Manpower and Personnel Needs for a Transformed Naval Force (2008)

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1 Introduction It has long been recognized that the ultimate key to success of U.S. naval forces is the quality of their people. A highly trained, versatile force is critical to realizing the full potential of our naval forces. In his 2006 guidance, ADM Michael G. Mullen, USN (Chief of Naval Operations [CNO]) states, “Our success in defense of this nation depends upon the men and women of the United States Navy—active, reserve, and civilian and their families.” His guidance sets as a priority “Develop 21st Century Leaders . . . through a transformed manpower, personnel and training organization that better competes for the talent our country produces and creates the conditions in which the full potential serving our Navy can be achieved.” Gen James T. Conway, USMC, Commandant of the Marine Corps (CMC) pointed out in his recent guidance: “Our marines and sailors in combat are our number one priority in all that we do.” The Commandant’s guidance also addresses the current force and the global war on terror (GWOT), and he provides direction to determine the structure and manning requirements to meet the Marine Corps’ goal of ensuring that individuals and units have 12 months at home for every 6 months they are deployed: “Deputy Commandants and Headquarters Marine Corps Directors will . . . examine our requirements for recruiters, infra- ADM   Michael G. Mullen, USN, Chief of Naval Operations. 2005. “CNO Guidance for 2006: Meeting the Challenge of a New Era,” Department of the Navy, Washington, D.C., October, p. 2. ADM Michael G. Mullen, USN, Chief of Naval Operations. 2005. “CNO Guidance for 2006:   Meeting the Challenge of a New Era,” Department of the Navy, Washington, D.C., October, p. 3.   en James T. Conway, USMC, 34th Commandant of the Marine Corps. 2006. “Commandant’s G Planning Guide,” Headquarters, U.S. Marine Corps, Washington, D.C., p. 1. 11 

12 MANPOWER AND PERSONNEL NEEDS FOR A TRANSFORMED NAVAL FORCE structure, materiel, and equipment to support both manning at a 1:2 deployment to dwell ratio and training across the spectrum of warfare.” The committee recognizes that overall naval manpower includes civilians who work for the Department of Defense (DOD) and defense contractors as well as uniformed men and women. However, even though civilians and con- tractors perform very important tasks, this report focuses on men and women in uniform. The committee also recognizes that the transformational needs of the Navy and the Marine Corps are not identical. The Navy is faced with integrating a new generation of ships demanding smaller and more highly trained and techni- cally proficient crews than the legacy fleet. The Navy must also move quickly to broaden its mission from the traditional major combat operations to incorporate the littorals and major estuaries—green- and brown-water operations. All of this while maintaining the readiness of the legacy ships as they are retired over the next 30 years. The Marine Corps, on the other hand, faces a less dramatic need for change in the short term. Their primary mission as an initial amphibious strike force will continue. In the longer term the situation is not as clear. In Iraq and Afghanistan the Marine Corps and Army missions are not clearly separated. The role of the Marine Corps vis-à-vis the expanding role of the Special Forces of the Navy and the Army is also not clearly defined. Beyond that the role of the developing Marine Corps Special Operations Forces is in the process of being defined. Both the Navy and the Marine Corps will face recruitment and training chal- lenges and compensation issues as they increasingly compete with the private sector for talent. Here the Marine Corps mandate to expand will heighten the need for numbers whereas the reduced crew sizes will ease the need of the Navy to meet end-strength targets. Rather than separate each of the issues into Navy and Marine Corps compart- ments, the committee chose to lay out the spectrum of change issues and depend upon the leadership of each service to determine how each issue challenges them and how to respond. The committee heard from key leaders, managers, and stakeholders about dramatic changes in operations, technology, equipment, and force structure that are ongoing or planned in the Navy and Marine Corps and their implications for manpower and personnel. The committee also reviewed several previous studies for their insights into the manpower and personnel challenges that face the Navy and Marine Corps and possible ways to address those challenges. Based on these multiple sources of information, the committee concluded that despite existing leadership guidance, the Navy and Marine Corps have not yet come to grips with the urgency, importance, and difficulty of building manpower   en G James T. Conway, USMC, 34th Commandant of the Marine Corps. 2006. “Commandant’s Planning Guide,” Headquarters, U.S. Marine Corps, Washington, D.C., p. 5. 

INTRODUCTION 13 and personnel policies and systems that will allow the services to get the right people into the right jobs and provide incentives for productivity. Too much of the manpower and personnel structure today still rests on the notion that people are largely interchangeable. When problems surface in immediate crises, temporary solutions are often patched together quickly, leaving behind a complex patchwork of policies without addressing the underlying causes. The Department of the Navy is at a critical crossroads. It can continue to risk the consequences of the traditional approach, which often assumes that the goal of manpower and personnel policies is simply to meet a given force level. If that is the case, focusing on recruitment and retention will suffice. If, on the other hand, the Department of the Navy embraces transformation and the manpower changes that it demands, it must fully accept and implement the recent guidance of the CNO and the CMC. The naval forces must develop new manpower policy and implementation plans. Many of the manpower and personnel problems that the naval services face are deep; solving them will require time and the cooperation of key stakehold- ers inside and outside the department. Problems in this category include those caused by the retirement system and the time-in-service pay table. For such problems there will be no quick fixes. Nevertheless, the committee believes that some changes—for example, the completion of the human capital strategy, the development of better evaluation programs to assess the impact of repeated deployments, and experimentation to assess the implications of future manning of the littoral combat ship (LCS)—can be made relatively quickly, and that the CNO and CMC are in a position to make them. Such changes could result in important early improvements that the Navy and Marine Corps could use as leverage for the more difficult steps. For the Navy and Marine Corps to bring their ambitious plans for the future to fruition, the CNO and CMC must make manpower transformation a very high priority. They must personally lead and become identified with the manpower transformation process. They must be personally involved at every step along the way. In addition, the Department of the Navy leaders must involve every sailor and marine in the transformation process and ensure that they understand and embrace it. The road will be difficult and involve integrated changes to virtually every aspect of manpower and personnel policy—including recruitment, career paths, force management, compensation, retirement, education, and training. But, once these changes are in place, the naval forces will be prepared to meet the future. To take an easier path will mean a future of constantly cobbling together temporary solutions to chronic problems, much as is done today. The next section of this chapter discusses how past policies still shape condi- tions of the present. The chapter goes on to describe the broad changes envisioned for the naval forces and their implications for men and women in uniform and the policies that surround them. The chapter ends with a brief outline of the report. 

14 MANPOWER AND PERSONNEL NEEDS FOR A TRANSFORMED NAVAL FORCE Today’s Policies Reflect Past Needs To gain insight into origins of the manpower situation facing today’s naval forces, one must go back centuries in time to the beginning of naval missions and manpower policy. For our purposes, however, a return to the World War II (WWII) era will suffice. In WWII the United States successfully undertook a massive mobilization of conscripted forces that led to one of the most significant military victories in history. The enormity of the effort, however, was followed by major manpower and demobilization issues in the postwar period. In an effort to resolve the problems, the Congress passed the National Security Act of 1947. Much of this act is still enshrined in Title 10 of the U.S. Code, which governs many aspects of the armed forces. One of the most important revisions to Title 10 came with the Defense Officer Personnel Management Act (DOPMA) of 1981 and a revised DOPMA in 1984. The two DOPMAs set limits on the proportion of officers in each service who can hold the rank of Major (Lieutenant Commander for the Navy) or higher at any one time. They also stipulate “up-or-out,” or high year-of-tenure rules for officers that are consistent across all four services. During its information gathering sessions, the committee heard repeatedly from Navy and Marine Corps officials that the DOPMAs’ constraints on the proportion of senior officers and its up-or-out rules hamper the achievement of future force goals. Two other laws that constrain the shape of the force and the flexibility of indi- vidual career paths are the Warrant Officer Management Act (WOMA), adopted through the Fiscal Year 1992/1993 National Defense Authorization Act, and the Reserve Officer Personnel Management Act (ROPMA), which became effective on October 1, 1996. WOMA established a single promotion structure for warrant officers regardless of service, established the rank of CW-5, stipulated high year- of-tenure rules for the warrant officer ranks, and authorized the service secretaries to implement mandatory retirement for selected warrant officers who are eligible to retire. ROPMA streamlined promotion guidelines and limited overall promo- tions, thereby establishing rules that more closely resemble the active-duty pro- motion blueprint. The act also addressed mandatory separation dates and officer retention based on the specific needs of the service. Despite important events and changes since 1947, the Korean Conflict, the Cold War, the Vietnam War, the introduction of the all-volunteer force, the stun- ning changes in technology, and now the GWOT, overall manpower policies established in 1947 remain largely intact. The basics of the system of promotion for officers and the principles of military compensation and retirement have changed very little. Future Opportunities and Challenges Yet the missions of naval forces, particularly the fighting missions, have changed significantly since WWII and the Cold War. In its fighting missions the 

INTRODUCTION 15 U.S. Navy, particularly the submarine force, underwent a period of intense inno- vation during the 1950s and early 1960s. Later decades of the Cold War saw little change, however. Had the Cold War erupted into a major battle on the plains of Europe, the Navy’s war missions were to destroy the Soviet Navy, particularly its submarines, defend convoys in the Atlantic, and perhaps, in concert with the marines, conduct strike operations on the periphery of the Soviet Union. These large-scale, blue-water operations would not have been greatly dissimilar from those launched during WWII. The post-Cold War changes were described in some detail in a recent Con- gressional Budget Office (CBO) report. According to that CBO report, the major peacetime change has been the addition of more operations to provide homeland security in U.S. coastal waters, a mission shared with the U.S. Coast Guard. In addition, naval resources are being called upon for humanitarian missions in the wake of natural disasters, such as tsunamis and major hurricanes. And there is the need to win the support of regional populations in the crucial campaign for hearts and minds. For the Navy that means, in addition to specific humanitarian missions, an increase in port calls, military-to-military operations, and engagement through foreign area officers. Naval war missions have changed to include large and small strike missions using land-attack missiles and carrier-based aircraft, the sinking of an occasional small enemy ship, and antimine operations. The use of unmanned aerial vehicles as persistent surveillance platforms is growing, as is the demand for special forces. Day-to-day patrol and maritime intercept operations in waters like the Persian Gulf and around the Horn of Africa are in great demand. Visit, boarding, search, and seizure (VBSS) is a mission requirement imposed now on every Navy ship, regardless of the size of its crew. Now during the GWOT, the Navy faces a new type of adversary who avoids direct confrontation, operates in small groups, and attacks primarily civilian targets. Iraq’s use of mines during the Persian Gulf War of 1991 suggests that countries with even moderate military capabilities can pose a challenge when they use their modest sea-denial capabilities in innovative ways. Furthermore, the pace of technical change continues. Information technology, which plays a growing role in modern military operations, is also a major com- ponent of an increasingly globalized commercial economy. If the United States faces a peer competitor in a future war, it will be one that possesses technological capability more comparable to that of our own forces than did the Soviet Union. (Chapter 2 provides a more complete discussion of new threats.) The central ground fighting role of the Marine Corps in both Operation Enduring Freedom and Operation Iraqi Freedom speak to the new challenges facing that service. Less obvious today, but equally challenging, will be the new   ongressional C Budget Office. 2006. Options for the Navy’s Future Fleet, Washington, D.C., May. 

16 MANPOWER AND PERSONNEL NEEDS FOR A TRANSFORMED NAVAL FORCE concepts of developing the ability to maneuver from the sea by passing over, rather than through, opposing coastal defenses. These new naval missions do not replace more traditional ones. The Navy will retain requirements for ensuring freedom of the seas against more traditional threats, which have not disappeared. In summary, although basic manpower policy has changed relatively little, the missions of naval forces have changed significantly. Large blue-water con- frontations seem unlikely in the near term. They have been replaced by signifi- cant responsibilities in the littorals of the world and in homeland security. These new responsibilities require more widely distributed forces that are capable of independent action and able to carry out diverse functions that depend on the particular scenario. Manpower Concerns for Naval Forces Despite guidance, quadrennial reviews of compensation, and numerous study group recommendations, the maritime services still face major manpower issues in preparing for a transformed naval force. Current plans call for the number of sailors to continue to decline, even as the number of ships increases (Figure 1.1). In contrast, the Marine Corps will expand in size during the coming 6 years (Table 1.1). To meet requirements, U.S. naval forces face challenges in achieving manpower goals. The challenges include personnel numbers, both in the aggregate 909 1000 1,400 900 1,200 End Strength (thousands) 800 Ship Force Levels 700 1,000 Ship Count 600 800 500 DON Civilians 400 600 317* 300 400 200 Total Active End Strength 200 100 0 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 Year *From 30 year shipbuilding plan February 2006 FIGURE 1.1  Number of sailors will decline as number of ships grows. SOURCE: VADM John C. Harvey Jr., USN, Deputy Chief of Naval Operations for Manpower, Personnel, Training, and Education and Chief of Naval Personnel, “Shaping the Force for the Future,” presentation to the committee, October 3, 2006, Washington, D.C. 1-1 

INTRODUCTION 17 TABLE 1.1  Current and Planned End Strength of the Naval Services FY 2006 Authorized FY 2013 Navy   Active duty 352,700 322,000   Reserve 73,100 73,100 Marine Corps   Active duty 179,000 202,000   Reserve 39,600 39,600 SOURCE: Congressional Budget Office, 2006, Recruiting, Retention, and Future Levels of Military Personnel, Washington, D.C., October, pp. 42, 54; RADM David A. Gove, USN, Deputy Chief of Naval Personnel, Commander, Navy Personnel Command, “Manpower and Personnel Needs for a Transformed Naval Force,” presentation to the committee, Feb- ruary 13, 2007, Millington, Tenn.; DOD press release, “Fiscal 2008 Department of Defense Budget Released,” February 5, 2007. and in specific occupational categories, shifts in the demographics of the U.S. population, and a decline in the propensity of young men and women to serve in the military. Changes in the mix of skills will be required of officers and enlisted personnel in both the active-duty and reserve forces. The services also face dra- matic changes in expectations among reservists and increasing competition from the private sector for human capital. Transformation goals call for developing smaller, more nimble, techno- logically advanced units of power networked into a mobile lethal force. There is concern that fielding the highly trained, versatile force necessary to realize the full potential of the technological innovation is lagging. Until recently the Navy and Marine Corps generally took for granted that the manpower needed for a transformed force would be readily available and could be trained to meet the new demands. Several factors call this assumption into question. During the committee discussions, Navy leadership has expressed deep concern over the manpower issue and the lack of attention to it. Challenges for Recruiting All of the services are challenged to meet their numerical recruiting goals while maintaining a high-quality force. The Navy’s recruiting goals for 2007 are 10,600 reserve enlisted, 37,000 active enlisted, and 1,570 active-duty officers. Currently the Navy has been able to meet its numerical goals while adhering to its quality standards, which are tighter than those set by law and regulation for the DOD overall. While these recruiting standards and goals are currently   he Navy expects 95 percent of its enlistees to be high school diploma graduates and at least 70 T percent to score above the median on the military’s entrance test of cognitive aptitude, the Armed Forces Qualification Test (AFQT). Unlike the Army in recent years, the Navy will not accept any 

18 MANPOWER AND PERSONNEL NEEDS FOR A TRANSFORMED NAVAL FORCE attainable, sustaining quality and quantity in the future will likely require greater effort and expense. As is discussed in Chapter 2, the number of qualified prospective male recruits is declining for several reasons. The propensity to enlist is lower now than at any other time in recent history. The continuing war in Iraq is changing young people’s perceptions about military service. The share of immigrants in the population places an additional constraint on recruiting, as a large number of immigrants do not meet the services’ standards for high school graduation or English language. Key influencers are less likely to advise young people to serve in the military. A declining share of today’s parents and grandparents have served in the mili- tary, and therefore the role model of military service provided by one’s father or grandfather is not as prevalent as it was even a decade ago. Public opinion against the war in Iraq has also taken its toll on support for joining the military among those who influence young people’s decisions, including parents, teachers, and coaches. Perhaps most troubling is the declining share of young people who meet the services’ physical, mental, health, and moral standards. In 2005 some 72 percent of young men were unqualified for service for one reason or another, cutting deeply into the pool from which the Navy and Marine Corps can recruit troops.  Particularly troubling in recent years is the large fraction of youth who are dis- qualified because of obesity. Recruitment challenges will be compounded during the coming years. In the Marine Corps the service’s planned expansion will require more recruits each year. For the Navy the challenge will be getting the right quality of the recruits for new categories of billets related to the GWOT and to move from a pyramidal to an oval workforce structure. To address these challenges, the Navy is increasing its recruiting force and is considering options to relax some of its quality goals, as well as offering several educational incentives for potential recruits. The Marine Corps plans to expand its recruiting force, but hopes to maintain current levels of quality. The Marine Corps is considering increases in recruiter bonuses and advertising budgets. recruits whose score on the AFQT falls at or below the 30th percentile (category IV). See RADM(S) Joseph F. Kilkenny, USN, Commander, Navy Recruiting Command, “Navy Recruiting Command . . . Seeking the ‘Best’ and the ‘Brightest,’” presentation to the committee, February 13, 2007, Mil- lington, Tenn.   ee, for example, the Pew Hispanic Center tabulations of the 2005 American Community Survey. S Also see the U.S. Census Bureau, U.S. Census of Population, 1960, 1970, and 1990; available at <http://www.census.gov/population/www/socdemo/educ-attn.html>. Accessed on September 17, 2007.  Kristin Roberts. 2007. “Military Sees Parents as Big Recruiting Barrier,” Reuters, May 11.   ADM(S) Joseph F. Kilkenny, USN, Commander, Navy Recruiting Command, “Navy Recruiting R Command . . . Seeking the ‘Best’ and the ‘Brightest,’” presentation to the committee, February 13, 2007, Millington, Tenn. 

INTRODUCTION 19 These steps will clearly help the services meet their recruiting goals in the short term, but it is not at all clear that they will suffice in the longer term. Additional efforts to expand the pool of qualified and interested applicants may be needed to solve the longer-term problems of meeting challenging recruiting goals.10 Transformation Requires Investment in People The military’s weak record of confronting manpower and personnel issues head-on has been reinforced over the years by the conventional wisdom that manpower was relatively inexpensive compared with technology. Future capa- bilities and technology, however, will require individuals to master multiple skill sets and the naval forces to provide increased and continuing training and education for all hands. Recently Navy Secretary Donald Winter stated that “we are increasingly seeing that tactics, techniques and procedures—and the people who utilize them—are becoming more important than the technology itself.” He went on to say, “What will win this war [global war on terror, or GWOT] is the human factor.”11 To generate the enhanced manpower capability will require an investment in people, including recruitment, training, education, retention, and separation of appropriate individuals. Human-systems integration, the careful design of man- machine (technology) systems, will also be increasingly important for ensuring successful human performance. Transformation is characterized by both techni- cal and procedural innovation. To master the capabilities necessary to effectively implement transformation will almost certainly require most personnel to master several skill sets. Such mastery will require ongoing training and education throughout a service member’s entire career. An example of the need for continuing education is the CMC initiative for the Center for Advanced Operational Cultural Learning (CAOCL) and the requirement for all career marines (enlisted before reaching the grade of E-7 and officers before reaching O-4) to gain operationally relevant regional, cultural, and language knowledge to allow them to plan and operate successfully in the joint and combined expeditionary environment in any region of the world.12 Such investments in training and education are costly, but they are necessary to ensure a force capable of meeting the challenges of the new missions. 10  ee S Section 9528 of the “No Child Left Behind” legislation, 115 Stat.1425 Public Law 107-110, January 8, 2002, 107th Congress, as an example of creating and retaining access for armed forces recruiters to high school juniors and seniors. 11  emarks by Donald C. Winter, Secretary of the Navy, Surface Navy Association National Sym- R posium, Crystal City, Va., January 9, 2007. 12  ol Otto J. Rutt, USMC, Senior Marine Advisor to the Defense Human Capital Strategy Program C Executive Officer (DHCS PEO), “21st Century Marine Corps,” presentation to the committee, January 23, 2007, Washington, D.C. 

20 MANPOWER AND PERSONNEL NEEDS FOR A TRANSFORMED NAVAL FORCE Young people with the learning abilities for multiple, complex tasks will be in great demand by all employers, military and civilian alike. Once highly trained, these sailors and marines will possess very marketable skills and be even more attractive to the civilian sector. It will require considerable effort for the naval forces to attract and retain the manpower required to carry out their missions. The Cost of Pay and Benefits Is Rising The new manpower needs come at a time when military pay and benefits consume about one-third of the DOD budget and place considerable pressure on accounts for acquisition and for operations and maintenance. The proportion of budgets devoted to military pay and benefits is substantially higher for the Marine Corps, both because that service is more people-intensive and because most of the Marine Corps’ aircraft, as well as the ships from which they operate, are purchased by the Navy. The Navy’s costs for military pay and benefits too will continue to rise even as the size of the force shrinks (Figure 1.2), fueled significantly by the rising cost of benefits for retirees. It is also apparent that, at least in the near term, naval manpower costs are likely to continue to rise more rapidly than the overall Department of the Navy budget for similar reasons—the rising cost of health care benefits and recent increases in both pay and fringe benefits. Pay & Allowances Health Care Accrual End Strength 390,000 30,000 28,000 380,000 26,000 370,000 Active-Duty End Strength 24,000 FY-13 22,000 FY-08 $29.8B 360,000 20,000 $25.6B 350,000 18,000 TY$(M) 16,000 +16.5% Growth 340,000 + 5.9 % Growth 14,000 330,000 12,000 10,000 320,000 8,000 6,000 310,000 4,000 300,000 2,000 - 290,000 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FIGURE 1.2  Changes in active-duty pay and allowances, health care accrual, and end strength with time indicate that Navy manpower costs are rising even as end strength falls. Cost figures are in current dollars, termed then-year (TY) dollars within DOD. SOURCE: fig 1-2 VADM John C. Harvey Jr., USN, Deputy Chief of Naval Operations for Manpower, Per- sonnel, Training, and Education and Chief of Naval Personnel, “Shaping the Force for the Future,” presentation to the committee, October 3, 2006, Washington, D.C. 

INTRODUCTION 21 By most measures the military compensation increases over the past 10 years have been generous, leading to an overall increase in cost per active-duty troop of 92 percent. Basic pay has grown nearly twice as rapidly as consumer inflation. Like most organizations that provide health care benefits, the military has expe- rienced rapidly increasing costs in those areas especially. Moreover, the costs of retiree medical benefits have grown even faster in recent years than those in the private sector because of major expansions in benefits and the shifting of costs from the private sector to the government. For example, Tricare for Life, granted by Congress through the National Defense Authorization Act of 2001, substantially increased the health care benefit for military retirees who have reached the age of 65 and are eligible for Medi- care. The Tricare benefit for retirees who have not yet reached Medicare age is also growing rapidly in cost. Its cost-sharing arrangement, which has not been adjusted since the mid-1990s, has become so much more generous relative to the beneficiaries’ other insurance choices that many in the retired population are shifting the costs of their health care from their postmilitary civilian employers to the government. Beyond Tricare for Life, Congress in recent years has granted several costly new benefits to the military, even though they were not requested or overtly sup- ported by the DOD or the military services (Table 1.2). The added benefits in fact went beyond the need and contributed to the Department of the Navy decision to request the voluntary separation incentive in order to induce some midcareer personnel to leave the service. TABLE 1.2  Benefits for Service Members, Families, and Retirees Added Since 1999 New Benefit History of Adoption Pay raises above the employment cost index Requested by chiefs of staff in autumn 1998 testimony; required by Congress for 2000 to 2006 Repeal of Military Retirement Reform Act (1986) Requested by chiefs of staff in autumn 1998, retirement provisions granted by Congress in National Defense Authorization Act of 2000 Tricare for Life Granted by Congress in National Defense Authorization Act of 2001, DOD role unclear Concurrent receipt of military retired pay and Granted by Congress in 2004 without DOD veterans’ disability compensation request Repeal of Social Security offset for surviving Granted by Congress without DOD request spouse of deceased military retiree Expanded Tricare for reservists Opposed by DOD, granted by Congress 

22 MANPOWER AND PERSONNEL NEEDS FOR A TRANSFORMED NAVAL FORCE Previous studies have shown that the most cost-effective ways to improve recruiting are to add recruiters and expand advertising.13 Enlistment bonuses are cost-effective in channeling recruits to specific occupations, but less so in increas- ing overall numbers. Recruitment and retention also respond to increases in basic pay. Yet the major beneficiaries of most of the recent changes have been the 15 percent of enlisted members and the 50 percent of officers who will retire after serving for 20 years or more, and the retirees themselves. Projections indicate that the costs of benefits for retirees will continue to climb.14 These challenges will place a strain on all of the recruited and retained force. People who volunteer for duty do so for their own mix of reasons. Satisfying career tracks and challenging assignments and experiences can be important fac- tors, but studies show that compensation is a crucial motivator of decisions to join, stay, work hard, and endure difficult assignments. Basic pay is particularly influential because it makes up the largest share of compensation. Because it applies across the board to all service members, how- ever, it is also very costly and generally not useful as a force management tool. In fact, increasing basic pay more rapidly than civilian wages rise can induce many individuals to remain in service longer than force managers would like. Moreover, basic pay is set by Congress and is uniform across all military departments. The individual military departments have greater flexibility when it comes to bonuses and special and incentive pays, but those pays together amount to less than 10 percent of all immediate cash pay. The Congress, the DOD, and the White House control the remaining 90 percent. The Congress has exerted substantial control over many of the compensation changes in the past decade and is likely to continue doing so in the future. In an effort to meet the new mission demands and save money, the services have transferred many tasks from active-duty personnel to civilians. The Marine Corps plans to convert 3,404 military billets to civilian billets through FY 2009 and return the “saved” marines to the operating forces.15 13  ongressional Budget Office, 2006, Recruiting, Retention, and Future Levels of Military Person- C nel, Washington, D.C., October; James N. Dertouzos and Steven Garber, 2006, Human Resource Management and Army Recruiting: Analyses of Policy Options, RAND Corporation, Santa Monica, Calif. 14  ee Congressional Budget Office, 2007, The Long-Term Implications of Current Defense Plans, S Detailed Update For Fiscal Year 2007, Washington, D.C., April, text adjacent to Figure 2.3 (see <http://www.cbo.gov/ftpdocs/80xx/doc8018/04-20-Defense.pdf>. Accessed on September 17, 2007.). Although pensions for military personnel are paid directly by the Treasury rather than by the Depart- ment of Defense, DOD budgets since 1986 have recognized the future costs of retired pay for service members currently in the force through an accrual account. In addition, since the inception of Tricare for Life, the future costs of that benefit for members currently in the force have been recognized through accrual accounting. 15  Col Otto J. Rutt, USMC, Senior Marine Advisor to the Defense Human Capital Strategy Program Executive Officer (DHCS PEO), “The 21st Century Marine Corps,” presentation to the committee, January 23, 2007, Washington, D.C. 

INTRODUCTION 23 Allowing private-sector firms to compete for work done by the government can save money. A Center for Naval Analyses examination of DOD’s 2,131 public- private competitions between 1978 and 1994 found that the competitions saved an average of about 30 percent.16 Such savings may not be achievable for more than a few years and may not be achievable at all when work is complex or difficult to describe.17 Moreover, while civilians can be deployed to war zones, they are not subject to many of the controls applied to the active force and they can quit! 18 Nevertheless, the committee got the impression in its discussions with the military leadership that in the Pentagon the current thinking is that military personnel and civilian contractors are often viewed as interchangeable. Work Pace and Unexpected Duties Are Taking a Toll Morale in the service is always a concern and more so with the war in Iraq stretching out. Indeed, the committee believed it sensed early signs of problems during a brief site visit to a few ships at port in Norfolk, Virginia. Appreciating that the committee’s site visit was very limited and took place in a port setting— which is a particularly busy time for sailors, with multiple competing interests onshore—committee members were struck by the level of voiced dissatisfac- tion with several aspects of Navy service, including long hours, lack of training opportunities, inflexible career paths, and individual augmentee (IA) assign- ments. The committee was particularly surprised at the level of feeling because several meeting presenters assured the committee that end-strength reductions were accompanied by force-shaping procedures and technologies that eliminated major manning problems. The committee’s sense was that the cumulative effect of working long days and performing duties that were unexpected or not part of their job descriptions were taking some toll. The most pronounced example of an unexpected duty was the growing par- ticipation of sailors in infantry and infantry support roles in the wars in Iraq and Afghanistan. The Navy has tasked sea, air, and land teams (SEALs), Seabees, medical personnel, chaplains, and EOD (explosive ordnance disposal) personnel, both in units and as IAs for duty in Afghanistan and Iraq.19 In February 2007 there 16  . R Derek Trunkey, Robert P. Trost, and Christopher M. Snyder. 1996. Analysis of the DOD’s Commercial Activities Program, Center for Naval Analyses, Alexandria, Va., December. 17  indy Williams, ed. 2001. “Holding the Line on Infrastructure Spending,” Holding the Line: C U.S. Defense Alternatives for the Early 21st Century, The MIT Press, Cambridge, Mass., Chapter 3, pp. 55-77. 18  he National Defense Authorization Act for Fiscal Year 2007, Pub. L. No. 109-364, Sec. 552 T substantially tightened the rules under which government contractor employees operate when they serve with U.S. military forces in a declared war or a contingency operation, by placing them under the Uniform Code of Military Justice. 19  DR Daniel Shaw, USN, Individual Augmentation, U.S. Joint Forces Command, “United States C Joint Forces Command: Individual Augmentation Requirements,” presentation to the committee, December 13, 2006, Norfolk, Va. 

24 MANPOWER AND PERSONNEL NEEDS FOR A TRANSFORMED NAVAL FORCE were over 13,000 sailors on the ground in Iraq and Afghanistan—more than were afloat in the Persian Gulf. Other issues that the committee noted were overwork due to people shortages (20-hour days), seniors having to perform the work of sub- ordinates because of undermanning, and inadequate time to complete their own assigned tasks. Sailors also felt that their ability to train lower-ranked individuals to do their jobs well was limited by their own work schedules.20 The “In Lieu of” and Individual Augmentation programs, whereby sailors are assigned to fill shortfalls in numbers and skills in Army or Marine Corps ground units, is causing personnel turbulence and, at times, seems to hurt morale while creating shortfalls in traditional billets. The sense the committee gained during the Norfolk ship visits was that people join the Navy in part for the seagoing lifestyle and resent being “dirt soldiers.” Because of the large number of sailors deployed on the ground in Iraq and Afghanistan, the morale problem created by these programs is not a trivial issue. For example, 300 sailors trained in electronic warfare (EW) spearhead the anti-improvised explosive device (anti-IED) effort in Iraq. The other services have not kept up their EW capabilities and therefore require assistance.21 At a minimum, the Navy should inform recruits of the possibility that they can be assigned duty as individual augmentees. Whether the Navy can do much more to make such duties palatable is unknown. The new Navy Expeditionary Combat Command may help, in that people in it will expect to serve in this way. Based on the presentations and conversations with several of the sailors with whom it talked, the committee believes that the Navy’s overall strategy of more automation and system reliability to reduce manual workloads is being used to rationalize the current short-staffing, despite the fact that the new automation and better equipment are not yet in place. Personnel reductions rationalized by reduced workloads due to information technology (IT) enhancements appear to have been taken on some existing ships prior to the full realization of workload reductions. As manpower costs rise faster than the budget and IT becomes more reliable, versatile, and less expensive, future ships are being designed and legacy ships are being refitted with improved IT suites that will reduce some manpower requirements. It is important, however, that IT-associated manpower savings be realized before staffing reductions are made. More generally, care must be taken not to overestimate the manpower savings or the rapidity with which they will be achieved. The committee believes that the issues noted above reflect work stress. The problems sensed by the committee were reflected more by enlisted members— particularly the senior enlisted—and by junior rather than senior officers. 20  he committee visited the Norfolk piers on December 13, 2006, and held discussions with random- T ly chosen Navy crew members aboard the USS Norfolk (SSN 714) and the USS Wasp (LHD-1). 21  DR Daniel Shaw, USN, Individual Augmentation, U.S. Joint Forces Command, “United States C Joint Forces Command: Individual Augmentation Requirements,” presentation to the committee, December 13, 2006, Norfolk, Va. 

INTRODUCTION 25 Some sailors expressed resentment that the retirement system “locked them in” to a poor career option. They projected a corresponding mind-set to leave the Navy as soon as it becomes financially feasible. Planned Draw-Downs and New Ship Designs Will Exacerbate the Problems One partial explanation for the discrepancy in perceptions regarding the ade- quacy of staffing levels the committee detected between formal presentations and informal discussions is that the briefers were using data from the new Smart Ship construct and therefore assumed that ships would require less work and therefore fewer people than are needed today. Unfortunately if today’s sailors already feel overburdened, then tomorrow’s Smart Ship manning levels and smaller crews are likely to be hard on the multitasked sailors of the future. A top-down look at plans for bringing future ships and aircraft online as they relate to productivity enhance- ment, including assessments of skill mix adjustments, out-of-norm operations, and lead times for preparing to use the new capabilities, should be considered. The fact that the manpower draw-down is to continue through 2013 adds urgency to the examination of these future productivity issues.22 A pressing reason to examine manpower productivity is the near-term addi- tion of new ship designs and retrofitting plans for the legacy fleet. The littoral combat ship (LCS) prototype is presently in sea testing, with delivery of the first operational ships expected in late 2007. The LCS is designed to support three operational modules: antisubmarine warfare, mine warfare, and antisurface war- fare against small missile-armed vessels. Basic manning to operate the ship is 40 sailors, and the ship must have its full complement to get underway. The 40-sailor crews will initially consist of experienced, second-term enlistees, called “hybrid sailors,” who are capable of handling all of the duties of multiple specialties. The crew for a module will not exceed 35, and there will be only 75 bunks on the ship. Thus, there will be no room for trainees or redundancy. In the past the Navy would design a ship, assemble a crew, train to a certain level, put to sea, and then come to grips with things that did not work as planned, often by adding more people. With the planned new ships, the Navy cannot afford the luxury of shakedown at sea. Crews must be qualified upon arrival; the Navy calls them “all-up rounds,” a term usually used to describe fully assembled ordnance. The need for experienced crew members will affect both manpower planning and promotion schemes. Currently LCS crews are being handpicked, but there is concern about where all those experienced sailors will come from in the future, 22VADM John C. Harvey Jr., USN, Deputy Chief of Naval Operations for Manpower, Personnel,   Training, and Education and Chief of Naval Personnel, “Shaping the Force for the Future,” presenta- tion to the committee, October 3, 2006, Washington, D.C. 

26 MANPOWER AND PERSONNEL NEEDS FOR A TRANSFORMED NAVAL FORCE as the Navy expands the LCS fleet to 55 ships. The concern is compounded by the fact that there is no plan to use civilians on the LCS. Future ship support plans also have profound implications for Navy man- power and personnel. The planned ships will no longer head to sea as self-suf- ficient units. Instead new ships will be dependent on significant shore-based logistic and electronic support throughout their missions. This shift of work from sea to shore will complicate career management. It may require new ranks and classifications, expansion in some ranks and contraction of others. The changes are likely to affect enlisted personnel more than officers. The problem will be compounded by similar manning changes projected for all future classes of ships. A legacy cruiser can have a crew of up to 405, whereas the next generation is to have a crew of about 110. A legacy guided missile destroyer (DDG) can have a manning requirement of up to about 370, whereas the next-generation destroyer (DDX) is projected not to exceed 175. Current projec- tions also call for a crew reduction of 1,100 from the current total of approximately 6,000 for future aircraft carriers. Such a reduction has ramifications both for the ship’s crew and the air wing. There is no denying that the Navy is going to become increasingly dependent on more senior, highly trained people, skilled in multiple areas—just the type also coveted by private industry. “Cherry picking” such a large number of crews in the future seems impossible unless the Navy’s overall workforce is significantly more capable than today’s. The manpower challenges are heightened by the fact that, for example, more than 50 percent of the legacy DDG ships are projected to be in service until at least 2030.23 As overall manpower is reduced and crew configurations change, preserving the ability to surge in time of threat will be crucial. Chapter 2 discusses in greater detail the staffing needs for the future Navy and Marine Corps. Marine Corps Mission and Plans In past years the Marine Corps has been quick to adapt to changes that improve combat capability. The Corps’ establishment of air-ground task forces, its evolution of doctrine for amphibious operations and close air support, and its use of vertical lift and jump jets are all examples of fundamental innovation. The Marine Corps differs from the Navy, however, in the degree to which it expects to hold to tradition even as it transforms to meet future challenges and capitalize on technological opportunity. Marine Corps Commandant General Conway in his guidance states that “we must remain faithful to our enduring mission—to be where our country needs us—when she needs us, and to prevail over what ever challenges we face.” He sees 23  onald O’Rourke. 2005. Navy DD(X) and CG(X) Programs: Background and Issues for Congress, R Congressional Research Service, Washington, D.C. 

INTRODUCTION 27 marines as “Soldiers of the Sea” and the Marine Corps as an amphibious combat force, operating from a sea base, able to respond rapidly and decisively.24 Under current plans the Marine Corps will continue to be a young force, with every marine trained as a rifleman regardless of his or her future military occu- pational specialty. All marines will have the same beginnings: enlisted personnel will all start with the yellow footprints at marine boot camp; officers will all pass through the basic school. All marines will become qualified with their service rifles and acquire competence in basic infantry skills. Through these “touchstone” activities, the Marine Corps expects to keep one foot rooted in the past, while leaning forward with the other foot as it prepares for the future. The Commandant has directed that the Marine Corps will “invest in science and technology to provide the ‘seed corn’ for future capabilities and prevent technological surprise.” The Marine Corps, he continues, must look beyond the horizon, posture for the future, and develop operating concepts that meet the needs of combatant commanders.25 The President’s Budget for Fiscal Year 2008 calls for substantial increases in the size of the Army and Marine Corps. For the Marine Corps, authorized end strength is expected to increase by about 5,000 troops per year through FY 2011, to an eventual end strength of 202,000 troops. The Marine Corps plans to devote about 75 percent of this increase to the operating forces.26 Some of these increases will be used to fill gaps in current capabilities; the remainder will go toward new transformational capabilities. Specifically, the Marine Corps will increase staffing for intelligence, reconnais- sance, and unmanned aerial vehicle activities; expand civil affairs, information operations, and regional expertise; and increase capacity for communications and coalition liaison. The Marine Corps is also adapting organizationally to the demands of new operations. During February 2006, the service established a Marine Special Operations Forces and Headquarters, a component of the U.S. Special Operations Command. The new component will be compatible with and deployed by Com- mander, U.S. Special Operations Command.27 The Marine Corps has continued to develop transformational concepts of operations and capabilities. Current plans call for expanding seabasing to get 24  en G James T. Conway, USMC, Commandant of the Marine Corps. 2006. “Commandant’s Plan- ning Guide,” Headquarters, U.S. Marine Corps, Washington, D.C., pp. 1, 6. 25  en James T. Conway, USMC, Commandant of the Marine Corps. 2006. “Commandant’s Plan- G ning Guide,” Headquarters, U.S. Marine Corps, Washington, D.C., pp. 8, 9. 26  ol Otto J. Rutt, USMC, Senior Marine Advisor to the Defense Human Capital Strategy Program C Executive Officer (DHCS PEO), “The 21st Century Marine Corps,” presentation to the committee, January 23, 2007, Washington D.C. 27  ol Otto J. Rutt, USMC, Senior Marine Advisor to the Defense Human Capital Strategy Program C Executive Officer (DHCS PEO), “The 21st Century Marine Corps,” presentation to the committee, January 23, 2007, Washington D.C. 

28 MANPOWER AND PERSONNEL NEEDS FOR A TRANSFORMED NAVAL FORCE marines to distant fights more rapidly, even when adversaries attempt to deny access. Leaders envision seabasing as “a scalable sea-based ‘system of systems’ that provides operational access and generates strategic speed.”28 Another area of innovation for the Marine Corps is distributed operations. Leaders hope that distributed operations will enable even small, physically dis- persed units to gain the advantage in time and space by combining information and integrating their actions.29 A crucial concept for the Marine Corps in recent years is that of the “strategic corporal.” Coined by former Commandant of the Marine Corps General Charles C. Krulak in 1999, the term refers to a corporal who is confident in making “well reasoned and independent decisions under extreme stress.”30 In the Marine Corps of the future, even infantry squad leaders are expected to interact confidently and respectfully with foreign populations, understand native customs, and make rapid decisions that reflect credit on their units, the Marine Corps, and the United States. The expectation that most corporals will be strategic corporals has implications for the quality of enlistees as well as their training and career progression. A related change for the Marine Corps is the transformation in the growing importance it attaches to understanding foreign cultures. The Marine Corps has expanded its Foreign Area Officer and Regional Area Officer (RAO) programs, increasing both the number of officer billets and the areas covered. There are new billets for active-duty civil affairs planners in all major operating headquarters. In addition, the operating forces now include foreign military training units and active-duty psychological operation (PSYOP) teams. The Marine Corps has estab- lished the Center for Advanced Operational Cultural Learning (CAOCL), whose mission is to “ensure marines are equipped with operationally relevant regional, cultural and language knowledge to allow them to plan and operate successfully in the joint and combined environment in any region of the world.”31 This program also requires marines to achieve various levels of foreign language proficiency. 28  ol C Otto J. Rutt, USMC, Senior Marine Advisor to the Defense Human Capital Strategy Program Executive Officer (DHCS PEO), “The 21st Century Marine Corps,” presentation to the committee, January 23, 2007, Washington D.C. 29  tGen James F. Amos, USMC, Deputy Commandant for Combat Development and Integration, L Commanding General, Marine Corps Combat Development Command. 2007. “Marine Corps Opera- tions in Complex and Distributed Environments,” Headquarters, U.S. Marine Corps, Washington, D.C., January 11. 30  en Charles C. Krulak, USMC, 31st Commandant of the Marine Corps. 1999. “The Strategic G Corporal: Leadership in the Three Block War,” Marines Magazine, January, p. 3. 31  ol Otto J. Rutt, USMC, Senior Marine Advisor to the Defense Human Capital Strategy Program C Executive Officer (DHCS PEO), “The 21st Century Marine Corps,” presentation to the committee, January 23, 2007, Washington, D.C. 

INTRODUCTION 29 The Way Ahead Today the naval forces are faced with significant new challenges. Future per- sonnel will all be required to possess a basic level of IT expertise and skills, as dis- cussed in Chapter 2. Personnel with these marketable skills may demand “unequal incentives” to keep them in the services. Uneven promotion opportunities, lateral transfers, incentives to separate from service before becoming eligible to retire, and other “force shaping tools” will be required to meet these challenges. There have been numerous studies carried out by expert panels, both within the DOD and by outside experts, that have analyzed all facets of the manpower issues. These studies have generated meaningful recommendations, many rein- forcing each other from study to study. Unfortunately, however, they have had, for all practical purposes, little effect. Chapter 3 examines and assesses some of these studies and their recommendations. Navy and Marine Corps requirements for a transformed force demand new manpower and personnel policies that are more flexible and adaptive. Research tools ranging from surveys and analyses of administrative data to pilot demonstra- tions and experimentation have always been key tools in formulating policies that support military manpower transformation as discussed in Chapter 4. Chapter 5 identifies several categories of obstacles to change. It then matches several broad categories of manpower and personnel reform to those categories of obstacles. The result is an illustrative mapping of the transformation landscape for naval manpower and personnel policy. Chapter 5 then ends with findings and recommendations aimed at improving the effectiveness of the Department of the Navy in managing and implementing such changes.