high rate of growth, the 
Army made progress in meeting recruiting goals, increased its number of 
recruiters and its funding for incentives, and exceeded its retention 
goals. All of the Army's components have made steady progress in 
recruiting personnel since fiscal year 2005, when all three fell short 
of meeting recruiting goals. The Army increased the number of 
recruiters from fiscal years 2005 through 2008, in the active Army by 
almost 25 percent (from 5,454 to 6,589); in the Army Reserve by more 
than 50 percent (from 1,117 to 1,739); and in the National Guard by 38 
percent (from 3,700 to 5,100). The Army's growth has also depended 
heavily on its ability to retain personnel, and in fiscal years 2005 
through 2008 the active Army exceeded its retention goals for personnel 
in each experience category for which retention goals were set. During 
the same period, the Army Reserve attained attrition rates lower than 
the established maximum. The Army National Guard kept its attrition 
rates below the established maximum in fiscal years 2006 and 2008, and 
while it had attrition rates slightly higher than the maximum in fiscal 
years 2005 and 2007, these rates still fell within the 2 percentage 
point margin of variance allowed by DOD. 

During this period of heightened military operations, the Army was able 
to dramatically increase its spending on enlistment and reenlistment 
bonuses in fiscal years 2005 through 2008. However, as its spending for 
bonuses went up, it did not use available research to determine whether 
it was paying more than it needed to in order to get the same results. 
The Army's annual expenditures on enlistment and reenlistment bonuses 
increased from $671.5 million in fiscal year 2005 to approximately $1.2 
billion in fiscal year 2008 for the active Army; from $123.5 million to 
$290.7 million for the Army Reserve; and from $377 million to $595 
million for the Army National Guard. According to DOD directives, the 
intent of enlistment and reenlistment bonuses is to influence personnel 
inventories in situations in which less costly methods have proven 
inadequate or impractical.[Footnote 4] A substantial body of research 
exists, dating from the 1960s to the present, exploring options for how 
the services can estimate the extent to which enlistment and 
reenlistment rates for particular segments of the force are likely to 
be affected by alternative uses of resources. While this research has 
provided much valuable information, it has focused on comparing 
incentive packages--not on whether the Army's increasing spending on 
bonuses is as cost-effective as it could be. During our audit work, 
Army officials told us that the main proof of the success of the bonus 
programs is that the Army has met its goals for accessions and 
retention. Because the Army does not use available research to 
determine whether it is setting bonus amounts at the most cost- 
effective levels, it does not know whether they are excessive and 
therefore cannot be assured that it is getting the maximum benefit from 
bonus expenditures. Furthermore, the Army's guidance allows the 
services the flexibility to award bonuses to occupations that are not 
considered to be priorities in the Army's readiness assessment process. 
The Army's Enlisted Incentives Review Board considers several factors 
when deciding those occupational specialties for which it will award 
bonuses, including the difficulty of recruiting for these positions, 
the numbers of available training slots, and the rates at which these 
occupations are filled. This process sometimes results in cases in 
which bonuses are not offered for priority occupations but are offered 
for nonpriority occupations. In addition, soldiers in the same 
occupations may receive different bonuses depending on the component in 
which they enlist. We are recommending that the Army build on currently 
available analyses that will enable it to set cost-effective enlistment 
and reenlistment bonuses. After our audit work was completed, Army 
officials told us that they had begun, in fiscal year 2009, to reduce 
the numbers and amounts of bonuses it offers and planned to reexamine 
its bonus program. In commenting on a draft of this report, DOD 
concurred with this recommendation and reported that in February 2009, 
DOD had contracted for a DOD-wide research study entitled "Recruiting 
and Retention Effectiveness of Cash Incentives." The objective of this 
research is to assess the impact on enlistment and reenlistment 
propensity of military cash incentives used in the services. 

During this period of rapid growth, the Army components have not 
consistently been able to meet DOD's traditional quality goals, which 
call for at least 90 percent of new recruits to have high-school 
diplomas and at least 60 percent to have scores in the upper half on 
the Armed Forces Qualification Test (AFQT). In fiscal year 2005, all 
three components fell short of the high-school diploma goal, and the 
Army National Guard fell short of the AFQT goal. Since then, components 
have continued to struggle. In fiscal year 2008, only the National 
Guard met the high-school diploma goal, and only the active Army met 
the AFQT goal. The Army estimates that only 3 out of 10 youth aged 17 
to 24 are qualified to join the Army without requiring a waiver for 
medical conditions, conduct issues, or administrative reasons such as 
the number of dependents--including those who have low educational 
credentials or low aptitude scores. The Army has initiated new programs 
to widen the pool of eligible recruits. For example, the Army has begun 
to target potential recruits who are slightly overweight or do not have 
high-school diplomas or equivalent degrees. In addition, all Army 
components have continued their use of conduct waivers to admit 
recruits who do not meet the standard entrance requirements for reasons 
such as prior criminal misconduct. Approximately 12 percent of all new 
recruits admitted by the active Army in fiscal year 2008 had a conduct 
waiver; some of those waivers were granted to recruits with prior 
felony charges.[Footnote 5] However, recruits with felony waivers 
comprised less than 1 percent of accessions to the active Army and less 
than 2 percent of accessions to the Army Reserve and the Army National 
Guard. In 2006, the Army began to study the performance of recruits 
with conduct waivers. For example, the Army conducted a study of 
recruits with conduct waivers who were accessed during fiscal years 
2003 through 2007, and the RAND Corporation conducted a study of Army 
recruits with conduct waivers who were accessed during fiscal year 2002 
through June 2005. Both the Army's and RAND's analyses showed that, 
while the performance of these recruits was generally as good as that 
of the recruits without conduct waivers, the former had a higher 
likelihood of being separated for adverse reasons, such as behavioral 
problems. As it continues to study soldiers admitted to the Army with 
waivers, RAND will be analyzing whether their presence adversely 
affects the behavior of other members of their units and will be 
updating its prior work. However, as in its prior analysis, RAND does 
not plan to consider in the scope of its work the costs associated with 
soldiers who require conduct waivers, such as the costs of the waiver 
review and approval processes and any early separations of these 
soldiers from the Army for adverse reasons. Army officials told us that 
they believe that the cost of the waiver review process is 
"negligible." However, because the Army has not yet calculated the cost 
of its multistep process and because research on enlistees with conduct 
waivers is mixed, it is not yet clear whether the cost of the 
recruiting, waiver, and training processes for recruits with conduct 
waivers justifies the possible loss of these enlistees before the end 
of their first terms. The Army therefore cannot be certain that it is 
making the most prudent use of its resources. To enable the Army to do 
so, we are recommending that it collect data on the cost-effectiveness 
of its policies related to recruits who have conduct waivers and use 
these data to inform its waiver policies. In commenting on a draft of 
this report, DOD concurred with this recommendation and reported that 
in February 2009, the Army Audit Agency had begun a study of waiver 
policy. 

To help alleviate shortages in the officer corps, the Army has offered 
incentives to several groups of officers, increased promotion rates, 
and shortened time-in-service requirements. While the Army seeks to 
fill all authorized officer positions, it is currently experiencing 
shortages of captains, majors, and lieutenant colonels, and it projects 
that shortages at some ranks will continue through 2013. For example, 
at the end of fiscal year 2008, the Army was short by 1,208 captains; 
3,112 majors; and 529 lieutenant colonels. To help alleviate these 
shortages, through November 2008, the Army offered captains a choice of 
incentives to remain in the Army: a cash bonus of up to $35,000; a 
choice of graduate school; a choice of military or language training; a 
choice of branch (or career area of expertise); or a choice of 
location. The Army is authorized to offer bonuses, but DOD Directive 
1304.21 states that it is wasteful to authorize the use of financial 
incentives when less costly but equally effective methods are 
available. However, as in the case of enlisted personnel, while the 
Army has conducted research to explore possible incentive packages, it 
has not demonstrated that the package it offered was the most cost- 
effective. In other efforts to alleviate officer shortages, since 1992, 
the Army has been exceeding congressional benchmarks for promotion 
rates and reducing time-in-service requirements for promotion. The Army 
has made these short-term trade-offs to alleviate current and future 
shortages but has not yet assessed what effect, if any, these trade- 
offs may be having on its officer corps. We are recommending that, 
should the Army decide to offer incentives to officers in the future, 
it build on currently available analyses that will enable the Army, 
with the direction and assistance of the Secretary of Defense, to set 
cost-effective bonus amounts and other incentives. We are further 
recommending that the Army track the effects on the officer corps of 
its actions to alleviate shortages, particularly when it has deviated 
from benchmarks described in Senate Report 96-375, which accompanied 
the Defense Officer Personnel Management Act (DOPMA). In commenting on 
a draft of this report, DOD stated that it concurred with our 
recommendation that the Army build on available analyses to set cost- 
effective bonus amounts and other incentives, adding that it requires 
the services to provide detailed business cases before employing 
retention bonuses. Regarding our recommendation that the Army track the 
effects on its officer corps of deviating from DOPMA benchmarks, DOD 
partially concurred, stating that these benchmarks are not intended to 
serve as fixed mandates. We agree but continue to believe that the Army 
should monitor the effect of its deviation from these benchmarks to 
determine whether this deviation will have a negative effect on the 
future officer corps. 

Background: 

DOD-wide, military personnel costs make up 23 percent of defense 
spending. According to GAO estimates, in fiscal year 2000 the average 
compensation for an active-duty soldier in terms of cash and noncash 
benefits and deferred benefits such as healthcare in retirement was 
$101,537. In fiscal year 2007, it cost about $125,000 a year to 
compensate an active-duty soldier, a rise of about 23 percent.[Footnote 
6]The Army must annually recruit and retain more than twice the number 
of uniformed personnel needed by any other military service, and it has 
budgeted approximately $51.8 billion for military personnel in fiscal 
year 2009. Each fiscal year, the Army determines its quantity goals-- 
the number of uniformed personnel it must recruit into the active Army, 
the Army Reserve, and the Army National Guard--based on the difference 
between the congressionally authorized end strength for each of these 
components and the projected number of currently serving personnel 
expected to continue their military service through the end of the 
fiscal year. In addition, requirements specific to the military 
services' officer corps set out in law--specifically the Defense 
Officer Personnel Management Act--guide the Army's management of these 
personnel.[Footnote 7] For example, the act sets the upper limit on the 
number of officers that the Army may have at any given time,[Footnote 
8] and Senate Report No. 96-375 describes benchmarks for officer 
promotion rates. Congressional reports accompanying the Defense Officer 
Personnel Management Act also contain information intended to guide 
management of the officer corps.[Footnote 9] Since 2004, two major Army 
initiatives--one to restructure the Army and another to expand its 
size--have influenced the Army's needs for both enlisted and officer 
personnel. 

* In 2004, the Army began its multiyear modular force restructuring, 
sometimes referred to as "Army Modularity," which involves the total 
redesign of the operational Army. It was initiated, in part, to support 
current operations in Iraq and Afghanistan. The foundation of modular 
restructuring is the creation of new, standardized, modular units that 
change the Army's division-based force structure to a structure in 
which smaller, more numerous brigade formations are embedded within 
significant support elements. These new modular Brigade Combat Teams 
and Multi-Functional Support Brigades are designed to be self- 
sufficient, stand-alone units that are more rapidly deployable and 
better able to conduct joint and expeditionary combat and support 
operations than were their larger division-based predecessors. These 
units, along with Functional Support Brigades and modular Headquarters 
Units, comprise the Army's new modular force. In most cases, modular 
brigades require a different personnel skill level mix than did the 
brigades they replace. 

* In January 2007, the President announced an initiative--called Grow 
the Force--intended to expand the size of the Army in order to meet 
strategic demands and help reduce stress on the force. Subsequently, in 
October 2007, the Chief of Staff of the Army announced a plan to 
accelerate the original Grow the Force completion date from fiscal year 
2013 to fiscal year 2010. The original plan called for an increase in 
active Army end strength of 65,000 personnel, bringing it to 547,400; 
an increase in Army National Guard end strength of approximately 8,200 
personnel, bringing it to 358,200; and an increase in Army Reserve end 
strength of approximately 1,000, bringing it to 206,000. The 
accelerated plan calls for the active Army and the Army National Guard 
to achieve their target end strengths by fiscal year 2010--3 years 
earlier than initially planned; the accelerated plan does not affect 
the Army Reserve's timeline. As we have previously reported, based on 
the original timeline, the Army's preliminary cost estimate indicated 
that expanding the Army would require approximately $70.2 billion from 
fiscal year 2007 through fiscal year 2013 for military personnel, 
operations and maintenance, procurement, and military construction 
costs.[Footnote 10] The Army also anticipates that it will need 
additional supplemental funding to meet the accelerated timeline. 

The Army has control over some but not all of the factors that affect 
recruiting. For example, to increase the number of recruits, the Army 
may choose to increase the size of its recruiting force or to use 
incentives, such as enlistment bonuses or educational benefits. 
However, according to the Congressional Budget Office, the combination 
of the duration of ongoing operations, the length and frequency of 
deployments, and the generally difficult nature of deployments has led 
to some concerns about the continuing effects of these factors on 
recruiting and retaining the force.[Footnote 11]Additionally, as we 
have previously reported, recent conditions present some of the most 
difficult recruiting and retention challenges DOD has experienced in 
recent history. Since the September 11, 2001, terrorist attacks on the 
United States, DOD has launched three major military operations 
requiring the deployment of significant numbers of military 
servicemembers. These are Operation Noble Eagle, which covers military 
operations related to homeland security; Operation Enduring Freedom, 
which includes ongoing military operations in Afghanistan and certain 
other countries; and Operation Iraqi Freedom, which includes ongoing 
military operations in Iraq. These military operations have greatly 
increased the rate at which personnel have been deployed, especially in 
the active Army, Army National Guard, Army Reserve, and the Marine 
Corps, which have provided the bulk of the military servicemembers for 
operations in Iraq.[Footnote 12] On the other hand, the recent downturn 
in the U.S. economy may increase potential recruits' interest in 
military service, as DOD has historically found that more youth are 
willing to consider military service during periods of high 
unemployment. While unemployment rates in the United States dropped 
from 2003 through 2007--falling from 6 percent in 2003 to 4.6 percent 
in 2007--as of January 2009, the unemployment rates had risen to 7.6 
percent. 

The Army Is Well Ahead of Schedule in Growing the Force: 

By the end of fiscal year 2008, the Army had almost reached its overall 
growth goal, although the original Grow the Force plan called for the 
growth to be completed by 2013. The Army decided to accelerate this 
planned growth and complete it by fiscal year 2010. In fiscal year 
2008, two Army components--the active Army and the Army National Guard-
-exceeded their fiscal year 2008 growth goals under the accelerated 
growth plan. All Army components have made progress in meeting their 
recruiting goals since fiscal year 2005, when none of them met 
recruiting goals. In 2008, all components exceeded their recruiting 
goals. The active Army and the Army Reserve also exceeded their 
retention goals each year from fiscal year 2005 through fiscal year 
2008. The Army National Guard exceeded its goals in fiscal years 2006 
and 2008 and fell within the allowable margin of variance for meeting 
its goals in the other 2 fiscal years. 

The Army Has Almost Met Its Overall Growth Goal, and Two Components 
Have Exceeded Their Annual Goals under the Accelerated Growth Plan: 

By the end of fiscal year 2008, the Army as a whole had met 99 percent 
of its overall growth goal, whereas it had initially planned to 
complete the growth by fiscal year 2013 under the original Grow the 
Force plan and by 2010 under the accelerated plan. Specifically, the 
Army's total end strength at the end of fiscal year 2008 stood at 
1,101,020 personnel, and its final end-strength goal under the Grow the 
Force plan is 1,111,600 personnel. 

Under the Army's accelerated growth plan, the goal for the active Army 
was to reach an end strength of 547,400 personnel by the end of fiscal 
year 2010; the active Army ended fiscal year 2008 with a total of 
543,645 personnel (see table 1). As table 1 also shows, the active Army 
exceeded its 2008 goals under both the original and the accelerated 
growth plans. At the end of fiscal year 2008, the active Army needed to 
grow only by an additional 3,755 to reach its overall end-strength goal 
of 547,400 personnel. Officials said that at this rate of growth, the 
active Army is well on track to reach its overall end strength goal by 
fiscal year 2010. 

Table 1: Army End Strength Goals and Growth Achieved under Original and 
Accelerated Plans in Fiscal Years 2007-2013 (Numbers in thousands): 

Active Army: Original plan; 
Fiscal year: 2007: 518.4; 
Fiscal year: 2008: 525.4; 
Fiscal year: 2009: 532.4; 
Fiscal year: 2010: 539.4; 
Fiscal year: 2011: 546.4; 
Fiscal year: 2012: 547.4; 
Fiscal year: 2013: 547.4. 

Active Army: Accelerated plan; 
Fiscal year: 2007: 522.0; 
Fiscal year: 2008: 529.2; 
Fiscal year: 2009: 537.5; 
Fiscal year: 2010: 547.4; 
Fiscal year: 2011: 547.4; 
Fiscal year: 2012: 547.4; 
Fiscal year: 2013: 547.4. 

Active Army: End strength achieved; 
Fiscal year: 2007: 522.0; 
Fiscal year: 2008: 543.6. 

Army National Guard: Original plan; 
Fiscal year: 2007: 350.0; 
Fiscal year: 2008: 351.3; 
Fiscal year: 2009: 352.6; 
Fiscal year: 2010: 353.9; 
Fiscal year: 2011: 355.3; 
Fiscal year: 2012: 356.8; 
Fiscal year: 2013: 358.2. 

Army National Guard: Accelerated plan; 
Fiscal year: 2007: 352.7; 
Fiscal year: 2008: 358.0; 
Fiscal year: 2009: 358.0; 
Fiscal year: 2010: 358.2; 
Fiscal year: 2011: 358.2; 
Fiscal year: 2012: 358.2; 
Fiscal year: 2013: 358.2. 

Army National Guard: End strength achieved; 
Fiscal year: 2007: 352.7; 
Fiscal year: 2008: 360.4. 

Army Reserve: Original plan; 
Fiscal year: 2007: 200.0; 
Fiscal year: 2008: 198.3; 
Fiscal year: 2009: 205.0; 
Fiscal year: 2010: 205.0; 
Fiscal year: 2011: 205.0; 
Fiscal year: 2012: 205.0; 
Fiscal year: 2013: 206.0. 

Army Reserve: End strength achieved; 
Fiscal year: 2007: 189.9; 
Fiscal year: 2008: 197.0. 

Source: GAO analysis of Army data. 

Notes: The Army National Guard is seeking permission from OSD to 
increase its force size to 370,700 personnel to better meet its 
operational needs. 

The end strength authorized for the Army Reserve prior to 2007 was 
205,000. The Grow the Force plan called on the Army Reserve to increase 
its force size by only 1,000 personnel--to 206,000. However, because 
the Army Reserve's actual end strength has been below the 205,000 that 
was authorized, the force size of the Army Reserve increased by 
approximately 7,000 by the end of fiscal year 2008. The Army Reserve is 
not subject to the accelerated growth plan. 

[End of table] 

The Army National Guard has also had success in growing well ahead of 
the schedule. By the end of fiscal year 2008, the National Guard had 
met 100.6 percent of its overall growth goal. As shown in table 1, the 
goal for the Army National Guard was to reach an end strength of 
358,200 personnel by the end of fiscal year 2010 under the accelerated 
growth plan; however, the Army National Guard ended fiscal year 2008 
with a total of 360,351 personnel. Army National Guard officials 
attributed their ability to exceed growth goals to their successes with 
recruiting and retaining personnel. 

The Army Reserve is not subject to the accelerated plan, but the 
original plan called on it to grow to 206,000 personnel by the end of 
fiscal year 2013. By the end of fiscal year 2008, the Army Reserve had 
met approximately 96 percent of this goal, with an end strength of 
197,024. As shown in table 1, the Army Reserve increased its number of 
personnel by approximately 7,000 by the end of fiscal year 2008, but it 
still fell slightly short of its 2008 end strength goal of 198,268. 
Army Reserve officials acknowledged that the Army Reserve has struggled 
in meeting its annual end-strength goal. They told us that despite the 
Army's need to accelerate the growth in personnel in order to reduce 
the burden of frequent and lengthy deployments, the Army Reserve was 
not included in the acceleration plans because of the difficulties it 
was experiencing in meeting its end-strength goals. 

Army Components Have Made Progress in Meeting Their Recruiting Goals 
Since 2005: 

The Army manages its overall end strength by setting goals for 
recruiting new personnel and retaining existing personnel. Since fiscal 
year 2005, when all Army components fell short of their recruiting 
goals, the components have made progress toward meeting their annual 
recruiting goals. To help accomplish this, they have increased the size 
of their recruiting force. As shown in table 2, the active Army met 
approximately 92 percent of its recruiting goal in fiscal year 2005, 
while the Army National Guard met approximately 80 percent of its goal 
and the Army Reserve met approximately 84 percent of its goal. Since 
fiscal year 2005, all three components have made steady progress toward 
meeting their recruiting goals. As shown in table 2, the active Army 
exceeded its annual goal of 80,000 new recruits from fiscal years 2006 
through 2008. The Army National Guard met more than 95 percent of its 
goal in both fiscal years 2006 and 2007 and exceeded its goal in fiscal 
year 2008. The Army Reserve met approximately 95 percent of its goal in 
fiscal year 2006 and exceeded its goal in both fiscal years 2007 and 
2008. 

Table 2: Enlisted Accessions in Fiscal Years 2005-08, by Component: 

Component: Active Army: Goal; 
Fiscal year: 2005: 80,000; 
Fiscal year: 2006: 80,000; 
Fiscal year: 2007: 80,000; 
Fiscal year: 2008: 80,000. 

Component: Active Army: Achieved; 
Fiscal year: 2005: 73,373; 
Fiscal year: 2006: 80,635; 
Fiscal year: 2007: 80,407; 
Fiscal year: 2008: 80,517. 

Component: Active Army: Percentage of goal achieved; 
Fiscal year: 2005: 91.7; 
Fiscal year: 2006: 100.8; 
Fiscal year: 2007: 100.5; 
Fiscal year: 2008: 100.6. 

Component: Army National Guard: Goal; 
Fiscal year: 2005: 63,002; 
Fiscal year: 2006: 70,000; 
Fiscal year: 2007: 70,000; 
Fiscal year: 2008: 63,000. 

Component: Army National Guard: Achieved; 
Fiscal year: 2005: 50,219; 
Fiscal year: 2006: 69,042; 
Fiscal year: 2007: 66,652; 
Fiscal year: 2008: 65,192. 

Component: Army National Guard: Percentage of goal achieved; 
Fiscal year: 2005: 79.7; 
Fiscal year: 2006: 98.6; 
Fiscal year: 2007: 95.2; 
Fiscal year: 2008: 103.5. 

Component: Army Reserve: Goal; 
Fiscal year: 2005: 28,485; 
Fiscal year: 2006: 36,032; 
Fiscal year: 2007: 35,505; 
Fiscal year: 2008: 37,500. 

Component: Army Reserve: Achieved; 
Fiscal year: 2005: 23,859; 
Fiscal year: 2006: 34,379; 
Fiscal year: 2007: 35,734; 
Fiscal year: 2008: 39,870. 

Component: Army Reserve: Percentage of goal achieved; 
Fiscal year: 2005: 83.8; 
Fiscal year: 2006: 95.4; 
Fiscal year: 2007: 100.6; 
Fiscal year: 2008: 106.3. 

Component: Total: Goal; 
Fiscal year: 2005: 171,487; 
Fiscal year: 2006: 186,032; 
Fiscal year: 2007: 185,505; 
Fiscal year: 2008: 180,500. 

Component: Total: Achieved; 
Fiscal year: 2005: 147,451; 
Fiscal year: 2006: 184,056; 
Fiscal year: 2007: 182,793; 
Fiscal year: 2008: 185,579. 

Component: Total: Percentage of goal achieved; 
Fiscal year: 2005: 86.0; 
Fiscal year: 2006: 98.9; 
Fiscal year: 2007: 98.5; 
Fiscal year: 2008: 102.8. 

Source: GAO analysis of data from the Office of the Secretary of 
Defense. 

[End of table] 

In working toward achieving its recruiting goals, the Army increased 
its number of recruiters from 10,271 in fiscal year 2005 to 13,428 in 
fiscal year 2008, a total increase of more than 30 percent. The number 
of recruiters also grew within each Army component during this period. 
For example, the number of recruiters in the active Army grew from 
5,454 in fiscal year 2005 to 6,589 in fiscal year 2008, an increase of 
more than 20 percent. The number of recruiters in the Army Reserve grew 
by more than 50 percent between fiscal years 2005 and 2008 (from 1,117 
to 1,739). For the Army National Guard, the number of recruiters grew 
by approximately 38 percent during that period (from 3,700 to 5,100) 
(see figure 1). 

Figure 1: Numbers of Army Recruiters in Fiscal Years 2005-08: 

[Refer to PDF for image: multiple vertical bar graph] 

Active Army: 
Fiscal year 2005: 5,454; 
Fiscal year 2006: 6,490; 
Fiscal year 2007: 6,362; 
Fiscal year 2008: 6,589. 

Army Reserve: 
Fiscal year 2005: 1,117; 
Fiscal year 2006: 1,643; 
Fiscal year 2007: 1,627; 
Fiscal year 2008: 1,739. 

Army National Guard: 
Fiscal year 2005: 3,700; 
Fiscal year 2006: 5,100; 
Fiscal year 2007: 5,100; 
Fiscal year 2008: 5,100. 

Source: GAO analysis of Army Budget Office, Army Reserve, and National 
Guard Bureau data. 

[End of figure] 

Army Components Met Their Retention Goals in Recent Years: 

Despite concerns that the increased length and frequency of deployments 
could cause soldiers to leave the Army, the Army components met their 
retention goals between fiscal years 2005 and 2008. The active Army 
uses soldiers' reenlistments as a measure of retention. The active Army 
exceeded its retention goals at each experience level every year from 
fiscal years 2005 through 2008 (see table 3).[Footnote 13] 

Table 3: Active Army Enlisted Reenlistments, 2005-08: 

Fiscal year 2005: Initial term; 
Goal: 26,935; 
Reenlistments achieved: 27,818; 
Percentage of goal achieved: 103.3. 

Fiscal year 2005: Midcareer; 
Goal: 23,773; 
Reenlistments achieved: 24,407; 
Percentage of goal achieved: 102.7. 

Fiscal year 2005: Career; 
Goal: 13,454; 
Reenlistments achieved: 17,287; 
Percentage of goal achieved: 128.5. 

Fiscal year 2005: Total; 
Goal: 64,162; 
Reenlistments achieved: 69,512; 
Percentage of goal achieved: 108.3. 

Fiscal year 2006: Initial term; 
Goal: 26,490; 
Reenlistments achieved: 28,081; 
Percentage of goal achieved: 106.0. 

Fiscal year 2006: Midcareer; 
Goal: 24,510; 
Reenlistments achieved: 24,562; 
Percentage of goal achieved: 100.2. 

Fiscal year 2006: Career; 
Goal: 13,200; 
Reenlistments achieved: 14,664; 
Percentage of goal achieved: 111.1. 

Fiscal year 2006: Total; 
Goal: 64,200; 
Reenlistments achieved: 67,307; 
Percentage of goal achieved: 104.8. 

Fiscal year 2007: Initial term; 
Goal: 25,502; 
Reenlistments achieved: 29,828; 
Percentage of goal achieved: 117.0. 

Fiscal year 2007: Midcareer; 
Goal: 21,770; 
Reenlistments achieved: 23,314; 
Percentage of goal achieved: 107.1. 

Fiscal year 2007: Career; 
Goal: 14,928; 
Reenlistments achieved: 16,635; 
Percentage of goal achieved: 111.4. 

Fiscal year 2007: Total; 
Goal: 62,200; 
Reenlistments achieved: 69,777; 
Percentage of goal achieved: 112.2. 

Fiscal year 2008: Initial term; 
Goal: 27,900; 
Reenlistments achieved: 31,866; 
Percentage of goal achieved: 114.2. 

Fiscal year 2008: Midcareer; 
Goal: 21,500; 
Reenlistments achieved: 24,455; 
Percentage of goal achieved: 113.7. 

Fiscal year 2008: Career; 
Goal: 15,600; 
Reenlistments achieved: 17,592; 
Percentage of goal achieved: 112.8. 

Fiscal year 2008: Total; 
Goal: 65,000; 
Reenlistments achieved: 73,913; 
Percentage of goal achieved: 113.7. 

Source: GAO analysis of data from the Office of the Secretary of 
Defense. 

[End of table] 

Like the active Army, the Army Reserve and the Army National Guard were 
successful in retaining personnel each year from fiscal years 2005 
through 2008. Both of these components use attrition rates--the number 
of losses from a component during a given period compared to the 
component's average end strength during that period--as a measure of 
retention, striving to keep attrition below an established maximum 
rate, or ceiling.[Footnote 14] However, DOD allows a 2 percentage point 
margin of variance from the established ceiling in assessing whether or 
not attrition goals have been met. As table 4 shows, the attrition rate 
for the Army Reserve remained at rates below the ceiling each year from 
fiscal years 2005 through 2008. The Army National Guard had attrition 
rates above the ceiling in fiscal years 2005 and 2007, but the rates 
during these 2 years fell to within the 2 percentage point margin of 
variance allowed by DOD. The Army National Guard also succeeded in 
keeping attrition rates below the ceiling in fiscal years 2006 and 2008 
(thus exceeding its goals). 

Table 4: Enlisted Attrition for the Army Reserve and the Army National 
Guard in Fiscal Years 2005-2008: 

Component: Army Reserve; 
Attrition ceiling: 28.6%; 
Attrition in fiscal year 2005: 23.4% (below ceiling); 
Attrition in fiscal year 2006: 21.5% (below ceiling); 
Attrition in fiscal year 2007: 24.4% (below ceiling); 
Attrition in fiscal year 2008: 21.1% (below ceiling). 

Component: Army National Guard; 
Attrition ceiling: 19.5%; 
Attrition in fiscal year 2005: 20.2%; (above ceiling; Falls within 
margin of variance); 
Attrition in fiscal year 2006: 18.8% (below ceiling); 
Attrition in fiscal year 2007: 19.7%; (above ceiling; Falls within 
margin of variance); 
Attrition in fiscal year 2008: 18.9% (below ceiling). 

Source: GAO analysis of data from the Office of the Secretary of 
Defense. 

Note: Arrows indicate whether the attrition rate for the year was above 
or below the ceiling. The goal for each component is to maintain 
attrition at rates below the ceiling. However, DOD allows a 2 
percentage point margin of variance from the established ceiling. 
Therefore, the Army National Guard met its goals in fiscal years 2005 
and 2007, even though its attrition rates were slightly above the 
established ceiling. An official with the Army National Guard told us 
that it is not uncommon for attrition rates to vary from year to year, 
as they reflect all types of losses, including retirements and medical 
discharges that fluctuate annually. 

[End of table] 

Army officials attributed the generally high retention rates among 
enlisted personnel to their strong commitment to the mission and their 
pride in the military service. Also, several Army officials said that 
the ongoing conflicts in Iraq and Afghanistan provide soldiers with 
opportunities to take advantage of their training and to put their 
combat skills to use, thus increasing satisfaction with their Army 
careers. Focus groups conducted with soldiers returning from 15-month 
combat tours and their families from December 2007 through February 
2008 also found that soldiers and their family members expressed great 
pride in their service, and soldiers indicated that they were doing 
what they had originally joined the Army to do. 

At the same time, deployments that are too long or too frequent may 
start having an adverse effect on retention, as pressure on personnel 
and their families increases. Participants in the focus groups reported 
that 15-month deployments are too long and 12-month dwell time[Footnote 
15] is too short to fully integrate with family and prepare for the 
next deployment. Top Army leaders acknowledge the strain on soldiers 
and families, and the Army has recently reduced deployments to 12 
months, followed by 12 months at home for active-duty soldiers. 
Officials we interviewed said that the accelerated rate of growth in 
Army end strength is helping them move toward the goal of shorter 
deployments and longer dwell time. 

The Army Has Dramatically Increased Bonus Expenditures but Does Not Use 
Available Research to Calculate the Most Cost-Effective Bonus Amounts: 

Since fiscal year 2005--the last year in which the Army failed to meet 
its end-strength mission--it has dramatically increased expenditures 
for enlistment and reenlistment bonuses. However, while the Army has 
completed or contracted for extensive analysis of the effectiveness of 
various recruiting tools, it has not integrated the results of its 
research to calculate the most cost-effective bonus amounts. That is, 
the Army cannot determine whether or not it is paying more in bonuses 
than it needs to pay. Also, these bonuses are not always targeted as 
precisely as they could be. The Army's process for determining whether 
to award a bonus to a specific occupational specialty is based on a 
number of factors, including whether the Army is having difficulty 
recruiting for and needs to fill training slots for the specialty and 
whether the occupation's fill rates indicate shortages. (Fill rates are 
the rates at which occupational specialties are filled in relation to 
the existing number of vacancies.) The Army's current system results in 
(1) soldiers in occupations of varying priority or responsibility 
sometimes getting the same bonus amounts; (2) all soldiers who are 
eligible for and apply for reenlistment while they are in Iraq, 
Afghanistan, and Kuwait receiving bonuses, regardless of their 
occupational specialties; and (3) soldiers in the same occupational 
specialties getting different bonus amounts depending on which 
component they join. After we had completed our audit work, OSD and the 
Army reported that the worsening U.S. economy had resulted in their 
ability to decrease bonus amounts and the numbers of occupations 
offered bonuses. In March 2009, they stated that in this fiscal year, 
they had contracted for analyses to be done on the effectiveness of 
cash incentives and on bonus prediction models. 

The Army Has Substantially Increased Its Expenditures on Bonuses: 

In fiscal year 2005, the Army's total enlistment and reenlistment bonus 
expenditures stood at approximately $1.2 billion; in fiscal year 2008, 
they had increased by almost 75 percent, to approximately $2.0 billion. 
Bonus expenditures also grew within each of the Army's components. 

Active Army: 

As figure 2 shows, the active Army spent $165.9 million on enlistment 
bonuses in fiscal year 2005; by fiscal year 2008, it had almost tripled 
its enlistment bonus expenditures, spending approximately $466.7 
million. The active Army also spent $505.6 million on reenlistment 
bonuses in fiscal year 2005; by fiscal year 2008, it had increased 
these expenditures by more than 35 percent, to $689.9 million. 

Figure 2: The Active Army's Total Bonus Expenditures for Fiscal Years 
2005 through 2008: 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal year: 2005; 
Reenlistment bonus expenditures: $505.6 million; 
Enlistment bonus expenditures: $165.9 million. 
Total expenditures: $671.5 million. 

Fiscal year: 2006; 
Reenlistment bonus expenditures: $736.9 million. 
Enlistment bonus expenditures: $353.1 million; 
Total expenditures: $1,090.1 million. 

Fiscal year: 2007; 
Reenlistment bonus expenditures: $566.1 million; 
Enlistment bonus expenditures: $472.7 million; 
Total expenditures: $1,028.8 million. 

Fiscal year: 2008; 
Reenlistment bonus expenditures: $689.9 million; 
Enlistment bonus expenditures: $466.7 million. 
Total expenditures: $1,156.6 million. 

Note: Numbers may not add due to rounding. 

Source: GAO analysis of data from the Army Budget Office. 

[End of figure] 

Army Reserve: 

The Army Reserve has also significantly increased its spending on 
bonuses to soldiers since fiscal year 2005. As figure 3 shows, the Army 
Reserve spent $59.6 million on enlistment bonuses in fiscal year 2005. 
By fiscal year 2008, it had almost tripled this amount, to $169.7 
million. Additionally, the Army Reserve spent $63.9 million on 
reenlistment bonuses in fiscal year 2005, nearly doubling its fiscal 
year 2008 expenditures, to $121 million. 

Figure 3: The Army Reserve's Total Bonus Expenditures for Fiscal Years 
2005 through 2008: 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal year: 2005; 
Reenlistment bonus expenditures: $63.9 million; 
Enlistment bonus expenditures: $59.6 million. 
Total expenditures: $123.5 million. 

Fiscal year: 2006; 
Reenlistment bonus expenditures: $140.0 million. 
Enlistment bonus expenditures: $83.4 million; 
Total expenditures: $223.4 million. 

Fiscal year: 2007; 
Reenlistment bonus expenditures: $146.6 million; 
Enlistment bonus expenditures: $99.5 million; 
Total expenditures: $246.1 million. 

Fiscal year: 2008; 
Reenlistment bonus expenditures: $121.0 million; 
Enlistment bonus expenditures: $169.7 million. 
Total expenditures: $290.7 million. 

Source: GAO analysis of data from the Army Budget Office. 

[End of figure] 

Army National Guard: 

The Army National Guard almost tripled its spending on enlistment 
bonuses from $141.8 million in fiscal year 2005 to $392.1 million in 
fiscal year 2008. It also increased total reenlistment bonus 
expenditures from $235.1 million in fiscal year 2005 to $375.8 million 
in fiscal year 2007, before curtailing reenlistment bonus spending for 
fiscal year 2008 (see figure 4).[Footnote 16] 

Figure 4: The Army National Guard's Total Bonus Expenditures for Fiscal 
Years 2005 through 2008: 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal year: 2005; 
Reenlistment bonus expenditures: $235.1 million; 
Enlistment bonus expenditures: $141.8 million. 
Total expenditures: $377.0 million. 

Fiscal year: 2006; 
Reenlistment bonus expenditures: $308.0 million. 
Enlistment bonus expenditures: $209.5 million; 
Total expenditures: $5174 million. 

Fiscal year: 2007; 
Reenlistment bonus expenditures: $375.9 million; 
Enlistment bonus expenditures: $327.7 million; 
Total expenditures: $703.5 million. 

Fiscal year: 2008; 
Reenlistment bonus expenditures: $202.8 million; 
Enlistment bonus expenditures: $392.1 million. 
Total expenditures: $595.0 million. 

Source: GAO analysis of data from the Army Budget Office. 

[End of figure] 

Army officials stated that the use of incentives, such as bonuses, is 
an integral part of a comprehensive recruiting and retention strategy. 
OSD officials said that the increase in bonus expenditures over the 
past several years has been necessary to overcome a recruiting 
environment made difficult by factors such as the declining propensity 
of youth to enter the military service, the decreasing number of youth 
who meet the Army's entrance standards, and the reality of recruiting 
during a time of overseas military conflicts. Up until now the Army has 
been able to dramatically increase the amounts it spends on enlistment 
and reenlistment bonuses. However, the current level of bonus 
expenditures may prove difficult to sustain in the tighter fiscal 
environment expected in the next several years. Also, rising 
unemployment rates in the civilian sector may make it easier to attract 
recruits and retain soldiers. 

The Army Has Not Used Research to Calculate What Bonus Amounts Would Be 
Most Cost-Effective: 

While the Army has conducted extensive research on the use of cash and 
other incentives such as choice of branch or graduate school, this 
research has been focused on comparing different incentive plans. It 
has not been directed at determining the most cost-effective bonus 
amounts. The Army therefore cannot determine whether or not it is 
paying more than it needs to pay in enlistment and retention bonuses. 
DOD Directive 1304.21 establishes policies for administering enlistment 
and reenlistment bonuses for military servicemembers, and DOD 
Instruction 1304.29 provides guidance on implementing these policies. 
[Footnote 17] These directives state that bonuses should be used in 
situations in which less costly methods have proven inadequate or 
impractical. DOD Directive 1304.21 further states that it is wasteful 
to authorize the use of financial incentives when less costly but 
equally effective incentives are available. In determining what bonus 
amounts to offer active-duty enlistees, the Army has established seven 
different amount levels based on the occupation that the enlistee would 
fill. (See table 10 in appendix II for a listing of the bonus amounts.) 
Bonus levels 1 through 7, as defined by the U.S. Army Recruiting 
Command, have been adjusted over the years. The current amounts range 
from $2,000 to $35,000, depending on the bonus level under which an 
occupation falls and the length of the enlistment contract signed by 
the recruit. For example, a recruit who enters the active Army in a 
level 3 occupational specialty and signs a 2-year contract would 
receive an enlistment bonus of $3,000. A recruit who enters the active 
Army in a level 1 occupational specialty--the highest bonus category--
and signs a 6-year contract would receive an enlistment bonus of 
$35,000. 

Although a substantial body of research exists on how analysts can 
estimate the extent to which enlistment and reenlistment rates for 
particular segments of the force are likely to be affected by 
alternative uses of resources, the Army has not integrated this 
research into its decisionmaking process in setting the most cost- 
effective bonus amounts.[Footnote 18] Accordingly, officials told us 
that the Army is not able to determine whether it is paying more than 
it needs to and therefore getting a cost-effective return on its 
investment. In light of the tighter fiscal environment expected in the 
next few years, it will become more important to determine whether it 
is paying bonuses to persons who would have joined or stayed in the 
Army without them. In fact, after we had completed our audit work, the 
Army stated that in fiscal year 2009, it had begun to decrease the 
number of occupational specialties that receive bonuses and the amounts 
spent for this purpose. 

The Army's Process Leads to Cases in which Occupations of Different 
Priority Levels Receive Similar Bonuses and Bonuses Vary by Component: 

To determine the occupational specialties for which active-duty 
enlistees should be offered enlistment bonuses, the Army has formed an 
Enlisted Incentives Review Board--made up of officials from the Army 
Office of the Deputy Chief of Staff, the U.S. Army Recruiting Command, 
and the U.S. Army Human Resources Command--which meets four times a 
year. Occupational fill rates, or the percentages of an occupation's 
positions that are filled, are a major factor in the board's 
determination of whether to offer enlistment bonuses for a particular 
occupational specialty. However, other factors are also considered, 
such as the Army's future planned growth, decreases in the need for an 
occupational specialty, the success of any previously offered bonuses 
in attracting the required numbers of enlistees, and the availability 
of training slots. The Army has a list of priority occupations that is 
compiled by field commanders when they assess their units' personnel 
needs, but given the various factors considered by the Enlisted 
Incentives Review Board, situations arise in which some priority 
occupations do not receive bonuses or in which different occupations 
with varying degrees of responsibility are awarded the same amount. For 
example, of the 35 occupational specialties on the Army's priority 
list, 9 were not designated to receive enlistment bonuses at the time 
of the June 2008 Enlisted Incentives Review Board meeting.[Footnote 19] 
However, at the same meeting the Enlisted Incentives Review Board 
identified 52 nonpriority occupational specialties that would be 
offered some level of bonus. (See table 11 in appendix II for a list of 
occupational specialties that were selected to receive bonuses.) 

The board's system for determining enlistment bonuses also sometimes 
results in cases in which occupations with varying degrees of 
responsibility receive the same bonus. For example, in June 2008, Food 
Service Specialists were eligible to receive the same bonus as 
Explosive Ordnance Disposal Specialists, even though the Explosive 
Ordnance Disposal Specialist was listed as a priority occupational 
specialty and was tasked with more dangerous responsibilities. 
Similarly, Infantrymen, an occupational specialty listed by the Army as 
a priority specialty, received the same level of enlistment bonus as 
Army band musicians. Army officials told us that these decisions were 
based on factors such as the difficulty of recruiting for some 
occupations and the availability of training slots for them. DOD 
guidance allows the services to grant bonuses to occupations that the 
services have not deemed "priority" but that are experiencing shortages 
or for which total accession objectives have not been met.[Footnote 20] 

Like enlistment bonuses, reenlistment bonuses are not always targeted 
at priority occupational specialties. For example, in fiscal years 2007 
and 2008, the active Army awarded tax-free reenlistment bonuses of up 
to $15,000 to all soldiers, regardless of occupational specialty, who 
were deployed to Afghanistan, Iraq, and Kuwait while they were in 
theater. Army officials reported that in fiscal year 2007, 15,984 
soldiers received these reenlistment bonuses, which averaged $10,700. 
As of April 2008, 4,483 soldiers had received these bonuses during 
fiscal year 2008; the average 2008 bonus was $12,700. Army officials 
linked these tax-free reenlistment bonuses to the Army's ability to 
attain high levels of retention. For example, they reported that 
recently deployed units or units currently deployed to Iraq, 
Afghanistan, and Kuwait have reenlistment rates at 110 to 120 percent 
of their yearly goals. 

Furthermore, because the Army's components manage their enlistment 
bonus programs separately, soldiers in the same occupations might 
receive bonuses of different amounts, depending on the component in 
which they serve. One prominent difference among the bonuses offered by 
Army components is the difference between what is offered to an active- 
duty enlistee and an enlistee who enters under the National Guard's 
Active First incentive program.[Footnote 21] All Active First recruits 
get a bonus of at least $20,000 if they sign up for 2 years in the 
active Army; $30,000 if they sign up for 3 years; and $40,000 if they 
sign up for 4 years. Because all Active First enlistees are eligible 
for bonuses, an enlistee in a specific occupational specialty may find 
that he or she is eligible for a bonus for joining the Active First 
program but not eligible for a bonus for joining the active Army. 
[Footnote 22] According to data provided by the U.S. Army Recruiting 
Command, such differences in bonuses offered by the Army's three 
components resulted in a divergence in the average dollar amount of 
bonus per enlistee in fiscal year 2008. As table 5 shows, bonuses 
ranged from $18,304 for an active-duty enlistee to $36,966 for an 
enlistee in the National Guard's Active First Program.[Footnote 23] 

Table 5: Enlistment Bonuses Awarded to New Recruits by Each Army 
Component in Fiscal Year 2008: 

Component: Number of accessions awarded an enlistment bonus; 
Active Army: 46,927; 
Army Reserve: 21,681; 
National Guard: 39,905; 
National Guard Active First: 2,119. 

Component: Average enlistment bonus; 
Active Army: $18,304; 
Army Reserve: $19,524; 
National Guard: $20,000; 
National Guard Active First: $39,966. 

Source: U.S. Army Recruiting Command. 

[End of table] 

The Army Has Fallen Short of Its Quality Goals and Has Taken Steps to 
Expand Its Recruiting Market: 

The Army components have not consistently met their quality goals for 
the percentage of new recruits who have high-school diplomas[Footnote 
24] and who score in the upper half on the AFQT. The Army estimates 
that only 3 out of 10 youth aged 17 to 24 are qualified to join the 
Army without a waiver, even including those who have low educational 
credentials or low aptitude. This has led the Army to experiment with 
some initiatives to expand its recruiting market to individuals who 
before now might have been considered ineligible for service, for 
example recruits who do not meet standard entrance requirements for 
reasons such as body fat and age requirements. While its programs to 
expand the recruiting market appear promising, the Army has not yet had 
time to collect long-term data on the performance of individuals 
admitted through these programs. 

Army Components Have Not Consistently Met Quality Benchmarks for 
Recruits with High-School Diplomas and Scores on the Upper Half on the 
AFQT: 

In fiscal years 2005 through 2008, the Army components did not 
consistently meet the quality benchmarks set for the services by DOD. 
Historically, DOD has used two primary measures to identify quality 
recruits: possession of a high-school diploma and a score in the upper 
half on the AFQT. These benchmarks require that at least 90 percent of 
recruits each year have a high-school diploma, at least 60 percent 
score in the upper half on the AFQT, and no more than 4 percent score 
in the bottom 30 percent on the AFQT. In fiscal year 2005, none of the 
Army's components met DOD's 90 percent benchmark for recruits with high-
school diplomas (see table 6). The active Army and the Army Reserve met 
the benchmark for 60 percent of enlistees scoring in the upper half on 
the AFQT, but the Army National Guard did not. Since fiscal year 2005, 
only the active Army has met the benchmark for 60 percent of its 
recruits scoring in the upper half on the AFQT. The Army National Guard 
has consistently met the high-school diploma benchmark since fiscal 
year 2005, while the active Army and the Army Reserve have not. In 
fiscal years 2006 through 2008, 91 percent of the Army National Guard's 
recruits had high-school diplomas. 

Table 6: Army Progress in Meeting Quality Benchmarks, Fiscal Years 2005-
08: 

Army component: Active Army; 
Quality indicator: Percentage with high-school diplomas; 
Fiscal year 2005: 87%; 
Fiscal year 2006: 81%; 
Fiscal year 2007: 79%; 
Fiscal year 2008: 83%. 

Army component: Active Army; 
Quality indicator: Percentage at or above the 50th percentile on the 
AFQT; 
Fiscal year 2005: 67%; 
Fiscal year 2006: 61%; 
Fiscal year 2007: 61%; 
Fiscal year 2008: 62%. 

Fiscal year 
Quality indicator Percentage at or below the 30th percentile on the 
AFQT; 
Fiscal year 2005: 4.0%; 
Fiscal year 2006: 3.8%; 
Fiscal year 2007: 4.0%; 
Fiscal year 2008: 3.5%. 

Army component: Army Reserve; 
Quality indicator Percentage with high-school diplomas; 
Fiscal year 2005: 88%; 
Fiscal year 2006: 90%; 
Fiscal year 2007: 86%; 
Fiscal year 2008: 89%. 

Army component: Army Reserve; 
Quality indicator: Percentage at or above the 50th percentile on the 
AFQT; 
Fiscal year 2005: 67%; 
Fiscal year 2006: 59%; 
Fiscal year 2007: 57%; 
Fiscal year 2008: 58%. 

Army component: Army Reserve; 
Quality indicator: Percentage at or below the 30th percentile on the 
AFQT; 
Fiscal year 2005: 3%; 
Fiscal year 2006: 4%; 
Fiscal year 2007: 4%; 
Fiscal year 2008: 3%. 

Army component: Army National Guard; 
Quality indicator Percentage with high-school diplomas; 
Fiscal year 2005: 83%; 
Fiscal year 2006: 91%; 
Fiscal year 2007: 91%; 
Fiscal year 2008: 91%. 

Army component: Army National Guard; 
Quality indicator: Percentage at or above the 50th percentile on the 
AFQT; 
Fiscal year 2005: 57%; 
Fiscal year 2006: 57%; 
Fiscal year 2007: 57%; 
Fiscal year 2008: 59%. 

Army component: Army National Guard; 
Quality indicator: Percentage at or below the 30th percentile on the 
AFQT; 
Fiscal year 2005: 5%; 
Fiscal year 2006: 4%; 
Fiscal year 2007: 4%; 
Fiscal year 2008: 1%. 

Source: GAO analysis of data provided by the Office of the Secretary of 
Defense. 

[End of table] 

All three components have met DOD's benchmark that no more than 4 
percent of enlistees score in the bottom 30th percentile on the AFQT, 
with one exception: in fiscal year 2005, 5 percent of the Army National 
Guard's recruits were in this category. 

The Army Has Implemented Initiatives to Expand Its Recruiting Market: 

Given the challenges the Army faces in meeting DOD quality benchmarks 
and because the Army estimates that only about 3 out of 10 youth aged 
17 to 24--including those who have low educational credentials or low 
aptitude--do not need a waiver to join the Army, it has recently 
introduced initiatives to assess the quality of potential recruits by 
other measures and to expand its traditional market for recruiting. The 
Army currently estimates that of the approximately 32 million young 
people in the United States aged 17 to 24, only 9.7 million (or 
approximately 3 out of 10) are qualified without requiring a waiver for 
medical conditions, conduct issues, or administrative reasons such as 
the number of dependents.[Footnote 25] However, the Army emphasizes 
that some of these fall into a category subject to a DOD percentage cap 
restriction for enlistment because they have AFQT percentile scores 
below 31 or lack high-school diplomas.[Footnote 26] Therefore, the Army 
estimates that only about 2 out of 10, or 6.2 million, can be 
considered fully qualified and eligible to enlist at any given time 
(see figure 5). Each year, the Army tries to recruit approximately 
176,000 of these individuals, meaning that the Army needs almost 3 
percent of this population to enlist. 

Figure 5: The Army's Estimate of the Size of the Population Eligible to 
Enlist in Fiscal Year 2008: 

[Refer to PDF for image: pie-chart] 

Unqualified because of a medical, conduct, or administrative reason
(22.4 million): 69.8%; 
Have an AFQT score at or below the 30th percentile or do not have a 
high-school diploma (3.5 million): 10.5%; 
Fully qualified without a waiver or other restriction (6.2 million): 
19.4% (Less than 2 in 10 are fully qualified). 

Source: U.S. Army Accessions Command. 

[End of figure] 

Individuals fall outside of the Army's target market for recruiting for 
a variety of reasons, including physical factors (such as body fat) or 
educational factors (such as not having a high-school diploma). To help 
meet its recruiting goals, however, the Army has targeted its efforts 
to some individuals who do not fully meet its entrance criteria, 
especially those who are over the body fat limit, do not possess high- 
school diplomas, or are ages 41 and 42[Footnote 27] but fully qualified 
otherwise. 

The Army has implemented four initiatives to expand its recruiting 
market.[Footnote 28] One of these focuses on overweight individuals. 
The Army has traditionally rejected individuals whose body fat exceeds 
a prescribed limit, but it has now begun to admit individuals who, 
although their body fat exceeds the limit, have other characteristics 
that have been found to be predictors of success in the Army. To screen 
for these characteristics, the Army has developed an Assessment of 
Recruit Motivation and Strength test, which assesses an individual's 
physical fitness and motivation and identifies promising individuals 
who would otherwise have been denied entry. The Army has also 
implemented a second and third program to target individuals without 
high-school diplomas. In 2005, the Army implemented a Tier Two 
Attrition Screen, used to screen individuals without high-school 
diplomas for characteristics such as motivation and mental and physical 
fitness--indicators linked to relatively low rates of attrition. In 
addition to the Tier Two Attrition Screen, the Army Preparatory School 
was opened in August 2008 to help promising individuals without high- 
school diplomas earn General Educational Development (GED) certificates 
in 4 weeks and to prepare them for basic training. The school is open 
to youth without high-school diplomas who have scored in the upper half 
on the AFQT, who need no other waivers, and who have passed the Tier 
Two Attrition Screen. The Army also implemented a fourth initiative to 
expand the recruiting market by increasing the maximum recruitment age 
from 40 to 42.[Footnote 29] According to the Army, individuals in this 
category often bring a range of experiences that can benefit both the 
Army and their fellow soldiers. This expansion of the pool provides a 
larger segment of the population with a chance to serve. 

As table 7 shows, the active Army and the Army Reserve have accessed 
several thousand recruits through these initiatives to expand its 
recruiting market. However, many of the recruits who entered through 
these programs have not yet completed their first enlistment terms, and 
the Army is still evaluating each program's long-term impact and 
effectiveness. 

Table 7: Numbers of Recruits Accessed in Fiscal Year 2008 through the 
Army’s Initiatives to Expand the Recruiting Market: 

Expansion program: Assessment of Recruit Motivation and Strength; 
Active Army accessions: 998; 
Army Reserve accessions: 366. 

Expansion program: Tier Two Attrition Screen; 
Active Army accessions: 6,580; 
Army Reserve accessions: 884. 

Expansion program: Army Preparatory School; 
Active Army accessions: 362; 
Army Reserve accessions: 41. 

Expansion program: Enlistment of persons aged 41-42; 
Active Army accessions: 283; 
Army Reserve accessions: 313. 

Expansion program: Total; 
Active Army accessions: 8,223; 
Army Reserve accessions: 1,604. 

Source: GAO's analysis of data provided by the U.S. Army Accessions 
Command. 

[End of table] 

The Army has accessed nearly 1,000 recruits in fiscal year 2008 as a 
result of the Assessment of Recruit Motivation and Strength program, 
and the Army Reserve has accessed 366. Initial findings from this 
program indicate that females who exceeded the body fat standards but 
were allowed to enlist as a result of passing the Assessment of Recruit 
Motivation and Strength test had attrition rates similar to those of 
fully qualified females; attrition among males who exceeded the body 
fat standards but passed the test was slightly higher compared to the 
attrition of fully qualified males. However, these recruits had not 
completed their terms of enlistment at the time of the study, and the 
Army plans to conduct analyses with a larger number of subjects in the 
future. In fiscal year 2008, the Army accessed 6,580 soldiers for the 
active Army and nearly 1,000 for the Army Reserve through the Tier Two 
Attrition Screen, and initial program evaluation results show that 
these recruits had attrition rates higher than those with high-school 
diplomas but lower than those with GEDs. However, because this 
initiative was first implemented in 2005, the Army has not yet gathered 
sufficient data to prove the long-term success of this program in 
predicting recruits' attrition behavior. From August 2008, when the 
Army Preparatory School first opened, to the end of fiscal year 2008, 
the Army also reported graduating and accessing 362 new recruits in the 
active Army and 41 new recruits in the Army Reserve entering through 
this program, but performance in the long term has yet to be assessed. 

The Army Has Continued to Grant Conduct Waivers for New Recruits and 
Analyzes the Outcomes of Recruits Entering with Conduct Waivers: 

The Army has continued to grant conduct waivers to recruits who do not 
meet some of the Army's entrance standards for reasons such as prior 
criminal misconduct. In fiscal year 2008, approximately 12 percent of 
new recruits admitted by the active Army had conduct waivers, compared 
with approximately 6 percent in the Army Reserve and 3 percent in the 
Army National Guard.[Footnote 30] According to the Army, enlistment 
waivers offer opportunities to individuals who have the potential to be 
good soldiers but who may not otherwise have been given a chance to 
serve. Some officials also acknowledged that waivers are necessary, 
given the Army's efforts to grow and the ongoing challenges in the 
recruiting environment. 

Through fiscal year 2008, the Army granted conduct waivers for various 
types of offenses: felonies,[Footnote 31] serious or minor 
misdemeanors, and serious or minor traffic offenses.[Footnote 32] Army 
data show that waivers for serious misdemeanors comprise the largest 
category of conduct waivers granted by all components in fiscal year 
2008, followed by waivers for felonies for the active Army and the Army 
Reserve and by waivers for minor traffic offenses for the Army National 
Guard. Waivers for felonies--the most serious type of offense that may 
qualify for a waiver--comprised approximately 13 percent of all conduct 
waivers for the active Army, 14 percent for the Army Reserve, and 10 
percent for the Army National Guard. We reviewed the files of all of 
those personnel accessed by the active Army or Army Reserve in fiscal 
year 2007 with waivers for felony convictions. Appendix III provides 
examples of the felonies committed by these recruits. Overall, however, 
the percentage of recruits entering with felony waivers was small. For 
example, recruits with felony waivers comprised less than 1 percent of 
overall accessions to the active Army and less than 2 percent of 
overall accessions to the Army Reserve and the Army National Guard. 

In fiscal year 2006, the Army began to collect and analyze data on the 
performance outcomes of recruits with conduct waivers. DOD Instruction 
1304.26 states that the underlying purpose of moral character standards 
is to minimize the enlistment of persons who are likely to become 
disciplinary cases. Initial analyses conducted by the Army and the RAND 
Corporation have shown that, while those with conduct waivers tend to 
perform as well as those without conduct waivers, they are more likely 
to be separated for adverse reasons, such as behavioral issues. 
[Footnote 33] All of these studies, however, examined accessions with 
waivers from fiscal years 2002 through 2007, years when, according to 
Army officials, the waiver data were subject to certain data 
reliability problems, including the overcounting of conduct waivers and 
the miscoding of some misdemeanors as felonies.[Footnote 34] Since that 
time, the Army has made improvements to the waiver data, and results of 
any forthcoming studies should provide a more reliable assessment of 
the conduct waiver population. 

At the Army's request, in 2009, RAND will assess whether the presence 
of soldiers with waivers adversely affects the behavior of other 
members of their units. In addition, RAND plans to update its analysis 
of how recruits with conduct waivers are performing.[Footnote 35] An 
Army official told us that the Army's own analyses and the work 
undertaken by RAND provide a comprehensive view of the Army's waiver 
policies and a mechanism for identifying the need for any changes. 
According to Army officials, the administrative cost of the waiver 
review process is "negligible." They added that the primary cost metric 
used to measure the return on investment for enlistees with waivers is 
comparing the attrition rates of those with waivers to the rates of 
those without waivers. They stated that in 2006, the Army found that 
there were no significant differences in attrition rates between these 
two groups. However, Army officials also acknowledge that the findings 
regarding the performance of those with and without conduct waivers are 
"mixed." As stated earlier, the Army has found evidence that some 
enlistees who entered the Army in fiscal year 2007 were more likely to 
be separated early for adverse reasons. Because the waiver process 
involves several different administrative layers, the cost of this 
process may be found to be more than originally estimated. Also, 
because research results on the performance of enlistees with and 
without conduct waivers are not definitive, the issue of whether 
granting these waivers is cost-effective is not yet clear. Completed 
and planned work on waivers does not consider the costs associated with 
the Army's separation of soldiers who were granted conduct waivers and 
were later separated early for adverse reasons. Studying these issues 
is important, given that the recruiting and training of individuals 
involves substantial expenditures on the part of the Army.[Footnote 36] 
After our audit work was complete, Army officials told us that in 
February 2009, the Army Audit Agency had begun a study of waiver 
policy. 

The Army Lacks Support to Gauge the Effect on the Officer Corps of Its 
Actions to Alleviate Shortages: 

In part as a result of the increased demand for officers created by 
Grow the Force and Army Modularity efforts, the Army is faced with 
shortages of captains, majors, and lieutenant colonels. To find ways to 
address these shortages, the Army contracted a study to predict the 
appeal to junior officers of different incentive packages. This study 
compared incentive packages that ranged in cost-per-person from $14,000 
to $165,000. Despite this research, it is not clear how the package 
ultimately offered to Army officers represented the most cost-effective 
one from the standpoint of the Army or whether the Army could have 
achieved the same results with less money. Also to alleviate shortages 
in its officer force, the Army has recently promoted officers at above- 
average rates, reduced time-in-service requirements for promotion, and 
suspended a performance indicator for its junior officers that it had 
previously used to identify the best-performing officers relative to 
their peers. These actions have had an immediate effect on alleviating 
some of the shortages, but the Army has not yet assessed whether the 
short-term measures it has taken will have long-term effects on its 
officer corps in the future. 

The Army Has Experienced Shortages of Captains, Majors, and Lieutenant 
Colonels: 

The Army's efforts to grow the force have exacerbated preexisting 
shortages in the officer corps, and the Army projects that some 
shortages will continue until fiscal year 2018. At the end of fiscal 
year 2008, the Army had a shortage of 1,208 captains; 3,112 majors; and 
529 lieutenant colonels. The Army had an excess of captains in fiscal 
year 2005, but since then it has fallen short of its requirements for 
captains. The Army has had a shortage of majors since at least 2003, 
and this shortage more than doubled from fiscal years 2003 through 
2008. Likewise, there has been a shortage of lieutenant colonels since 
at least 2003. According to Army officials, shortages have grown 
because the Army's modular structure requires more midlevel officers 
per brigade, and the Army has increased its requirements for officers 
in general as part of its Grow the Force initiative. (See figure 6 for 
the numbers of Army requirements for captains, majors, and lieutenant 
colonels compared with the numbers of these officers the Army had in 
its operating strength from fiscal years 2003 through 2013.) 

Figure 6: Historical and Projected Shortages of Active Army Captains, 
Majors, and Lieutenant Colonels, Fiscal Years 2003 to 2013 (Number of 
officers in thousands): 

[Refer to PDF for image: combined line and vertical bar graph] 

Captains: 

Fiscal year: 2003; 
Historical operating strength: 19,467; 
Historical authorizations: 19,719. 

Fiscal year: 2004; 
Historical operating strength: 20,109; 
Historical authorizations: 19,845. 

Fiscal year: 2005; 
Historical operating strength: 20,436; 
Historical authorizations: 21,265. 

Fiscal year: 2006; 
Historical operating strength: 21,074; 
Historical authorizations: 21,032. 

Fiscal year: 2007; 
Historical operating strength: 22,145; 
Historical authorizations: 21,370. 

Fiscal year: 2008; 
Historical operating strength: 22,469; 
Historical authorizations: 21,261. 

Fiscal year: 2009; 
Projected operating strength: 23,027; 
Projected authorizations: 21,019. 

Fiscal year: 2010; 
Projected operating strength: 23,335; 
Projected authorizations: 21,875. 

Fiscal year: 2011; 
Projected operating strength: 23,737; 
Projected authorizations: 23,099. 

Fiscal year: 2012; 
Projected operating strength: 23,770; 
Projected authorizations: 24,101. 

Fiscal year: 2013; 
Projected operating strength: 23,835; 
Projected authorizations: 25,121, 

Majors: 

Fiscal year: 2003; 
Historical operating strength: 13,520; 
Historical authorizations: 12,262. 

Fiscal year: 2004; 
Historical operating strength: 14,043; 
Historical authorizations: 12,540. 

Fiscal year: 2005; 
Historical operating strength: 14,260; 
Historical authorizations: 13,245. 

Fiscal year: 2006; 
Historical operating strength: 14,567; 
Historical authorizations: 13,624. 

Fiscal year: 2007; 
Historical operating strength: 15,387; 
Historical authorizations: 13,212. 

Fiscal year: 2008; 
Historical operating strength: 15,905; 
Historical authorizations: 12,793. 

Fiscal year: 2009; 
Projected operating strength: 16,367; 
Projected authorizations: 13,190. 

Fiscal year: 2010; 
Projected operating strength: 16,436; 
Projected authorizations: 13,452. 

Fiscal year: 2011; 
Projected operating strength: 16,559; 
Projected authorizations: 13,265. 

Fiscal year: 2012; 
Projected operating strength: 16,546; 
Projected authorizations: 13,184. 

Fiscal year: 2013; 
Projected operating strength: 16,577; 
Projected authorizations: 13,228. 

Lieutenant Colonels: 

Fiscal year: 2003; 
Historical operating strength: 8,721; 
Historical authorizations: 8,375. 

Fiscal year: 2004; 
Historical operating strength: 8,869; 
Historical authorizations: 8,451. 

Fiscal year: 2005; 
Historical operating strength: 8,829; 
Historical authorizations: 8,655. 

Fiscal year: 2006; 
Historical operating strength: 8,848. 
Historical authorizations: 8,642. 

Fiscal year: 2007; 
Historical operating strength: 9,258; 
Historical authorizations: 8,746. 

Fiscal year: 2008; 
Historical operating strength: 9,445; 
Historical authorizations: 8,916. 

Fiscal year: 2009; 
Projected operating strength: 9,622; 
Projected authorizations: 9,133. 

Fiscal year: 2010; 
Projected operating strength: 9,631; 
Projected authorizations: 9,292. 

Fiscal year: 2011; 
Projected operating strength: 9,655; 
Projected authorizations: 9,436. 

Fiscal year: 2012; 
Projected operating strength: 9,649; 
Projected authorizations: 9,464. 

Fiscal year: 2013; 
Projected operating strength: 9,651; 
Projected authorizations: 9,438. 

Source: GAO analysis of data prepared by the Army’s Office of the 
Deputy Chief of Staff for Personnel. 

Note: Operating strength refers to the number of officers the Army 
needs to conduct operations and maintain the force. For example, 
operating strength does not include officers in training or in transit. 

[End of figure] 

As figure 6 shows, the Army projects the shortages of captains, majors, 
and lieutenant colonels to continue. Our analysis of these projections 
shows that by fiscal year 2012, the supply of captains will have caught 
up with the demand. The shortage of majors, however, is projected to 
remain more severe and to continue beyond 2013 with no significant 
change in the operating strength of majors, despite growing 
authorizations. According to projections, the shortage of lieutenant 
colonels will have lessened but also will continue through the end of 
fiscal year 2013. 

Aside from the general shortage of officers at these two ranks, 
officers are in short supply in particular career areas. When the rate 
at which a career area, or branch,[Footnote 37] is filled falls below 
85 percent, the Army considers the branch to have a critical shortage. 
On the basis of calculations performed on Army data, Army officials 
believe that there are several areas where the Army does not have 
enough officers to meet current demand, including transportation, 
military intelligence, foreign area expertise, and the special 
branches.[Footnote 38] (See appendix IV for a list of branches with 
fill rates below 85 percent.) 

The Army Has Offered Incentives to Address Critical Shortages of 
Midlevel Officers but Lacks Data to Assess Their Effectiveness: 

The Army initiated an incentive program for captains and continues to 
offer incentives to cadets just prior to their commissioning. DOD 
Directive 1304.21 states that bonuses should be awarded only when less 
costly methods have proven inadequate or impractical and, similarly, 
that it is wasteful to authorize the use of financial incentives when 
less costly but equally effective methods are available. In order to 
fill immediate needs for captains, the Army offered a "menu of 
incentives" to 23,053 captains in branches with fill rates below 90 
percent who began service as officers between 1999 and 2005. From 
September 2007 until March 2008--phase one of this program--the Army 
offered these captains a choice of five incentives in return for taking 
on extended service obligations: (1) a cash bonus of up to $35,000; 
[Footnote 39] (2) a graduate education; (3) a choice of branch; (4) a 
choice of location; or (5) military school.[Footnote 40] In phase two, 
from April 2008 until November 2008, the Army did not offer captains 
the choice of branch or choice of location, and it limited the military 
school option to language training. Captains were offered these 
incentives in exchange for committing to at least 3 additional years of 
active-duty service. Of the 15,317 captains who accepted one of these 
incentives, 94.6 percent chose the cash bonus (see table 8). According 
to the most recent Army estimate, the cash bonus has cost the Army 
$443.5 million; based on that estimate, the average bonus was $30,488. 
[Footnote 41] 

Table 8: Number of Captains Participating in the Menu of Incentives, 
September 2007 through November 2008: 

Total number of contracts; 
Cash bonus: 14,497; 
Graduate school: 243; 
Choice of branch: 320; 
Choice of location: 185; 
Special training: 72; 
Total participants: 15,317. 

Percentage of total contracts; 
Cash bonus: 94.6%; 
Graduate school: 1.6%; 
Choice of branch: 2.1%; 
Choice of location: 1.2%; 
Special training: 0.5%; 
Total participants: 100.0%. 

Source: GAO analysis of data from the Army's Office of the Deputy Chief 
of Staff for Personnel. 

[End of table] 

Although 15,317 captains have taken advantage of one of these 
incentives, the Army did not collect data that would allow it to 
determine the most cost-effective amount for the cash bonus. Also, 
despite the requirement to use less costly measures first, the Army did 
not determine whether offering less costly measures--for example, 
offering the menu of incentives without the cash bonus option or the 
choice of graduate school--would have similar results. Before selecting 
this incentive package, the Army contracted with Chadwick, Martin, and 
Bailey in 2006 to explore different options.[Footnote 42] The 
contractor conducted an online questionnaire involving about 2,000 
officers who had entered the Army in 2003, 2004, and 2005. The 
questionnaire asked the officers to choose among different incentive 
packages, which included incentives that ranged in cost from $14,000 
per person to $165,000 person. The incentive costing the least involved 
offering the officer his or her branch or functional area of choice, 
and the incentive costing the most involved offering the officer a 
choice of graduate school and a degree from a list of options. While 
the study predicted the likely results of the Army's offering of 
different incentive packages, it did not recommend a package that 
represented the most cost-effective use of Army resources, and it is 
not clear how the Army selected the incentive package it ultimately 
offered its officers. Because the Army did not use such data to 
determine which incentives would be most cost-effective, it cannot 
provide evidence that its policy is in line with DOD Directive 1304.21. 
Without such data, the Army cannot determine how best to allocate the 
money it spends on incentives to achieve maximum effect. 

The Army has also attempted to alleviate what it expects to be a future 
demand for captains and majors by offering a precommissioning incentive 
to cadets at the United States Military Academy and in the Reserve 
Officer Training Corps. Under this incentive program, in return for a 
commitment to at least 3 additional years of service, cadets are 
offered (1) a chance to attend graduate school, (2) a choice of branch, 
or (3) a choice of location. This program did not include the option of 
a cash bonus but did offer cadets a graduate school education, which 
the Chadwick, Martin, and Bailey study had estimated would cost 
$165,000 per person, the most expensive of the incentives examined. 
When cadets are first commissioned, they are obligated to serve 3 to 5 
years, depending on whether they were accessed through the Military 
Academy, the Reserve Officer Training Corps, or the Officer Candidate 
Schools. By adding 3 years to their initial obligations, officers who 
participate in this program will be required to stay in the Army until 
they have been captains for several years. Some, particularly if they 
choose the graduate school option, will become majors before completing 
their service obligations.[Footnote 43] Army officials have stated that 
participation in this precommissioning program to date has been 
promising; they believe the program will significantly increase the 
retention of officers at the rank of captain and beyond and close the 
future gap without the need for additional retention incentives for 
officers. According to the Army's calculations, the program will 
increase the percentage of officers accessed in 2007 and 2008 who will 
complete 8 years of service from 47 percent to 66 percent. Table 9 
provides information on the number of officers who participated in the 
precommissioning incentive program. 

Table 9: Number of Officers Participating in the Precommissioning 
Incentive Program in Fiscal Years 2007-2009: 

Commissioning source: U.S. Military Academy; 
Incentive: Graduate school: 605; 
Incentive: Branch of choice: 354; 
Incentive: Post of choice: 61; 
Total: 1,020. 

Commissioning source: Reserve Officer Training Corps; 
Incentive: Graduate school: 718; 
Incentive: Branch of choice: 1,971; 
Incentive: Post of choice: 409; 
Total: 3,098. 

Commissioning source: Total; 
Incentive: Graduate school: 1,323; 
Incentive: Branch of choice: 2,325; 
Incentive: Post of choice: 470; 
Total: 4,118. 

Source: Army's Office of the Deputy Chief of Staff for Personnel. 

[End of table] 

As of November 2008, the Army had not implemented any programs 
specifically targeted at majors or lieutenant colonels. An Army 
official stated that the Army has not offered incentives to majors or 
lieutenant colonels because officials do not believe there is a 
retention problem with majors or lieutenant colonels. 

The Army Has Not Yet Assessed the Effects on Its Officer Corps of Short-
Term Actions to Alleviate Shortages: 

In addition to offering incentive programs, the Army has been promoting 
officers at faster-than-recommended rates and reducing time-in-service 
requirements. However, the Army has not yet determined whether these 
actions will have a negative effect on its future officer corps. 
Because the Army operates in a closed system, it can only promote from 
within; this limits the actions the Army can take and makes it 
important to identify trends that may need to be addressed as early as 
possible. House Report 96-1462 on the Defense Officer Personnel 
Management Act describes the complexity of the promotion system and 
emphasizes that any change to one variable affects the others. The 
report concludes that in order to maintain a high-quality officer 
corps, changes to the system must be made very carefully. While the 
Army provided data regarding the quality of officers at the time of 
their accession--such as a bachelor's degree or Scholastic Aptitude 
Test score--the Army had no data that could demonstrate whether the 
performance of its officers had changed over time or whether actions it 
had taken, such as promoting at higher rates, would have an effect on 
the officer corps in the future. 

Since 1992, in order to meet the increased demand for officers, the 
Army has dramatically increased its promotion rates for officers, 
exceeding the benchmarks set forth in 1980 in Senate Report No. 96-375, 
which accompanied the Defense Officer Personnel Management Act. 
[Footnote 44] In order to maintain the rank structure outlined in the 
act and simultaneously provide officers with rewarding career tracks, 
the established promotion rates (which are lower as officers proceed up 
the ranks)--as well as the "up-or-out" system--guide the Army in 
promoting the best-qualified officers to higher ranks, with the 
understanding that some fully qualified officers will not be promoted. 
[Footnote 45] The Secretary of the Army issues guidance defining what 
the Army considers to be important experience, and the Deputy Chief of 
Staff for Personnel determines which officers are to be considered for 
promotion. The Army promotes only officers who have been determined by 
promotion boards to be fully qualified to serve at the next higher 
rank. 

The Army expects to continue this practice of promoting officers at 
certain ranks at rates higher than recommended benchmarks through 
fiscal year 2010. Figure 8 shows comparisons between promotion rates 
established in Senate Report No. 96-375 and the Army's actual or 
expected promotion rates in fiscal years 2004-2010 for captains, 
majors, lieutenant colonels, and colonels. 

Figure 7: Actual or Projected Promotion Rates Compared with Promotion 
Rate Benchmarks in Fiscal Years 2004-2010: 

[Refer to PDF for image: four vertical bar graphs] 

Lieutenant to Captain: Congressional committee benchmark: 95%; 
Year: 2004: 92.3%; 
Year: 2005: 98.4%; 
Year: 2006: 98.8%; 
Year: 2007: 98.0%; 
Year: 2008: 98.0%; 
Year: 2009: 98.0%; 
Year: 2010: 98.0%. 

Captain to Major: Congressional committee benchmark: 80%; 
Year: 2004: 96.9%; 
Year: 2005: 97.7%; 
Year: 2006: 98.0%; 
Year: 2007: 94.3%; 
Year: 2008: 91.0%; 
Year: 2009: 92.8%; 
Year: 2010: 90.8%. 

Major to Lieutenant Colonel: Congressional committee benchmark: 70%; 
Year: 2004: 76.9%; 
Year: 2005: 86.2%; 
Year: 2006: 90.9%; 
Year: 2007: 90.9%; 
Year: 2008: 87.2%; 
Year: 2009: 87.3%; 
Year: 2010: 87.7%. 

Lieutenant Colonel to Colonel: Congressional committee benchmark: 50%; 
Year: 2004: 52.6%; 
Year: 2005: 58.5%; 
Year: 2006: 59.4%; 
Year: 2007: 61.0%; 
Year: 2008: 57.5%; 
Year: 2009: 49.3%; 
Year: 2010: 49.2%. 

Source: GAO analysis of data from Senate Report 96-375 and the Army's 
Office of the Deputy Chief of Staff for Personnel. 

[End of figure] 

While promoting at these high rates, the Army has reduced the time that 
it requires officers to remain at certain ranks before they are 
promoted. For example, as of November 2008, the Army was promoting 
officers to the rank of captain after they had served 3 years and 2 
months as lieutenants, while the other services were promoting officers 
to captain or the equivalent rank only after they had served for 4 or 
more years. Likewise, as of November 2008, the Army had reduced its 
time-in-service requirement for promotion to major to 9 years of 
service, while the other services were requiring between 9 years, 8 
months; and 10 years, 2 months of service. While shortening its time- 
in-service requirements for promotion to captain, the Under Secretary 
of Defense suspended the requirement that first lieutenants serve 2 
years before being promoted to captain, shortening the requirement to 
18 months. For all other promotions, the Army's requirements are within 
those established in Title 10 of the United States Code, which call for 
officers to serve 18 months as second lieutenants and 3 years at the 
rank of captain, major, and lieutenant colonel before being considered 
for promotion.[Footnote 46] 

In addition to reductions in the standard time-in-service requirements 
for promotion, early promotions for majors and lieutenant colonels are 
on the rise. Early promotions are given to officers who, although they 
have less time in service than the officers identified to be considered 
for promotion in a particular year, are judged to be clearly better 
choices for promotion. Early promotions do not increase the number of 
officers promoted; rather, the Army draws from officers having 1 fewer 
year of experience to select candidates for promotion. From fiscal 
years 2006 through 2008, early promotions to major rose from 7.5 
percent to 12.5 percent. Likewise, from fiscal years 2006 through 2008, 
early promotions to lieutenant colonel rose from 7.4 percent to 14.8 
percent. The Defense Officer Personnel Management Act requires 
authorization by the Deputy Secretary of Defense if early promotions 
account for over 10 percent of promotions, and the Army has acquired 
this authorization.[Footnote 47] The act also requires that early 
promotions not exceed 15 percent of all promotions, and the Army has 
stayed within this benchmark. Early promotions to lieutenant colonel 
are moving more majors up the ranks faster. However, although this 
helps to prevent shortages of lieutenant colonels, it exacerbates the 
shortage of majors. 

As House Report 96-1462 stated, officer management is a complex system, 
and any changes must be made carefully. While the Army moves away from 
the legislative benchmarks and changes previous standards to meet the 
current demands for officers, it has not yet assessed the long-term 
effect of these actions on the officer corps. As a result, the Army is 
missing critical data to inform its decisions and to allow it to 
identify and address any trends in the officer corps while taking 
appropriate force-shaping actions. 

Conclusions: 

The Army has been successful in finding innovative ways to meet its 
goals for increasing end strength. However, its expenditures for 
bonuses and incentives have not been as effectively targeted as they 
could be. While the Army has access to various studies and data, it is 
not clear that the Army has used this information to set the most cost- 
effective bonus amounts. For example, although its expenditures for 
enlistment and reenlistment bonuses have grown by about 75 percent, the 
Army does not know whether these bonuses are set at amounts that are 
sufficient to meet its enlistment and reenlistment goals and at the 
same time do not result in excessive payments to achieve these results. 
Initial results of the effect of admitting individuals who do not meet 
the Army's standard eligibility requirements appear positive, and the 
Army has begun efforts to analyze the performance outcomes of recruits 
with conduct waivers. While the studies conducted by the Army, 
including the one it has contracted out to RAND, may provide useful 
information on the performance of those admitted with conduct waivers 
during a certain period of time, it will be important for the Army to 
continue monitoring this population closely, including assessing the 
cost-effectiveness of investing in those who require conduct waivers in 
order to determine whether it is making prudent use of its valuable 
resources in recruiting and training these individuals and whether any 
modifications to its waiver policies are needed. This is especially the 
case given that, even though data show that recruits with conduct 
waivers are strong performers, other evidence indicates that they are 
more likely to exhibit disciplinary problems and to be separated for 
adverse reasons than those who do not need conduct waivers. 

Faced with a wartime environment, restructuring efforts that result in 
the need for additional officers, and a system for developing leaders 
that requires years of forward planning, the Army has been required to 
promote officers at a much faster rate than it has in the past and to 
offer new incentives to retain officers. While there is no easy 
solution to the shortage of midlevel officers, there are trade-offs 
involved with each action to alleviate the shortage. Without using 
research that will allow the Army to assess the cost-effectiveness of 
its new incentives and the metrics to identify trends to help shape the 
force appropriately, the Army will not be in a position to make 
informed decisions about the choices it makes and the risks it assumes 
as it manages the future officer force. 

Recommendations for Executive Action: 

We recommend that the Secretary of Defense direct the Secretary of the 
Army to take the following four actions: 

* To enhance its existing processes to recruit and retain sufficient 
numbers of enlisted personnel and to avoid making excessive payments to 
achieve desired results, build on currently available analyses that 
will enable the Army to set cost-effective enlistment and reenlistment 
bonuses. 

* To enable the most efficient use of recruiting resources, collect 
data on the cost-effectiveness of the Army's conduct waiver polices-- 
including costs associated with the waiver review and approval process 
and with future separations of soldiers with conduct waivers for 
adverse reasons--and use these data to inform the Army's waiver 
policies. 

* Should the Army decide to offer incentives to officers in the future, 
build on currently available analyses that will enable the Army, with 
the direction and assistance of the Secretary of Defense, to set cost- 
effective bonus amounts and other incentives. 

* To enable the Army to make informed decisions regarding the 
management of its officer corps over time, track--and if necessary 
correct--any effects that its actions to alleviate shortages may have 
on the officer corps, particularly in cases in which the Army has 
deviated from benchmarks established in the Defense Officer Personnel 
Management Act. 

Agency Comments and Our Evaluation: 

We provided the Department of Defense with a draft of this report for 
review and comment. In response to our draft, DOD concurred with the 
first three recommendations and partially concurred with the fourth. 
Regarding our recommendation that the Army conduct further study on the 
cost-effectiveness of enlistment and reenlistment bonuses, DOD stated 
that in February 2009, it had contracted for a study that will cover 
all the military services and is entitled "Recruiting and Retention 
Effectiveness of Cash Incentives." DOD expects to receive the first 
draft of this study in June 2009. Regarding our recommendation that the 
Army collect and use data on the cost-effectiveness of its waiver 
policies, DOD stated that the Army Audit Agency had begun an audit in 
February 2009 of the Army components' granting of enlistment waivers. 
In response to our recommendation that the Army consider the cost- 
effectiveness of any future incentives offered to its officer corps, 
DOD concurred, stating that DOD requires the military services to 
provide a detailed business case before it grants the services the 
authority to employ a retention bonus. In response to our 
recommendation that the Army track the effects of its short-term 
actions to alleviate shortages on its officer corps, DOD partially 
concurred, stating that the DOPMA guidelines are not intended to serve 
as fixed mandates. We agree and state this in our report. However, we 
continue to believe that if these guidelines are no longer valid, the 
Army should monitor the effect of not maintaining these benchmarks in 
managing its future officer corps. DOD's comments in their entirety 
appear in appendix V. 

We are sending copies of this report to the appropriate congressional 
committees. This report will be available at no charge on GAO's Web 
site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-3604 or by e-mail at farrellb@gao.gov. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. GAO staff who made major 
contributions to the report are listed in appendix VI. 

Signed by: 

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

[End of section] 

Appendix I: Scope and Methodology: 

To assess the Army's progress in growing the force and identify 
strategies that the Army has used to accomplish this progress, we 
obtained and analyzed data on the actual and proposed end strength for 
the Army as a whole, as well as for each component. Specifically, we 
reviewed the Army's original and accelerated Grow the Force plans to 
identify proposed end strength numbers for each fiscal year of the 
plans. For the original plan, this included fiscal years 2007 through 
2013; for the accelerated plan, this included fiscal years 2007 through 
2010. We obtained information from the Army's Office of the Deputy 
Chief of Staff for Programs on the actual end strength that the Army 
had achieved in fiscal years 2007 and 2008 and compared the proposed 
end strength to the actual end strength achieved. Further, to describe 
the extent to which the active Army, the Army National Guard, and the 
Army Reserve have met their target recruiting and retention goals for 
fiscal years 2005 through 2008, we obtained data on these metrics from 
the Office of the Undersecretary of Defense for Personnel and 
Readiness. 

To determine the extent to which the Army is directing the growth in 
its enlisted force to areas of most critical need, we obtained data 
from the Army's Office of the Assistant Secretary of the Army, 
Financial Management and Comptroller, on how much the components spent 
on enlistment and reenlistment bonuses given to Army recruits and 
soldiers for fiscal years 2005 through 2008. To determine how the Army 
identifies priority occupational specialties and which ones should be 
awarded bonuses, we interviewed officials from the U.S. Army Human 
Resources Command; the U.S. Army Recruiting Command; and the Army's 
Office of the Deputy Chief of Staff for Personnel, Enlisted Career 
Systems Division. We also observed two working sessions of the Enlisted 
Incentives Review Board. We reviewed data provided by the members of 
that Board, as well as other documents showing fill rates, recruiting 
goals, and bonus levels for the various enlisted occupational 
specialties. 

To determine the extent to which the Army is maintaining the quality of 
its enlisted force, we obtained and reviewed data describing the extent 
to which the active Army, the Army National Guard, and the Army Reserve 
had met DOD's quality benchmarks for fiscal years 2005 through 2008. We 
also reviewed the estimates made by the Army and others to determine 
the size of the target recruiting market and discussed the Army's 
methodology in applying the conclusions reached with knowledgeable Army 
officials. We also obtained data on active Army and Army Reserve 
programs to expand the youth target market population from the U.S. 
Army Recruiting Command. Additionally, we obtained information on the 
numbers and types of enlistment waivers granted by the active Army, the 
Army Reserve, and the Army National Guard in fiscal years 2005 through 
2008. Types of enlistment waivers include conduct waivers, drug and 
alcohol waivers, administrative waivers, and medical waivers. The U.S. 
Army Recruiting Command provided data on waivers granted to recruits 
enlisting into the active Army and the Army Reserve. The National Guard 
Bureau provided data on waivers granted to recruits enlisting into the 
Army National Guard. However, the U.S. Army Accessions Command holds 
responsibility for maintaining these data for all components, and 
waiver information stored in the U.S. Army Accessions Command's 
database originates and is entered at Military Entrance Processing 
Stations. After interviewing relevant officials from the U.S. Army 
Recruiting Command, we determined that the waiver data from fiscal 
years 2005 through 2007 had limitations that precluded us from 
presenting these data in our report. Among the problems cited by 
officials were the data system's failure to capture all waivers for 
recruits with multiple waivers, the overcounting of other waivers, and 
the miscoding of some misdemeanors as felonies. We determined that the 
Army had adequately addressed these problems for the fiscal year 2008 
waiver data, and we found this year's data to be sufficiently reliable 
for the purposes of our report. To obtain information on the 
performance of recruits with and without enlistment waivers, we (1) 
reviewed the Army's 2007 and 2008 studies of the performance of the 
conduct waiver population and obtained additional information about 
these studies' findings and methodology through interviews with 
relevant Army officials and (2) reviewed RAND's 2008 study of the 
performance of recruits with waivers and obtained additional 
information on RAND's ongoing and planned efforts in the area of 
conduct waivers from relevant RAND and Army officials. We also reviewed 
DOD and Army policies pertaining to enlistment waivers--specifically 
the Office of the Undersecretary of Defense for Personnel and 
Readiness' June 2008 Directive-Type Memorandum 08-018 on enlistment 
waivers and Army Regulation 601-210, "Personnel Procurement: Active and 
Reserve Components Enlistment Program" (June 7, 2007). 

To assess the extent to which the Army is directing the growth in its 
officer force to areas of need and the extent to which it has 
determined whether short-term tradeoffs to alleviate shortages will 
have long-term effects on its officer corps, we analyzed various data 
related to officer demand, strength levels, promotions, and retention. 
We reviewed the Defense Officer Personnel Management Act of 1980, 
Senate Report No. 96-375, House Report No. 96-1462, and corresponding 
provisions of Title 10 of the U.S. Code in order to ascertain 
legislated benchmarks for officer strength, promotion rates, and 
options available to the Army to address shortages. We obtained data on 
officer authorizations and strength levels, as well as information on 
programs to address officer shortages from the Army's Office of the 
Deputy Chief of Staff for Personnel. We compared authorizations and 
strength levels to identify shortages in specific ranks and specific 
branches. We analyzed existing and projected trends in officer demand 
and supply for fiscal years 2003-13. We reviewed documentation and 
reports on incentive programs for captains and cadets prior to their 
commissioning. Additionally, we talked to Army officials about their 
intent behind these programs. Furthermore, we received information on 
actual promotion rates from the Army's Office of the Deputy Chief of 
Staff for Personnel, which we compared to the promotion benchmarks in 
Senate Report No. 96-375. 

The data we reviewed for each of our research objectives generally 
covered fiscal years 2005 through 2008; however, our analysis of 
enlistment waivers was limited to fiscal year 2008 due to limitations 
in waiver data from previous years, such as the system's failure to 
capture some waivers and the overcounting of other waivers. Except in 
the case of the enlistment waiver data, we found the data for fiscal 
years 2005 through 2008 to be sufficiently reliable for the purposes of 
this report. We interviewed officials and, where appropriate, obtained 
documentation at the following locations: 

Office of the Secretary of Defense: 

* Office of the Undersecretary of Defense for Personnel and Readiness: 

* Defense Manpower Data Center: 

Department of the Army: 

* Army National Guard: 

* Assistant Secretary of the Army for Financial Management and 
Comptroller: 

* Office of Economic and Manpower Analysis, United States Military 
Academy: 

* Office of the Assistant Secretary of the Army for Manpower and 
Reserve Affairs: 

* Office of the Deputy Chief of Staff for Personnel: 

* Office of the Chief of Staff for Programs: 

* U.S. Army Accessions Command: 

* U.S. Army Cadet Command: 

* U.S. Army Human Resources Command: 

* U.S. Army Recruiting Command: 

* U.S. Army Reserve Command: 

Other Government Agencies: 

* Congressional Budget Office: 

* Congressional Research Service: 

The RAND Corporation: 

We conducted this performance audit from February 2008 through March 
2009 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Enlistment Bonuses for Active Duty Soldiers: 

Table 10 shows the amounts of enlistment bonuses offered to active-duty 
Army soldiers at the time of the Army's June 2008 Enlisted Incentives 
Review Board's meeting. 

Table 10: Levels of Enlistment Bonuses Offered to Active Army Soldiers, 
June 2008: 

Bonus level: Level 1; 
Length of enlistment contract: 2 years: $10,000; 
Length of enlistment contract: 3 years: $20,000; 
Length of enlistment contract: 4 years: $25,000; 
Length of enlistment contract: 5 years: $30,000; 
Length of enlistment contract: 6 years: $35,000. 

Bonus level: Level 2; 
Length of enlistment contract: 2 years: $7,000; 
Length of enlistment contract: 3 years: $15,000; 
Length of enlistment contract: 4 years: $20,000; 
Length of enlistment contract: 5 years: $25,000; 
Length of enlistment contract: 6 years: $30,000. 

Bonus level: Level 3; 
Length of enlistment contract: 2 years: $3,000; 
Length of enlistment contract: 3 years: $10,000; 
Length of enlistment contract: 4 years: $15,000; 
Length of enlistment contract: 5 years: $20,000; 
Length of enlistment contract: 6 years: $25,000. 

Bonus level: Level 4; 
Length of enlistment contract: 2 years: $0; 
Length of enlistment contract: 3 years: $5,000; 
Length of enlistment contract: 4 years: $10,000; 
Length of enlistment contract: 5 years: $15,000; 
Length of enlistment contract: 6 years: $20,000. 

Bonus level: Level 5; 
Length of enlistment contract: 2 years: $0; 
Length of enlistment contract: 3 years: $4,000; 
Length of enlistment contract: 4 years: $5,000; 
Length of enlistment contract: 5 years: $10,000; 
Length of enlistment contract: 6 years: $15,000. 

Bonus level: Level 6; 
Length of enlistment contract: 2 years: $0; 
Length of enlistment contract: 3 years: $3,000; 
Length of enlistment contract: 4 years: $4,000; 
Length of enlistment contract: 5 years: $5,000; 
Length of enlistment contract: 6 years: $10,000. 

Bonus level: Level 7; 
Length of enlistment contract: 2 years: $0; 
Length of enlistment contract: 3 years: $2,000; 
Length of enlistment contract: 4 years: $3,000; 
Length of enlistment contract: 5 years: $4,000; 
Length of enlistment contract: 6 years: $5,000. 

Source: U.S. Army Human Resources Command. 

[End of table] 

Table 11 shows occupational specialties that were determined to qualify 
for bonuses at the June 2008 meeting of the Enlisted Incentives Review 
Board. 

Table 11: Occupational Specialties Qualifying for Enlistment Bonuses 
(as of June 2008): 

Bonus level: 1; 
Occupational Specialty: 09L - Interpreter/Translator; 
Year-to-date fill rate (in percentages): not listed; 
On Priority List?: No. 

Bonus level: 1; 
Occupational Specialty: 13D - Field Artillery Tactical Data Systems 
Specialist; 
Year-to-date fill rate (in percentages): 94; 
On Priority List?: Yes. 

Bonus level: 1; 
Occupational Specialty: 14E - Patriot Fire Control Enhanced 
Operator/Maintainer; 
Year-to-date fill rate (in percentages): 88; 
On Priority List?: Yes. 

Bonus level: 1; 
Occupational Specialty: 25P - Microwave Systems Operator/Maintainer; 
Year-to-date fill rate (in percentages): 86; 
On Priority List?: No. 

Bonus level: 1; 
Occupational Specialty: 25S - Satellite Communication Systems 
Operator/Maintainer; 
Year-to-date fill rate (in percentages): 88; 
On Priority List?: No. 

Bonus level: 1; 
Occupational Specialty: 35W - Electronic Warfare/Signal Intelligence 
Recruit; 
Year-to-date fill rate (in percentages): 57; 
On Priority List?: No. 

Bonus level: 2; 
Occupational Specialty: 13R - Field Artillery Firefinder Radar 
Operator; 
Year-to-date fill rate (in percentages): 91; 
On Priority List?: Yes. 

Bonus level: 2; 
Occupational Specialty: 14J - Air Defense Tactical Operations Center 
Operator/Maintainer; 
Year-to-date fill rate (in percentages): 101; 
On Priority List?: No. 

Bonus level: 2; 
Occupational Specialty: 14T - Patriot Launching Station Enhanced 
Operator/Maintainer; 
Year-to-date fill rate (in percentages): 97; 
On Priority List?: Yes. 

Bonus level: 2; 
Occupational Specialty: 18X - Special Forces Recruit; 
Year-to-date fill rate (in percentages): 102; 
On Priority List?: Yes. 

Bonus level: 2; 
Occupational Specialty: 25Q - Multichannel Transmission Systems 
Operator; 
Year-to-date fill rate (in percentages): 102; 
On Priority List?: Yes. 

Bonus level: 2; 
Occupational Specialty: 25U - Signal Support Systems Specialist; 
Year-to-date fill rate (in percentages): 101; 
On Priority List?: Yes. 

Bonus level: 2; 
Occupational Specialty: 88M - Motor Transportation Operator; 
Year-to-date fill rate (in percentages): 93; 
On Priority List?: Yes. 

Bonus level: 2; 
Occupational Specialty: 92F - Petroleum Supply Specialist; 
Year-to-date fill rate (in percentages): 90; 
On Priority List?: Yes. 

Bonus level: 2; 
Occupational Specialty: 94A - Land Combat Electronic Missile System 
Repairer; 
Year-to-date fill rate (in percentages): 98; 
On Priority List?: No. 

Bonus level: 2; 
Occupational Specialty: 94E - Radio and Communications Security 
Repairer; 
Year-to-date fill rate (in percentages): 91; 
On Priority List?: No. 

Bonus level: 2; 
Occupational Specialty: 94S - Patriot System Repairer; 
Year-to-date fill rate (in percentages): 102; 
On Priority List?: No. 

Bonus level: 3; 
Occupational Specialty: 13F - Fire Support Specialist; 
Year-to-date fill rate (in percentages): 100; 
On Priority List?: Yes. 

Bonus level: 3; 
Occupational Specialty: 35H - Common Ground Station Analyst; 
Year-to-date fill rate (in percentages): 90; 
On Priority List?: Yes. 

Bonus level: 3; 
Occupational Specialty: 63J - QM and Chemical Equipment Repairer; 
Year-to-date fill rate (in percentages): 106; 
On Priority List?: No. 

Bonus level: 3; 
Occupational Specialty: 89D - Explosive Ordnance Disposal Specialist; 
Year-to-date fill rate (in percentages): 99; 
On Priority List?: Yes. 

Bonus level: 3; 
Occupational Specialty: 92G - Food Service Specialist; 
Year-to-date fill rate (in percentages): 99; 
On Priority List?: No. 

Bonus level: 3; 
Occupational Specialty: 94F - Computer Detection Systems Repairer; 
Year-to-date fill rate (in percentages): 100; 
On Priority List?: No. 

Bonus level: 3; 
Occupational Specialty: 94M - Radar Repairer; 
Year-to-date fill rate (in percentages): 102; 
On Priority List?: No. 

Bonus level: 3; 
Occupational Specialty: 94Y - Integrated Family of Test Equipment 
Operator and Maintainer; 
Year-to-date fill rate (in percentages): 103; 
On Priority List?: No. 

Bonus level: 4; 
Occupational Specialty: 13B - Cannon Crew Member; 
Year-to-date fill rate (in percentages): 95; 
On Priority List?: Yes. 

Bonus level: 4; 
Occupational Specialty: 21U - Topographic Analyst; 
Year-to-date fill rate (in percentages): 101; 
On Priority List?: No. 

Bonus level: 4; 
Occupational Specialty: 35G - Imagery Analyst; 
Year-to-date fill rate (in percentages): 105; 
On Priority List?: No. 

Bonus level: 4; 
Occupational Specialty: 35T - Military Intelligence Systems 
Maintainer/Integrator; 
Year-to-date fill rate (in percentages): 97; 
On Priority List?: No. 

Bonus level: 4; 
Occupational Specialty: 37F - Psychological Operations Specialist; 
Year-to-date fill rate (in percentages): 96; 
On Priority List?: Yes. 

Bonus level: 4; 
Occupational Specialty: 42RN - Keyboard Player; 
Year-to-date fill rate (in percentages): not listed; 
On Priority List?: No. 

Bonus level: 4; 
Occupational Specialty: 92R - Parachute Rigger; 
Year-to-date fill rate (in percentages): 98; 
On Priority List?: Yes. 

Bonus level: 5; 
Occupational Specialty: 11X - Infantryman; 
Year-to-date fill rate (in percentages): 103; 
On Priority List?: Yes. 

Bonus level: 5; 
Occupational Specialty: 25N - Joint Networking Nodal System 
Operators/Maintainers; 
Year-to-date fill rate (in percentages): 101; 
On Priority List?: Bonus level: Yes. 

Bonus level: 5; 
Occupational Specialty: 35N - Signals Intelligence Analyst; 
Year-to-date fill rate (in percentages): 102; 
On Priority List?: Bonus level: No. 

Bonus level: 5; 
Occupational Specialty: 42R9B - Cornet or Trumpet Player; 
Year-to-date fill rate (in percentages): not listed; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 42R9D - French Horn Player; 
Year-to-date fill rate (in percentages): not listed; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 42R9H - Oboe Player; 
Year-to-date fill rate (in percentages): not listed; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 42R9J - Clarinet Player; 
Year-to-date fill rate (in percentages): not listed; 
On Priority List?:No. 

Bonus level: 5; 
Occupational Specialty: 42R9K - Bassoon Player; 
Year-to-date fill rate (in percentages): not listed; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 42R9T - Guitar Player; 
Year-to-date fill rate (in percentages): not listed; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 42R9U - Electric Bass Guitar Player; 
Year-to-date fill rate (in percentages): not listed; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 52D - Power Generator Equipment; 
Year-to-date fill rate (in percentages): 99; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 68K - Medical Laboratory Specialist; 
Year-to-date fill rate (in percentages): 105; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 68S - Preventive Medicine Specialist; 
Year-to-date fill rate (in percentages): 99; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 74D - Chemical Biological Radiological and 
Nuclear Operations Specialist; 
Year-to-date fill rate (in percentages): 105; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 89A - Ammunition Stock Control and Accounting 
Specialist; 
Year-to-date fill rate (in percentages): 115; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 89B - Ammunition Specialist; 
Year-to-date fill rate (in percentages): 115; 
On Priority List?: No. 

Bonus level: 5; 
Occupational Specialty: 94T - Avenger System Repairer; 
Year-to-date fill rate (in percentages): 118; 
On Priority List?: No. 

Bonus level: 6; 
Occupational Specialty: 13M - Multiple Launch Rocket System/High 
Mobility Artillery Rocket System Crew Member; 
Year-to-date fill rate (in percentages): 78; 
On Priority List?: No. 

Bonus level: 6; 
Occupational Specialty: 19K - M1 Abrams Armor Crew Member; 
Year-to-date fill rate (in percentages): 100; 
On Priority List?: Yes. 

Bonus level: 6; 
Occupational Specialty: 21C - Bridge Crewmember; 
Year-to-date fill rate (in percentages): 92; 
On Priority List?: No. 

Bonus level: 6; 
Occupational Specialty: 21D - Diver; 
Year-to-date fill rate (in percentages): 102; 
On Priority List?: No. 

Bonus level: 6; 
Occupational Specialty: 21Y - Geospatial Engineer; 
Year-to-date fill rate (in percentages): 0; 
On Priority List?: No. 

Bonus level: 6; 
Occupational Specialty: 27D - Paralegal Specialist; 
Year-to-date fill rate (in percentages): 81; 
On Priority List?: No. 

Bonus level: 6; 
Occupational Specialty: 31B - Military Police; 
Year-to-date fill rate (in percentages): 101; 
On Priority List?: Yes. 

Bonus level: 6; 
Occupational Specialty: 35S - Signals Collector/Analyst; 
Year-to-date fill rate (in percentages): 108; 
On Priority List?: No. 

Bonus level: 6; 
Occupational Specialty: 45G - Fire Control Rep; 
Year-to-date fill rate (in percentages): 101; 
On Priority List?: No. 

Bonus level: 6; 
Occupational Specialty: 63M - Bradley Fighting Vehicle System; 
Year-to-date fill rate (in percentages): 92; 
On Priority List?: No. 

Bonus level: 6; 
Occupational Specialty: 68W - Healthcare Specialist; 
Year-to-date fill rate (in percentages): 99; 
On Priority List?: Yes. 

Bonus level: 6; 
Occupational Specialty: 94H - Test, Measurement, and Diagnostic 
Equipment Support Specialist; 
Year-to-date fill rate (in percentages): 89; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 13P - Multiple Launch Rocket System Automated 
Tactical Data Systems Specialist; 
Year-to-date fill rate (in percentages): 76; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 14S - Air and Missile Defense; 
Year-to-date fill rate (in percentages): 117; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 15B - Aircraft Powerplant Repairer; 
Year-to-date fill rate (in percentages): 101; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 15G - Aircraft Structural Repairer; 
Year-to-date fill rate (in percentages): 100; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 15J - OH-58D Armament/Electrical/Avionics 
System Repairer; 
Year-to-date fill rate (in percentages): 101; 
On Priority List?: Yes. 

Bonus level: 7; 
Occupational Specialty: 15Q - Air Traffic Control Operator; 
Year-to-date fill rate (in percentages): 82; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 21B - Combat Engineer; 
Year-to-date fill rate (in percentages): 101; 
On Priority List?: Yes. 

Bonus level: 7; 
Occupational Specialty: 21E - Heavy Construction Equipment; 
Year-to-date fill rate (in percentages): 99; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 25C - Radio Operator Maintainer; 
Year-to-date fill rate (in percentages): 96; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 25R - Visual Information/Audio Equipment 
Repairer; 
Year-to-date fill rate (in percentages): 92; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 31E - Internment/Resettlement Specialist; 
Year-to-date fill rate (in percentages): 105; 
On Priority List?: Yes. 

Bonus level: 7; 
Occupational Specialty: 35F - Intelligence Analyst; 
Year-to-date fill rate (in percentages): 105; 
On Priority List?: Yes. 

Bonus level: 7; 
Occupational Specialty: 46Q - Journalist; 
Year-to-date fill rate (in percentages): 98; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 63B - Light Wheeled Vehicle Mechanic; 
Year-to-date fill rate (in percentages): 103; 
On Priority List?: Yes. 

Bonus level: 7; 
Occupational Specialty: 92W - Water Treatment Specialist; 
Year-to-date fill rate (in percentages): 87; 
On Priority List?: No. 

Bonus level: 7; 
Occupational Specialty: 92Y - Unit Supply Specialist; 
Year-to-date fill rate (in percentages): 102; 
On Priority List?: Yes. 

Bonus level: 7; 
Occupational Specialty: 94R - Avionic and Survivability Equipment 
Repairer; 
Year-to-date fill rate (in percentages): 106; 
On Priority List?: No. 

Source: GAO analysis of data provided by the Army Office of the Deputy 
Chief of Staff, U.S. Army Recruiting Command, and U.S. Human Resources 
Command. 

[End of table] 

[End of section] 

Appendix III: GAO Review of Felony Waivers: 

Through the end of fiscal year 2008, the Army granted conduct waivers 
to some enlistees who had histories of felony charges, and it has a 
multi-step review process in place to make these determinations. 
[Footnote 48] In fiscal year 2008, a fairly small number of individuals 
were admitted into the Army with a felony waiver. Specifically, 1,048 
recruits with felony waivers entered the active Army in fiscal year 
2008 (or less than 2 percent of overall accessions). The number of 
recruits entering the Army Reserve and the Army National Guard with 
felony waivers in fiscal year 2008 stood at 196 and 128, respectively, 
or less than 1 percent of these components' overall accessions for that 
year.[Footnote 49] While the Army grants felony waivers in some cases, 
officials said that the Army does not admit serious criminals who may 
pose harm to others and to the Army's larger mission. According to Army 
documents, the Army does not consider applicants convicted of the most 
serious felonies, such as murder, sexually violent crimes, domestic 
violence,[Footnote 50] and drug dealing, as well as alcoholism and drug 
dependency. The Army also excludes individuals on probation or parole, 
in confinement, awaiting criminal charges, and ordered to enter the 
military in lieu of (or as a result of) being prosecuted.[Footnote 51] 

Army officials said that the Army's waiver approval process is designed 
so that only the most deserving candidates are awarded waivers. In 
assessing an individual for a conduct waiver, the Army uses the "whole 
person concept," considering factors such as employment stability, 
success in school, accomplishments in the community, references from 
others in the community who have come to know the applicant, and signs 
of remorse and changed behavior since the incident occurred. The 
process involves a series of steps and multiple layers of review. Each 
individual's waiver request is typically reviewed at 6 different levels 
for misdemeanors and traffic offenses and at 10 different levels for 
felonies. All felony waivers and certain serious misdemeanor waivers 
must be approved at the level of the Deputy Commanding General of the 
U.S. Army Recruiting Command for active Army and Army Reserve recruits 
and at the level of the Director of the Army National Guard for Army 
National Guard recruits. 

The Army reported that the top five offenses that receive felony 
waivers are burglary, narcotics and drug charges, aggravated assault, 
larceny, and unlawful breaking or entering. Our review of the waiver 
files for all those accessed by the active Army or Army Reserve in 
fiscal year 2007 with waivers for felony convictions identified 
examples within each of these categories. Table 12 provides examples of 
the various offenses that we found in reviewing the waiver files. 

Table 12: Examples of Felony Offenses Committed by Individuals Who 
Received Waivers for Felony Convictions from the Army in Fiscal Year 
2007: 

Offense category: Burglary; 
Example: At age 19, an individual was charged with burglary after he 
and a friend opened the door of the restaurant where a friend worked 
and took the safe. He served probation and paid a fine. He was 25 years 
old when the waiver application was reviewed. 
At age 20, an individual was charged with burglary for attempting to 
steal $1,547.50 from a store. He completed 56 weekends in jail, served 
probation, and paid a fine. He was 24 when the waiver application was 
reviewed. 

Offense category: Narcotics/drug charges; 
Example: At age 17, an individual was charged with possession of drugs 
and drug paraphernalia after the search of the car he was driving 
resulted in the police's finding a bag of marijuana and an empty bag of 
heroin. He paid relevant fines. He was 20 years old when the waiver 
application was reviewed. 
At age 18, an individual was found to have methamphetamines in his 
possession. He started using marijuana at the age of 12, later moving 
on to methamphetamines. He served probation, paid a fine, and completed 
community service. At the age of 22, he was also charged with Driving 
While Intoxicated, for which he served one day in jail and paid a fine. 
He was 23 years old when the waiver application was reviewed. 

Offense category: Aggravated assault; 
Example: At age 18, an individual was charged with aggravated assault 
for pulling out a pocket knife and swinging it at a group of 
individuals who he claims attacked him, striking one of them in the 
leg. He served probation. He was 20 years old when the waiver 
application was reviewed. 
At age 16, an individual was charged with aggravated assault with a 
deadly weapon. He claimed that he had come home and seen his mother 
being physically assaulted by her boyfriend. He called the police, 
grabbed a gun that was in the house, and threatened to use it. He 
served probation and completed community service. He was 18 years old 
when the waiver application was reviewed. 

Offense category: Other types of assault; 
Example: At age 16, an individual was charged with assault with a 
deadly weapon for accidentally poking his friend with a tool from a 
metal class. He served probation. He was 18 years old when the waiver 
application was reviewed. 
At age 19, an individual was charged with assault with intent to 
inflict serious bodily injury for punching another individual who he 
assumed dented the rear of his car. The individual claimed that when he 
threw a punch, he forgot that he also had a bat in his hand. He served 
probation. He was 22 years old when the waiver application was 
reviewed. 

Offense category: Larceny/theft; 
Example: At age 31, an individual was convicted for larceny over $500. 
He was a manager at a store at the time and was informed that he would 
be laid off. Out of anger and frustration, he took $26,000 from the 
store the day before he left. He returned the money, as well as paid a 
fine and served probation. He was 32 years old when the waiver 
application was reviewed. 
At age 22, an individual was arrested for grand theft after she wrote a 
check to pay for a motorcycle but did not have money in the bank. She 
paid court costs and restitution, as well as completed probation. A few 
months after this incident, she wrote another "hot check" for food. She 
was 33 years old when the waiver application was reviewed. 

Offense category: Robbery/armed robbery; 
Example: At age 18, an individual was charged with robbery when he and 
a friend took items from a convenience store while carrying handguns. 
He paid restitution, as well as served confinement and parole. He was 
27 years old when the waiver application was reviewed. 
At age 18, an individual was charged with robbery with a firearm when 
he and a friend robbed a local fast food restaurant. They took the gun 
that belonged to the friend's father and told the manager, at gunpoint, 
to hand over the money. They were also charged with grand theft of the 
motor vehicle when they took the manager's car to get away. He paid a 
fine, served a prison sentence, and served probation. He was 24 years 
old when the waiver application was reviewed. 

Offense category: Breaking and entering; 
Example: At age 18, an individual was charged with breaking and 
entering. He claimed he was homeless and broke into a high school 
building to use a bathroom and a shower. He served probation and paid a 
fine. He was 21 years old when the waiver application was reviewed. 
At age 20, an individual was charged with residential entry after he 
and a friend went inside his girlfriend's beach house without 
permission and stayed there through the night. He served a jail 
sentence and probation, as well as paid a fine. He was 22 years old 
when the waiver application was reviewed. 

Offense category: Sexual offenses; 
Example: At age 21, an applicant was dating a coworker. The applicant 
claimed he did not know that she was under the age of 18 and was 
charged with corruption of a minor. He completed community service and 
paid a fine. He was 23 years old when the waiver application was 
reviewed. 
At age 17, an applicant had consensual sex with a 17-year-old girl. 
After her mother became aware of the incident, he was arrested and 
charged with having sex with a child. He paid a fine, as well as served 
a jail sentence of 2-1/2 months and probation. He was 18 years old when 
the waiver application was reviewed. 

Source: GAO review of fiscal year 2007 waiver files from the U.S. Army 
Recruiting Command. These files covered all waivers granted in fiscal 
year 2007 to active Army and Army Reserve recruits with felony 
convictions. 

Note: All of these examples were based on the information provided by 
waiver analysts at the U.S. Army Recruiting Command, reflecting the 
waiver analysts' interpretations of the events. Substantial amounts of 
the information in the files were redacted, and it is not clear what 
evidence the Army used to determine the individuals' eligibility for a 
waiver. 

[End of table] 

According to the Army, waivers will always be considered in the 
enlistment process because a one-time incident may not accurately 
reflect the true character of a person whom the Army ultimately decides 
to admit. Officials told us that those applying for conduct waivers are 
strong candidates whose qualifications are high enough to motivate the 
Army to undertake this rigorous process on their behalf. However, some 
of the waiver files that we reviewed showed that the waiver applicants 
did not have high school diplomas or had fairly low AFQT scores. 
[Footnote 52] 

[End of section] 

Appendix IV: Critical Shortages of Officers by Rank and Branch: 

The table below shows fiscal year 2008 fill rates, or rates at which 
specific officer career areas, or branches, are currently filled, as 
well as the numbers of unfilled positions in those career areas. The 
Army considers a career area to be experiencing a shortage if it has a 
fill rate below 85 percent. 

Table 13: Fill Rates Below 85 Percent for Officers by Rank and Branch 
at the End of Fiscal Year 2008: 

Regular Army (total); 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 80% (3,112); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Combat Arms (total); Aviation; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: 62% (181); 
Captains: [Empty]; 
Majors: [Empty]; 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Combat Support (total); Percentage of authorizations filled (number of 
positions unfilled): Lieutenants: [Empty]; Captains: [Empty]; Majors: 
83% (324); Lieutenant colonels: [Empty]; Colonels: [Empty]. 

Combat Support: Military Police; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: [Empty]; 
Lieutenant colonels: 83% (34); 
Colonels: [Empty]. 

Combat Support: Military Intelligence; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 78% (196); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Combat Support: Chemical; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 82% (33); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Combat Support: Combat Service Support (total); 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: 81% (510); 
Majors: 56% (540)[A]; 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Combat Support: Civil Affairs; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 71% (52); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Combat Support: Adjutant General Corps; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: 80% (156); 
Majors: [Empty]; 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Combat Support: Transportation Corps [A]; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: 68% (181)[A]; 
Majors: 2% (285)[A]; 
Lieutenant colonels: 0% (122)[A]; 
Colonels: 0% (32)[A]. 

Combat Support: Ordnance[A]; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: 76% (191)[A]; 
Captains: 68% (170)[A]; 
Majors: 2% (189)[A]; 
Lieutenant colonels: 0% (83)[A]; 
Colonels: 0% (30)[A]. 

Combat Support: Quartermaster Corps [A]; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: 72% (144)[A]; 
Majors: 3% (214)[A]; 
Lieutenant colonels: 1% (77)[A]; 
Colonels: 6% (17)[A]. 

Special Branches (total); 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 83% (747); 
Lieutenant colonels: [Empty];
Colonels: [Empty]. 

Special Branches: Judge Advocate General's Corps; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 61% (176); 
Lieutenant colonels: [Empty]; 
Colonels: 84% (20). 

Special Branches: Medical Corps; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: 0% (1); 
Captains: 83% (263); 
Majors: [Empty]; 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Special Branches: Dental Corps; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 52% (116); 
Lieutenant colonels: 48% (141); 
Colonels: 78% (60). 

Special Branches: Medical Specialist Corps; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: 60% (45); 
Captains: [Empty]; 
Majors: [Empty]; 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Special Branches: Nurse Corps; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 77% (171); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Special Branches: Medical Service Corps; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 82% (169); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Functional Areas (total): Systems Engineering; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 63% (44); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Functional Areas (total): Information Operations; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 54% (96); 
Lieutenant colonels: 68% (27); 
Colonels: 72% (5). 

Functional Areas (total): Strategic Intelligence; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 80% (20); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Functional Areas (total): Space Operations; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: [Empty]; 
Lieutenant colonels: 71% (19); 
Colonels: [Empty]. 

Functional Areas (total): Human Resource Management [B];
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: 0% (20)[B]; 
Majors: 0% (139) [B]; 
Lieutenant colonels: 1% (69) [B]; 
Colonels: 0% (22) [B]. 

Functional Areas (total): Comptroller [B]; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: 0% (66) [B]; 
Majors: 0% (117) [B]; 
Lieutenant colonels: 0% (79) [B]; 
Colonels: 0% (32) [B]. 

Functional Areas (total): U.S. Military Academy Stabilized Faculty; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: [Empty];
Lieutenant colonels: 59% (25); 
Colonels: [Empty]. 

Functional Areas (total): Foreign Area Officer; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: 59% (154); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Functional Areas (total): Operations Research/Systems Analysis; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: 48% (61); 
Majors: 74% (63); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Research, Development and Acquisition; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: 84% (44); 
Majors: [Empty]; 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Functional Areas (total): Force Development; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: [Empty]; 
Lieutenant colonels: [Empty]; 
Colonels: 81% (5). 

Functional Areas (total): Systems Automation Officer; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: 63% (88); 
Majors: 62% (90); 
Lieutenant colonels: [Empty]; 
Colonels: [Empty]. 

Functional Areas (total): Simulations Operations; 
Percentage of authorizations filled (number of positions unfilled): 
Lieutenants: [Empty]; 
Captains: [Empty]; 
Majors: [Empty]; 
Lieutenant colonels: 67% (24); 
Colonels: 70% (6). 

Source: GAO analysis of data from the Army's Office of the Deputy Chief 
of Staff for Personnel. 

[A] The Army is in the process of combining Transportation Corps, 
Ordnance, and Quartermaster Corps under the functional area Logistics. 
While there may not be enough officers in the specific branch, 
positions in Transportation Corps, Ordnance, and Quartermaster Corps 
can be filled by Logistics officers. Therefore, these numbers do not 
accurately reflect the fill rate for these positions. These types of 
changes also distort the fill rates shown in the Combat Service Support 
branch. 

[B] These are new categories the Army created in 2007 to replace the 
Financial Management category. The Army is still working to transfer 
officers to these new categories. Therefore, these numbers do not 
accurately reflect the fill rates for these positions. 

[End of table] 

[End of section] 

Appendix V: Comments from the Department of Defense: 

Office Of The Under Secretary Of Defense: 
Personnel And Readiness: 
4000 Defense Pentagon: 
Washington, D.C. 20301-4000: 

April 23, 2009: 

Ms. Brenda S. Farrell: 
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Ms. Farrell: 

This letter is the Department of Defense's response to the draft 
Government Accountability Office (GAO) report, Military Personnel: Army 
Needs to Focus on Cost-Effective Use of Financial Incentives and 
Quality Standards in Managing Force Growth, dated May 2009, (GAO Code 
351131/GAO-09-256). 

Please see the enclosure for our specific responses to each of the 
recommendations. Questions regarding this response should be addressed 
to the OSD (MPP) action officer, Lt Col Greg Brown at 693-3939 or 
greg.brown@osd.mil. 

Sincerely, 

Signed by: 

William J. Carr:
Deputy Under Secretary (Military Personnel Policy): 

Enclosure: As stated: 

GAO Draft Report - Dated May, 2009: 
GAO Code 351131/GAO-09-256: 

"Military Personnel: Army Needs to Focus on Cost-Effective Use of 
Financial Incentives and Quality Standards in Managing Force Growth" 

Department Of Defense Comments To The Recommendations 

Recommendation 1: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army to enhance its existing processes to 
recruit and retain sufficient numbers of enlisted personnel and to 
avoid making excessive payments to achieve desired results, build on 
currently available analyses that will enable the Army to set cost-
effective enlistment and reenlistment bonuses. 

DOD Response: Concur. The Department policy is: The intent of bonuses 
is to influence personnel inventories in specific situations in which 
less costly methods have proven inadequate or impractical. The Military 
Services must exercise this authority in the most cost-effective 
manner, considering bonus employment in relation to overall skill, 
training, and utilization requirements. Military skills selected for 
the award of enlistment, accession, reenlistment, or retention bonuses 
must be essential to the accomplishment of defense missions." [DoDD 
1304.21, January 2005]. Moreover, Army regularly responds to the 
Department of Defense in justifying new bonuses or defending changes to 
existing incentives. Admittedly, oversight and refinement is essential 
in assuring successful policy compliance. To that end, in February 2009 
the Department contracted a DoD-wide research study entitled 
"Recruiting and Retention Effectiveness of Cash Incentives." The 
explicit objective of this research is to assess the impact on 
enlistment and reenlistment propensity of military cash incentives used 
in the Services. The assessment of bonuses will cover scope of 
application, growth trends, and cost-effectiveness relative to other 
resources utilized to improve recruiting and retention. The Department 
expects to receive the first draft of this research in June of 2009. 

Recommendation 2: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army to enable the most efficient use of 
recruiting resources, collect data on the cost-effectiveness of the 
Army's conduct waiver polices including costs associated with the 
waiver review and approval process and with future separations of 
soldiers with conduct waivers for adverse reasons-and use these data to 
inform the Army's waiver policies. 

DOD Response: Concur. We note that, on February 17, 2009, Army Audit 
Agency began an audit of the Army Recruiting Waiver Program that will, 
among other things, examine whether the Active, Reserve, and National 
Guard components are using appropriate and uniform standards for 
granting and processing enlistment waivers. 

Recommendation 3: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army to, should the Army decide to offer 
incentives to officers in the future, build on currently available 
analyses that will enable the Army, with the direction and assistance 
of the Secretary of Defense, to set cost-effective bonus amounts and 
other incentives. 

DOD Response: Concur. The Department policy is: The intent of bonuses 
is to influence personnel inventories in specific situations in which 
less costly methods have proven inadequate or impractical. The Military 
Services must exercise this authority in the most cost-effective 
manner, considering bonus employment in relation to overall skill, 
training, and utilization requirements. Military skills selected for 
the award of enlistment, accession, reenlistment, or retention bonuses 
must be essential to the accomplishment of defense missions. " [DoDD 
1304.21, January 2005]. The Department's oversight of officer retention 
is rigorous and demands that the Military Services provide a detailed 
business case before the Office of the Secretary of Defense grants the 
requesting service the authority to employ a retention bonus. 

Recommendation 4: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army, to enable it to make informed 
decisions regarding the management of its officer corps over time, 
track-and if necessary correct-any effects that its actions to 
alleviate shortages may have on the officer corps, particularly in 
cases in which the Army has deviated from benchmarks established in the 
Defense Officer Personnel Management Act. 

DOD Response: Partially-concur. DOPMA officer promotion "benchmarks" 
represent generalized guidelines but are not intended, under present 
law and policy, to serve as fixed mandates. Moreover, OSD policy 
(Enclosure 2 of DoDI 1320.13, June 1996) already is explicit in 
defining desired promotion timing and opportunity. In the course of 
managing officer experience and grade profiles, the Secretaries of the 
Military Departments are permitted to vary actual promotion opportunity 
and timing (by competitive category and grade) to meet these 
requirements. Oversight is important, and these data are tracked 
annually by OSD staff, through Service inputs and data systematically 
assembled and submitted from the Defense Manpower Data Center. 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov. 

Acknowledgments: 

In addition to the contact above, David Moser, Assistant Director, 
Natalya Barden, Catherine Brown, Renee Brown, Tim Carr, Brandon Hunt, 
Joanne Landesman, Julia Matta, Lonnie McAllister, Charles Perdue, Terry 
Richardson, Bev Schladt, and Rajneesh Verma made key contributions to 
this report. 

[End of section] 

Footnotes: 

[1] Formerly referred to as the Global War on Terror. 

[2] The President's plan also included increasing the size of the 
Marine Corps by 27,000 active-duty personnel. The Marine Corps now 
expects to complete its growth and reach its active-duty end strength 
goal of 202,000 by fiscal year 2011. 

[3] In addition, we conducted a qualitative review of the waiver files 
for all those accessed by the active Army or Army Reserve in fiscal 
year 2007 with waivers for felony convictions. The purpose of this 
review was to obtain examples of the offenses committed by those who 
were ultimately admitted by the Army. 

[4] DOD Directive 1304.21, "Policy on Enlistment Bonuses, Accession 
Bonuses for New Officers in Critical Skills, Selective Reenlistment 
Bonuses, and Critical Skills Retention Bonuses for Active Members" 
(Jan. 31, 2005); and DOD Instruction1304.29, "Administration of 
Enlistment Bonuses, Accession Bonuses for New Officers in Critical 
Skills, Selective Reenlistment Bonuses, and Critical Skills Retention 
Bonuses for Active Members" (Dec. 15, 2004). 

[5] After we had completed our audit work, Army officials told us that 
in fiscal year 2009, they had suspended the granting of adult felony 
waivers. 

[6] Compensation costs are reported in constant fiscal year 2007 
dollars. These costs have been updated and adjusted for inflation and 
are based on costs reported in [hyperlink, 
http://www.gao.gov/products/GAO-05-798], Military Personnel: DOD Needs 
to Improve the Transparency and Reassess the Reasonableness, 
Appropriateness, Affordability, and Sustainability of Its Military 
Compensation System (Washington, D.C: July 19, 2005). 

[7] Pub. L. No. 96-513 (1980), as amended. 

[8] 10 U.S.C. § 523. 

[9] H. Rep. No. 96-1462 and S. Rep. No. 96-375. 

[10] GAO, Force Structure: Need for Greater Transparency for the Army's 
Grow the Force Initiative Funding Plan, [hyperlink, 
http://www.gao.gov/products/GAO-08-354R] (Washington, D.C.: Jan. 18, 
2008). 

[11] U.S. Congressional Budget Office, Recruiting, Retention, and 
Future Levels of Military Personnel (October 2006). 

[12] GAO, Military Personnel: DOD Needs Action Plan to Address Enlisted 
Personnel Recruitment and Retention Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-05-134] (Washington, D.C.: Nov. 17, 
2005). 

[13] The Army tracks retention rates for soldiers in three categories: 
initial term (for those serving in their first enlistments and having 
fewer than 6 years of service); midcareer (for those serving on their 
second or subsequent enlistments and having fewer than 10 years of 
service); and career (those serving on their second or subsequent 
enlistments and having 10 or more years of service). 

[14] Unlike the active Army, the Army Reserve and the Army National 
Guard calculate losses regardless of whether personnel have a service 
obligation remaining on their contract. 

[15] Dwell time refers to the amount of time between deployments. 

[16] These figures do not include bonuses paid to Army National Guard 
members who enlisted through the Active First program. Under the Active 
First program, an enlistee joins the Army National Guard but in fact 
serves first in the active Army for 2 to 4 years. After serving on 
active duty, the soldier goes into the National Guard. Bonuses given to 
those entering through the Active First program were funded in the 
active Army's budget. 

[17] "Policy on Enlistment Bonuses, Accession Bonuses for New Officers 
in Critical Skills, Selective Reenlistment Bonuses, and Critical Skills 
Retention Bonuses for Active Members" (Jan. 31, 2005). Department of 
Defense Instruction 1304.29, "Administration of Enlistment Bonuses, 
Accession Bonuses for New Officers in Critical Skills, Selective 
Reenlistment Bonuses, and Critical Skills Retention Bonuses for Active 
Members" (Dec. 15, 2004). 

[18] This body of research dates back to the 1960s and 1970s, when 
various organizations were researching the cost of an all-volunteer 
force. GAO cites many of these studies, conducted by RAND and other 
researchers in GAO's report, Military Draft: Potential Impacts and 
Other Issues, [hyperlink, http://www.gao.gov/products/GAO/NSIAD-88-102] 
(Washington, D.C.: Mar. 10, 1988). Other studies include An Enlisted 
Force Management System Model to Predict the Effects of Bonus Decisions 
(1988); A System for Allocating Selective Reenlistment Bonuses (1989); 
National Research Council, Attitudes, Aptitudes, and Aspirations of 
American Youth (Washington, D.C.: National Academies Press, 2003); 
RAND, Have Improved Resources Increased Military Recruiting and 
Retention? (2004); Chadwick, Martin, and Bailey, Incorporated, U.S. 
Army Accessions Command: Active Duty Recruitment Incentive Study Report 
of Findings (Apr. 2005); Orvis, B. Issues for Discussion Re Changing 
the Value of the Enlistment Bonus. (Washington, D.C.: Army Staff 
Decision Brief, 2005); Greenston, P, Diaz, M. & Sticha, Raising the Cap 
on Enlistment Bonus Programs: Forecasted Impact on Army Accessions 
(Washington, D.C., Army Research Institute, 2006); Center for Naval 
Analysis, The Effect of Enlistment and Reenlistment Bonuses on 
Participation in the Navy Selected Reserve (Apr. 2006); The Effect of 
Bonuses on Participation in the Navy Selected Reserve: Regression 
Results (May 2006); Congressional Budget Office, Recruiting, Retention, 
and Future Levels of Military Personnel (Oct. 2006); and Pionk, J. 
Evaluation of the Effectiveness of Army Cash Enlistment Bonus 
Incentives. Doctoral Dissertation. (Prescott, AZ: Northcentral 
University, 2009). 

[19] These were 11C, Indirect Fire Infantry; 15R, AH-64 Helicopter 
Repairer; 15S, OH-58D Helicopter Repairer; 15T, UH-60 Helicopter 
Repairer; 15U, CH-47 Helicopter Repairer; 19D, Cavalry Scout; 25B, 
Information Systems Operator-Analyst; 35K, UAV Operator; and 35M, Human 
Intelligence Collector. 

[20] Department of Defense Instruction Number 1304.29, "Administration 
of Enlistment Bonuses, Accession Bonuses for New Officers in Critical 
Skills, Selective Reenlistment Bonuses, and Critical Skills Retention 
Bonuses for Active Members" (Dec. 15, 2004), allows the services to 
award bonuses to occupational specialties that are experiencing 
shortages, even if they are not considered to be critical occupations 
on the basis of other factors. In 2002, we reported that the services, 
including the Army, were paying reenlistment bonuses to occupations 
that were not considered critical (GAO, Military Personnel: Management 
and Oversight of Selective Reenlistment Bonus Program Needs 
Improvement, [hyperlink, http://www.gao.gov/products/GAO-03-149] 
(Washington, D.C.: Nov. 25, 2002)). In that report, we recommended that 
DOD require the Army to establish criteria for selecting critical 
specialties and that it issue an instruction to the services with 
guidance for administering and selecting specialties for inclusion in 
their reenlistment programs. In its written response to our report, DOD 
stated that the criteria for selecting specialties for inclusion in 
reenlistment programs were already sound because they were written to 
provide flexibility for the management of critical skills to meet 
shortfalls in the services' inventories. 

[21] Under the Active First program, an enlistee joins the Army 
National Guard but serves first in the active Army for 2 to 4 years. 
After serving on active duty, the soldier goes into the National Guard. 

[22] Both regular Army and Active First enlistees have total military 
service obligations of 8 years, meaning that their total obligation 
period on active and reserve duty together is 8 years. 

[23] After we had completed our audit work, the Army reported that 
effective October 1, 2008, all Active First accessions received the 
same bonus as active Army accessions. 

[24] This group excludes persons with General Educational Development 
certificates. 

[25] This calculation is based on a study by the Lewin Group, which, in 
its report to the Office of the Under Secretary of Defense, stated that 
the study could be improved for more accuracy. For example, the report 
stated that refining the estimated aptitude levels, which are based on 
1997 data, would lead to a larger eligible population. Likewise, 
refining the way the system determines when youth are disqualified for 
more than one reason could reduce the disqualified population by 
several percentage points, thereby increasing the qualified market. 

[26] While the Army is allowed to recruit individuals without high- 
school diplomas, DOD's benchmark is that at least 90 percent of 
recruits each year have high-school diplomas. Likewise, the Army can 
recruit individuals whose AFQT percentile scores fall between 10 and 
30, but DOD's policy requires that no more than 4 percent of these 
individuals be admitted each year. While the Army has not consistently 
met these benchmarks set by DOD, it is restricted in how many of these 
individuals can be admitted. Furthermore, anyone with an AFQT 
percentile score below 10 is not permitted to enlist. 

[27] In 2007, the Army increased the maximum age for enlistees from 40 
to 42. 

[28] In February 2009, after we had completed our audit work, the 
Secretary of Defense authorized the military services to recruit 
certain legal aliens whose skills are considered to be vital to the 
national interest. This "Military Accessions Vital to National 
Interest" program is a pilot program that will continue for up to 12 
months and involve recruiting up to 1,000 personnel with critical 
skills, such as physicians, nurses, and experts in languages with 
associated cultural backgrounds. 

[29] Army Regulation 601-210, section 2-3, states that all Army 
applicants with no prior service must enlist and ship prior to their 
42nd birthday. Army Regulation 601-210, "Active and Reserve Components 
Enlistment Program" (June 7, 2007). 

[30] The Army also grants waivers for reasons such as certain medical 
conditions or having a large number of dependents. In fiscal year 2008, 
conduct waivers comprised approximately 49 percent of all waivers given 
by the active Army, 29 percent of all waivers given by the Army 
Reserve, and 20 percent of all waivers given by the Army National 
Guard. 

[31] In March 2009, after we had completed our audit work, the Army 
stated that waivers for adult felonies had been suspended for the 
active Army and the Army Reserve. Prior to that date, the Army National 
Guard had already suspended felony waivers. 

[32] According to Army Regulation 601-210, examples of waiverable 
felonies include burglary, narcotics or habit-forming drug charges, 
aggravated assault, larceny (more than $500), and breaking and 
entering. The Army further indicated that waiverable serious 
misdemeanors include two or more charges of Driving Under the 
Influence, two or more charges for possession of marijuana, leaving the 
scene of an accident or hit and run, contributing to the delinquency of 
a minor, and larceny (less than $500). Officials explained to us that 
examples of waiverable minor misdemeanors include one charge of Driving 
Under the Influence, one charge for possession of marijuana, an altered 
drivers' license or identification charge, disorderly conduct, and 
violation of probation. The number of offenses that would necessitate a 
waiver depends on the severity level of the offense. For example, the 
following offenses would require a waiver: one felony conviction, one 
or more serious misdemeanor convictions, and five or more minor 
misdemeanor convictions. Individuals with more than one felony 
conviction are permanently disqualified from entry. 

[33] An analysis conducted by the Army in the fall of 2008 showed that 
active Army soldiers who entered with conduct waivers between 2003 and 
2007 generally did not differ in their length of stay, reenlistment 
rates, or separation rates due to unsatisfactory performance from those 
who entered during the same period without conduct waivers. When 
soldiers who entered the Army in fiscal year 2003 were analyzed 
separately from soldiers who entered in other years, no statistical 
difference in reenlistment rates was found between soldiers who had 
conduct waivers and those who did not have conduct waivers. However, 
when reenlistment rates for all soldiers who entered the Army in fiscal 
years 2003 through 2006 were analyzed, soldiers with conduct waivers 
were found to have slightly lower reenlistment rates than those without 
conduct waivers. This result also held for the analysis of soldiers who 
entered in fiscal year 2007. 

At the same time, these soldiers had higher rates of separation for 
adverse reasons such as misconduct, alcohol rehabilitation failure, and 
separation in lieu of trial by court martial, and they had a higher 
percentage of court martial cases than soldiers without conduct waivers 
who entered the Army during the same period. 

An analysis conducted by the RAND Corporation used data on accessions 
from fiscal years 2002 through June 2005 in order to follow recruits 
for at least 3 years; unlike the Army, RAND controlled for the effect 
of demographic factors. RAND's study results, like the Army's, 
indicated that those with conduct waivers showed evidence of early 
success in terms of their performance, followed by a greater likelihood 
of serious behavioral problems and separation for adverse reasons. We 
have not independently assessed the reliability of the study conducted 
by RAND. 

[34] The Army has since implemented controls to correct these 
deficiencies, and we have found the latest waiver data, from fiscal 
year 2008, to be sufficiently reliable for our purposes. Moreover, in 
an effort to improve the consistency of waiver reporting across all the 
services and service components, OSD issued a new policy in June 2008 
on how waivers should be categorized. Directive-Type Memorandum 08-018, 
"Enlistment Waivers," describes the new policy, including standardized 
terminology, reporting requirements, and specific codes that the 
services should use for tracking and reporting waiver data. 

[35] A RAND official overseeing the work on waivers told us that a 
draft report is expected in the fall of 2009. The official also told us 
that RAND does not plan to continue analyzing this issue after 2009, 
unless there is a specific request from the Army for more work. 

[36] Documentation provided to us by the Army in 2008 indicated that 
the total initial investment per new recruit ranges from $53,976 to 
$66,376, depending on the training option. This estimate includes the 
cost of recruiting, processing, and basic and follow-up training. 

[37] Army officer branches refer to the various categories of jobs 
performed by officers. 

[38] The Transportation Corps was singled out by Army officials as one 
area with particular need. Special branches facing critical shortages 
of majors include the Judge Advocate General's Corps, Dental Corps, 
Nurse Corps, and Medical Service Corps. 

[39] Depending on the fill rates for their particular branches, 
captains' cash bonuses were $25,000, $30,000, or $35,000. 

[40] Under phase one, captains were offered the chance for special 
training, for example, to attend a military school or language 
training. However, during phase two, the special training offer was 
limited to language training. 

[41] The cost estimate provided by the Army was based on more recent 
data that showed 14,547 bonus contracts, whereas the final data 
reported in table 8 were the most recent comprehensive data available 
on all contracts. 

[42] The resulting report was "U.S. Army Jr. Officer Retention 
Incentive Study: Presentation of Findings," September 14, 2006. 

[43] Under the graduate school option, an officer incurs an additional 
3 years of service, plus the additional time incurred for time spent in 
graduate school, which is a 3-to-1 ratio (i.e., for every 1 month in 
graduate school, the officer is required to serve an additional 3 
months in the Army). 

[44] S. Rep. No. 96-375 (1979). 

[45] Pub. L. No. 96-513, Dec. 12, 1980. 

[46] 10 U.S.C. § 619. 

[47] 10 U.S.C. § 616. 

[48] In March 2009, after we had completed our audit work, the Army 
stated that waivers for adult felonies had been suspended for the 
active Army and the Army Reserve. Prior to that date, the Army National 
Guard had already suspended felony waivers. 

[49] As of December 6, 2007 (less than 3 months into fiscal year 2008), 
the Army National Guard had stopped granting waivers for adult-level 
felonies in an attempt to increase the quality of its soldiers. 

[50] Army Regulation 601-210, section 4-7, defines a crime of domestic 
violence as an offense that involves the use or attempted use of 
physical force; threatened use of a deadly weapon by a current or 
former spouse, parent, or guardian of the victim; by the person with 
whom the victim shares a child in common; by a person who is cohabiting 
with or has cohabited with the victim as a spouse, parent, or guardian; 
or by a person who was similarly situated to a spouse, parent, or 
guardian of the victim. Army Regulation 601-210, "Active and Reserve 
Components Enlistment Program" (June 7, 2007). 

[51] Officials of the Office of the Secretary of Defense acknowledged 
that it may not be possible for the Army to know if someone was told by 
a judge to enter the Army in lieu of being prosecuted, unless the 
individual discloses this information. 

[52] The limited amount of information from the waiver files that was 
made available to GAO precluded us from assessing all the other 
qualifications that were taken into consideration when officials 
approved felony waiver requests for particular applicants. We did not 
independently assess the adequacy of the Army's process or the internal 
controls applied at different steps in the process. 

[End of section] 

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