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[H.A.S.C. No. 109–20]









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MARCH 16, 2005




JOHN M. McHUGH, New York, Chairman
JO ANN DAVIS, Virginia
JOHN KLINE, Minnesota
JIM SAXTON, New Jersey
WALTER B. JONES, North Carolina
JIM RYUN, Kansas
ROBIN HAYES, North Carolina

VIC SNYDER, Arkansas
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MARTY MEEHAN, Massachusetts
SUSAN A. DAVIS, California
MARK UDALL, Colorado

Michael Higgins, Professional Staff Member
Debra Wada, Professional Staff Member
Jennifer Guy, Staff Assistant




    Wednesday, March 16, 2005, Fiscal Year 2006 National Defense Authorization Act—Recruiting, Retention and Military Personnel Policy, and Benefits and Compensation Overview


    Wednesday, March 16, 2005
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    McHugh, Hon. John M., a Representative from New York, Chairman, Subcommittee on Military Personnel

    Snyder, Hon. Vic, a Representative from Arkansas, Ranking Member, Subcommittee on Military Personnel


    Abell, Hon. Charles S., Principal Deputy Under Secretary of Defense, Personnel and Readiness

    Brady, Lt. Gen. Roger A., Deputy Chief of Staff for Personnel, U.S. Air Force

    Hagenbeck, Lt. Gen. Franklin L., Deputy Chief of Staff for Personnel, G–1, U.S. Army

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    Hoewing, Vice Adm. Gerald L., Chief of Naval Personnel, U.S. Navy

    Osman, Lt. Gen. H.P., Deputy Commandant for Manpower and Reserve Affairs, U.S. Marine Corps

[The Prepared Statements can be viewed in the hard copy.]

Abell, Hon. Charles S.

Barnes, Master Chief Joseph L., (Ret.), National Executive Secretary, Fleet Reserve Association, U.S. Navy

Barnes, Master Chief Joseph L., (Ret.), Fleet Reserve Association, Co-Chairman, Personnel, Compensation and Commissaries Committee, U.S. Navy joint with Erin M. Harting, Enlisted Association of the National Guard of the United States, Co-Chairman, Guard and Reserve Committee; Michael Jordan, Col., (Ret.), Military Officers Association of America, Co-Chairman, Retirement Committee, U.S. Air Force; and Joyce Wessel Raezer, National Military Family Association, Co-Chairman, Personnel, Compensation and Commissaries Committee

Brady, Lt. Gen. Roger A.

Eakle, Brig. Gen. Jan D. ''Denny'', Deputy Director, Defense Finance and Accounting Service

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Hagenbeck, Lt. Gen. Franklin L.

Hoewing, Vice Adm. Gerald L.

Lokovic, Command Sgt. James E., (Ret.), Deputy Executive Director and Director, Military and Government Relations, Air Force Sergeants Association

McHugh, Hon. John M.

McIntosh, Maj. Gen. Robert A., (Ret.), Executive Director, Reserve Officers Association of the United States

Osman, Lt. Gen. H.P.

Snyder, Dr. Vic

Stewart, Derek B., Director Defense Capabilities and Management

[There were no Documents submitted.]

[The Questions and Answers can be viewed in the hard copy.]

Mr. McHugh
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House of Representatives,
Committee on Armed Services,
Military Personnel Subcommittee,
Washington, DC, Thursday, March 16, 2005.

    The subcommittee met, pursuant to call, at 2:02 p.m., in room 2212, Rayburn House Office Building, Hon. John McHugh (chairman of the subcommittee) presiding.


    Mr. MCHUGH. The hearing will come to order.

    There is good news and there is bad news. The bad news is for the first panel: The first panel is that we expect five votes which, based on the timing, will probably consume an hour and could happen in about 15 minutes. Dependent upon your agreement, we would hope you could stick with us.

    The good news is for the second panel. As much as we value the perspective and the insight, and it is very, very important to us, I think it would be, and I should say the distinguished ranking member, Dr. Snyder, agrees in this judgment, unfair to the second panel to ask them to stay for the extended period of time that it would likely require.
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    So, unless the second panel charges to the front of the room and insists that they stay for about three or four hours before they begin to appear, the second panel would be, with our greatest words of appreciation, dismissed. I am waiting to hear those words of protest from the second panel. Thank you.

    Dr. SNYDER. Mr. Chairman, would it be fair to place all their written statements in the committee record today?

    [The information referred to can be viewed in the hard copy.]

    Mr. MCHUGH. Absolutely. Without objection, that certainly will be done. And by the way, to the second panel, as is our custom, we have a—and I would say this to the Defense Finance Accounting Services (DFAS) particularly, we have a list of written questions that we would submit for the record to you. And we would deeply appreciate a timely response on that so we can flesh out the record. But the gentleman, as always, raises a good point. And certainly we can embody their testimony as we have received it into the record.

    Now, having provided the panel that appears second with that chance to protest, I guess it is only fair to present the first panel, who is seated and looking so sharp, the chance to protest. We understand that an imposition, an interlude of an hour is significant. Does that present any general problems for you folks? And just remember, CSPAN is here and you are on camera.

    Go ahead. [Laughter.]
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    Well, we do appreciate it, and we recognize the difficulty. But democracy will be heard. Let me just begin by rendering the opening statement, and hopefully we can get through that at least before the votes occur.

    Today the subcommittee turns its attention to the two building blocks of our military forces, recruiting and retention, and a general review of personnel policies, benefits and compensation issues.

    It will come as no surprise to close observers of this subcommittee that we continue to be very concerned about recruiting and retention programs. This subcommittee has closely monitored the ups and downs of recruiting and retention trends for many years, and has been quick to sound the alarm when challenges came into view.

    The need to sound the alarm this year may be greater than in any year in recent memory. While recruiting and retention is never an easy task, the reemergence of the civilian job market and the stresses of war-time operations on the force may well forge a recruiting and retention environment unequaled over the next several years. And certainly the least favorable of the past 20 years.

    One only has to look at the performance of the economy to understand how it shapes the perspective of America's youth about military service. For example, available jobs increased by 146,000 in January and 262,000 in February.

    Since the most recent low-point in payroll employment during May 2003, the number of jobs has increased by 2.9 million and is now just above the employment peak reached in February of 2001.
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    Similarly, the unemployment rate remained relatively low, at 5.4 percent in February of 2005, well below the 6.3 percent high point in June of 2003.

    The effect of the war on recruiting can best be summarized by a press quote attributed to one of our witnesses today, General Hagenbeck, the Army's personnel chief. The General described this increasingly common reaction of parents of potential recruits when he said, ''Well, let's wait and see how this thing settles out in Iraq.''

    From what the subcommittee understands, recruiters from all of the services spend more time with parents trying to overcome their concerns than with recruit prospects that they are trying to enlist.

    We have already seen evidence that notwithstanding the addition of substantial resources, we are experiencing great stress in recruiting and not inconsequential retention problems.

    For example, five of the six reserve components have failed to achieve their recruiting goals through January of 2005. Both the active Marine Corps and the Army are underperforming against their objectives for filling their delayed entry programs. And the press is reporting that the Army has failed to meet its accession requirements for February by 1,900 recruits, 27 percent below its objective of 7,050.

    The active Army and Air Force are not achieving their objectives for retaining initial term and mid-career enlisted members. And nearly every day, I am bombarded by press reports that retention in the reserve components is on the edge of disaster.
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    We need to understand the perspective of our witnesses about their preparation to meet the demands of this challenging period. I fear that the risk to recruiting and retention during this period have been underestimated and that the very tight fiscal year 2006 budget will not provide the resources necessary to battle successfully through the challenges ahead.

    I have the absolute greatest respect and admiration for all young men and women who step forward out of patriotism and a personal call to serve. But at the end of the day, the all-volunteer force is sustained by the effective and timely use of resources in the marketplace.

    Today we need to reassure ourselves that those vital resources are in place.

    I have two written statements. I know I have three even though it says two written statements in addition to our witnesses here today. And without objection I move that the additional written statements of the Fleet Reserve Association, the Reserve Association of the United States, and the Air Force Sergeants Association be entered in the record.

    [The information referred to can be viewed in the hard copy.]

    Without objection, so ordered.

    With that, I would like to yield to my partner in this, and certainly one of the leading lights on these issues and all personnel issues, the gentleman from Arkansas, Dr. Snyder.
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    [The prepared statement of Mr. McHugh can be viewed in the hard copy.]


    Dr. SNYDER. Thank you, Mr. Chairman.

    But as usual, I think you have summarized the problem well, and I think we need to get on with the hearing, because we do have the votes. And I am prepared to start hearing our witnesses. Thank you all for being here. And thank all of you behind them for being here today, too.

    [The prepared statement of Dr. Snyder can be viewed in the hard copy.]

    Mr. MCHUGH. I thank the gentleman. His brevity is eloquence in motion.

    I would like to welcome our first panel. Some are old friends. Others are not testifying for the first time, but certainly for the second time.

    And with that, let me introduce them, I believe in the order in which they have been seated, I hope: the Honorable Charles S. Abell, Principal Deputy Undersecretary of Defense for Personnel and Readiness.
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    Mr. Secretary, welcome.

    Lieutenant General F.L. Hagenbeck, Deputy Chief of Staff for Personnel, G–1, Department of the Army.

    Buster, thanks for being with us again.

    Vice Admiral Gerald Hoewing, Chief of Naval Personnel, Department of the Navy.

    Admiral, thanks, as always, for being with us.

    Lieutenant General Roger A. Brady, Deputy Chief of Staff for Personnel, Department of the Air Force.

    General, thanks for being with us again.

    And Lieutenant General H.P. Osman, Deputy Commandant for Manpower and Reserve Affairs, United States Marine Corps. Thanks so much for being with us.

    Gentlemen, thank you so much, as I said, for being with us. I am following the example set by the distinguished ranking member. Let me just turn the microphone and our attention over to you.

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    Secretary Abell, thanks for being with us, sir.


    Secretary ABELL. Thank you, Mr. Chairman. And I appreciate you bringing the focus today on recruiting and retention.

    Both of these are extremely important issues. Each service faces different challenges and uses slightly different approaches. As you know, the recruiting population is common, but individual service strategies and approaches are necessarily different and each is largely successful for that particular service.

    What do we know about the population of young men and women from which we recruit our service members? They are smart. They are patriotic. They are willing to serve. They listen to their influences, these are coaches and counselors and parents and aunts and uncles who may have served. And these influences, as you have quoted from General Hagenbeck, are urging them to be more cautious.

    The other thing we know about this population is that they value money now. They like lump sums over protracted payments. They like present compensation over deferred compensation.

    Each of the personnel chiefs will address the specifics for their service. The Office of the Secretary of Defense's (OSD) role is to provide oversight, guidance, resources, sometimes a nudge in one direction or another.
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    We are developing leading edge indicators to help us monitor both the recruiting and retention vice, the more traditional historical indicators. Challenging times require extraordinary effort and innovative approaches. Very few in the Department work harder than the recruiters on the street out there finding young men and women and asking them to volunteer to join us.

    And you will hear about some of the innovative approaches and extraordinary effort later this afternoon, I am sure.

    Retention has been good, I believe. Once the members join, they are staying in large numbers despite the tempo and the challenges that we offer them. Retention figures indicate, to me at least, that we are meeting the compensation expectations of the force. But as always we could use some tweaks on some of those.

    We need some force-shaping authorities to enable us to retain the right skill mix, the right mix of experience, and to develop the force we need to meet the transformational goals of the future for each service.

    In our legislative request, you will see us ask for some authority for lump-sum buyouts for those who are not yet eligible to retire and annuities to selected personnel, along with a modest transition benefit, again for those who may not be eligible to retire yet, authority to set some higher tenure limits for certain officer skills—this would be less than the mandatory retirement limit, and selected early retirement authority, similar to what we had during the drawdown.
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    It may seem counterintuitive that we would ask for these authorities at the same time we are struggling to recruit and retain, but this is force shaping, it is not about getting rid of folks, it is about keeping the right folks and being able to get them in the right skill and experience mix.

    Throughout this whole process, of course, of force shaping, we will look for things that help us get volunteers to do what we need to do, but the authorities would move along a continuum from fully voluntary to perhaps more directed, only as a last resort.

    We have undertaken an intensive effort to manage the process and enhance the rehabilitation of those severely injured among our services. I know many of you have visited with our severely injured service men and women.

    My expectation is that your experience was similar to mine: When you go there and hope to lift their spirits, what I find is that they in fact lift my spirits.

    Each service has a unique program to take care of their own. We are not advocating a single central program. We cherish the service linkage. OSD does have a joint operations center that serves as a point of facilitation. It has military services, it has Veteran's Affairs (VA), the Department of Labor, has non-profit organizations, perfect partners, open 24 hours a day, 7 days a week, to help servicemembers and their families.

    And it uses the case-management philosophy to work their issues until they are satisfied.
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    Mr. Chairman, as you pointed out, there are many issues to talk about, a limited amount of time. And I want to afford my colleagues the opportunity to talk about their programs.

    But before I close, I would like to take a minute and offer a tribute to and recognize the contributions of one who served us both so well. Ms. Tillie Fowler served on your committee, and I have heard you and a number of your colleagues characterize her as a valued member of this committee. She was also a valued member of our team. She served the Secretary of Defense and the Department of Defense nobly, capably and willingly. She accepted the hard tasks. She provided us thoughtful and insightful advice, always candid, never pulled a punch. She was a friend and a colleague and a dedicated public servant. And we will miss her greatly. Thank you, Mr. Chairman.

    [The prepared statement of Secretary Abell can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you, Mr. Secretary. And thank you particularly for your gracious comments about Tillie Fowler. I think we have all served with her and knew her personally. And I could not agree more with your assessment. And I think Tillie and I disagreed on one issue; that was term limits. And yet she stepped forward and kept true to her opinion and left this Congress. And it was a sad day for those of us who were left behind. But what a special lady she was. And how much she cared for the men and women in uniform in this country. And our sympathies go out to Buck, her husband, and family. And we miss her now as a human and as a dear friend.
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    I think, General Hagenbeck, if you can compress your testimony in about four minutes, five minutes, we can get to you before we have to go vote.

    We challenge you, sir.


    General HAGENBECK. I will talk quickly, Mr. Chairman. Thank you and Dr. Snyder for having me here again this afternoon.

    The United States Army owes its success to the all-volunteer force, and it provides the high quality, versatile young Americans that we depend on to serve as our soldiers.

    It is the first time in our history in which the Nation has tested the all-volunteer force during a prolonged war. Determining what kind of all-volunteer force we need and developing the environment, the compensation, education and other incentives to keep it appropriately manned may be our greatest strategic challenge in the Army.

    The soldier is the centerpiece of all that the Army is and will be doing. For those brave men and women, I want to express my sincere gratitude for their continued and committed support. To win this war, we must recruit and maintain quality-force soldiers who have a warrior ethos ingrained in their character. Last year, the active and reserve met the recruiting goals. The National Guard missed their goal, as you mentioned earlier.
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    The global war on terror, lower propensity to serve, and negative feedback from influencers, coupled with the improving economy and lower unemployment, are also presenting a very challenging recruiting environment, again, as you stated in your opening statement.

    Recruiting incentives, such as the enlisted bonus program, the Army college fund program, loan repayment program and national call to service, combined with an increase in recruiters, incentives and advertising, will help to improve our ability to make our annual mission.

    In the previous year, the active Army achieved all retention goals, a result that can be directly attributed to the Army's selective reenlistment bonus program. The Reserve and the National Guard nearly achieved their overall retention objectives, both finishing at 99 percent of the yearly mission goals.

    An important component of the Army's ability to retain quality soldiers is the selective reenlistment bonus. The bonus is offered to all soldiers currently deployed to Afghanistan, Iraq and Kuwait, and has been increased to a maximum of $15,000. And it has been well-received by our soldiers.

    Congress supported needed pay raises and increases in special pays, such as hostile fire pay, family separation pay and critical skills retention bonus. These increases significantly contribute to the soldier's overall well-being.

    With your support, the Army has the flexibility to encourage soldiers to serve in difficult-to-fill positions and less desirable assignments, as well as retaining soldiers who hold critical, high demand skills. These tools ultimately provide the Army the ability to continue to fight the war on terrorism and recruit and retain this quality force.
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    With your continued support, we will be able to compensate soldiers and their families, wherever they served and under all conditions: healthy, injured, returned to duty, and for those soldiers who pay the ultimate price for freedom. We appreciate all your efforts on behalf of our soldiers. Although we have been very successful in the last few years in recruiting and maintaining quality soldiers to achieve the required temporary increase, the Army will continue to need broad incentive packages to shape the force. And we need a renewed recognition that raising and maintaining an army is a shared responsibility among all Americans. Once again, thank you for the opportunity to appear before you today, and I look forward to your questions.

    [The prepared statement of General Hagenbeck can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you very much, General.

    Admiral, we are going to stop there. I hope that does not disrupt your day too much. You can all go out and play a round of golf. But we will be back as soon as we possibly can. Thank you for your concern. And the subcommittee will stand in recess until the end of the votes, at which time we will reconvene.


    Mr. MCHUGH. We will reconvene the hearing again.

    Thank you for your patience, gentlemen, I do appreciate it. Let's get right back to the action here.
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    Admiral Hoewing.


    Admiral HOEWING. Thank you, Mr. Chairman, Dr. Snyder, and distinguished members of the subcommittee. Thanks, once again, for the opportunity to come and appear before you today.

    On behalf of the men and women of the United States Navy, I would like to express our gratitude for your continued support of the programs and initiatives that provide our sailors with the quality of service, their growth and development opportunities and ever-increasing opportunities in the Navy.

    From record high retention and recruiting to enhanced compensation and quality of service, our fleet is the most capable and talented that we have ever seen. And it is a fleet that is battle-tested and sharp.

    Our Navy's performance in Operations Enduring Freedom and Iraqi Freedom demonstrate more than just combat excellence. It reaffirms the single greatest advantage that we hold over our potential adversary, the genius of our people.

    I have visited them in the fleet, and I can tell you that they are proud. They want to serve. And the tone out there has never been better.
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    That is a direct result of your support. But it also reflects innovative organizational and operational changes, such as technology investments that have improved and will continue to improve the way we get work done.

    Through our fleet response plan, we can, like never before, support the national security strategy with persistent, rotational and surge-capable naval capabilities, capabilities that are enhanced by innovative new manning practices derived from fleet experimentation, such as optimal manning and our sea-swap concept. We are investing heavily in technology, designing affordable next generation ships and aircraft, engineered with systems that maximize the performance of our sailors, while decommissioning legacy platforms burdened by manpower-intensive systems. These changes present us with a rare, if not historic, opportunity to redefine manpower requirements at sea and ashore to man the Navy for the 21st century.

    Truth is, we have been hampered by a Cold War, industrial age manning construct that simply will not suffice in the information and technology rich world we live today or against the diverse trans-national threats that we also face. We can and must do better, and we need your support.

    To that end, our Chief of Naval Operations (CNO's) number one priority for fiscal year 2005 is the development and implementation of a modern, total force, human resource strategy that will deliver a more capable navy with fewer, but even more talented sailors.

    Our approach to create this smaller, smarter workforce is deliberate and careful and is built on three supportive tasks. The first is determining true manpower requirements. We must evaluate not only the relevance of a given task to combat capability, but whether or not that task is best performed by an active duty or reserve sailor in uniform, a civilian, or a contractor.
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    We are eliminating the non-productive work before the personnel numbers are reduced. We are not seeking to lay more work on the backs of fewer people. It is a total force, requirements driven approach.

    Second, we are shaping the force smartly and precisely, using the tools that we have and some tools that we will be asking you for this year. Perform to Serve has already resulted in the conversion of more than 4,000 sailors from overmanned to less crowded skill sets.

    Our selective reenlistment bonus (SRB) program remains the most effective retention and shaping tool that we have in our tool kit today. But we need your support to raise the SRB cap to provide the incentives necessary to retain our most talented and technically trained sailors, such as our nuclear plan systems operators and maintainers.

    Our assignment incentive pay program has been hugely successful, with over 3,000 talented sailors taking orders to critical billets that will ultimately lead to more than 10,000 sailors rotating to sea duty following qualification shore duty tours.

    We request your support of a lump-sum payment of assignment incentive pay to capture the positive effect of that net present value effect on the behavior of our sailors, effectively giving us more bang for less dollars.

    And third, as we continue to evaluate our progress in getting the right person to the right job, we need your support and are requesting new legislative authorities to shape the force which provide market-based, flexible tools designed to encourage voluntary retention, as well as transition behavior, while preserving the vital talents of our sailors and without breaking the faith with our people. The possibilities are both exciting and endless.
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    In conclusion, Mr. Chairman, let me again thank you and the committee for the extraordinary support that you have provided. The dedicated men and women of the world's strongest Navy continue to defend freedom in the far corners of the earth, taking the sovereignty of this great nation with them in our ships, our submarines and our aircraft.

    Your continued support and guidance will maintain that high quality and prepare us to meet the challenges of the 21st century.

    Thank you very much, sir, and we look forward to your questions.

    [The prepared statement of Admiral Hoewing can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you, Admiral.

    General Brady, welcome, sir.


    General BRADY. Mr. Chairman, Dr. Snyder and distinguished committee members, thank you for the opportunity to be here today.

    In the years since the fall of the Soviet Union, America's air men have responded to dramatic changes in our force structure and the world's security environment. We continue to streamline our active duty force, while remaining engaged around the world at levels higher than at any time than at any time during the Cold War.
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    As we work toward the future, we must determine our personnel needs, shape the force to meet those needs, provide relief for our most heavily stressed career fields, and develop the leaders who will take the reins deep into the 21st century. These are complex and interrelated issues and challenging how we manage the total force.

    We are on target to meet end-strength by the end of fiscal year 2005. We will continue to bring balance to the force by right-sizing and shaping specific career specialties and overall officer and enlisted skill sets. We remain postured to use various programs already in place, such as career job reservation, non-commissioned officer (NCO) retraining, Palace Chase and Blue to Green initiatives. Due to the success of our programs thus far, you can expect to see continuing adjustments to our current force-shaping criteria that will ensure we right-size and right-shape the force.

    As we return to our authorized end-strength, relief is flowing to overstressed career fields. This is a multistep process, but our guiding principle is simple: We must have the right people with the right skills in the right place to meet the needs of the air expeditionary force.

    We are doing this prudently, identifying specialties and specific gear groups within those specialties where we have more people than we need. At the same time, we are correcting our skill imbalances by realigning manpower and expanding training pipelines.

    We are also taking a hard look at where our people serve. We have airmen serving outside the Air Force who do not deploy as part of an air expeditionary force. They serve in joint and defense agency positions, some of which require uniformed people. Others, however, do not.
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    Through military to civilian conversions and competitive sourcing initiatives and consultation with these other agencies, we are returning some of these airmen to Air Force positions.

    The Guard and Reserve play a critical role in the total force. Today, 25 percent of the air expeditionary packages are composed of Air National Guard and Air Force Reserve volunteers. As we take steps to ensure the long-term health of our active duty forces, we must do the same for our citizen airmen. And bolstering the ranks of the Air reserve component is a critical part of force shaping. While reducing active duty accessions is one tool currently being used to bring the force down to authorized levels, it is imperative that we continue to renew and replenish the ranks with targeted recruiting.

    For fiscal year 2005, we plan to access nearly 19,000 enlisted members and just over 5,000 officers. This one-year reduction in our recruiting goal is part of a deliberate effort to reduce force size without jeopardizing the long-term health of the fleet. A one-year reduction will create a temporary decrease, offset by the number of personnel accessed in preceding and subsequent years. Continued congressional support of our recruiting and marketing programs is critical to maintain the Air Force's competitiveness in a dynamic job environment.

    We must all remember that ours is a recruited force, which means that we must be competitive in the national personnel marketplace to both recruit and retain our people. A vital element for success is the ability to offer bonuses and incentives where we have traditionally experienced shortfalls. And we need the continuing authority to use incentive tools flexibly in a dynamic personnel market. Congressional support for these programs, along with increases in pay and benefits and quality of life initiatives, have been critical to our success in recruiting and retaining air men and their families, and we are most appreciative of your support.
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    While we continue to size and shape the force to meet our evolving mission, we must remain attentive to the quality of service for our members. In this regard, we completed an Air Force-wide assessment of our sexual assault prevention and response capabilities. A campaign plan was approved, and we are implementing specific initiatives to better understand the problem of sexual assault, do everything within our ability to prevent it, and prepare ourselves to provide consistent and continuing care for victims when it occurs.

    We reemphasized and continue to stress the need for airmen to look after one another. We are weaving this mindset into the very fabric of our culture. All airmen have a responsibility to be a part of the well-being of their wingmen, their fellow air men. It is not a program, it is a mindset, a reaffirmation of our culture to take better care of our most valuable resource, our people.

    As we continue to develop and shape the force to meet the demands of the air expeditionary force, we will seek more efficient and effective service delivery methods, leverage opportunities to educate our future leaders, and make the extra efforts required to recruit and retain the incredible men and women who will take on the challenge of defending our nation well into this century.

    Undergirding this effort will be an aggressive commitment to nurture and sustain the culture of airmen core values of service, integrity and excellence, which makes ours the most respected air and space force in the world.

    Mr. Chairmen and members of the committee, thank you for calling this hearing and for your continued support to the men and women of this Air Force.
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    [The prepared statement of General Brady can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you, General.

    General Osman.


    General OSMAN. Chairman McHugh, Dr. Snyder, distinguished members of this committee, I thank you for the opportunity today to appear before you to discuss recruiting, retention, and other personnel matters.

    I want to thank you upfront, certainly, for the support that you give to our Marines and their families. It is absolutely essential.

    You know that today's Marine is a young man or a young woman of character. They have strong work ethic. They are of sound moral fiber. And they desire a challenge.

    You saw that certainly two weeks ago in the form of Sergeant Chandler who appeared before this committee. Again, there are many Sergeant Chandlers out there. I would like to highlight a few points for you today as we begin this hearing.

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    First, recruiting: The Marine Corps continues to meet its accession mission in recruiting going on ten years now.

    It is true the last two months we failed in our contracting mission. I am here to tell you that for the month of March, we are going to get it back on track.

    But more importantly, at the end of the year, I am absolutely convinced that we are going to make that accession mission as well as that contracting mission and ensure we have that start pool of 50 percent that is so critical.

    Obviously an advertising budget as well as enlistment bonuses play large in our success.

    In the area of retention, we continue to make our retention goals for both our first-termers and second-termers. SRB funding is obviously critical, and we have seen that, certainly with our infantry men this year, as we increased their multiple and are way ahead of this year's retention of infantry men compared to last year.

    End-strength: I thank the committee for the end-strength increase the Marine Corps will realize this year. We went from 175,000 to 178,000. This is important. This will allow us to flesh out our infantry battalions; it will allow us to put more recruiters on the street, improve our trainers force, as well as develop a foreign military training unit that will complement the efforts of Special Operations Command.

    Compensation certainly plays a large role. We often say that the biggest reason that a Marine either stays in the Marine Corps or leaves the Marine Corps is because of compensation. OSD is conducting a comprehensive review of compensation packages this year, and we think this is very important, to ensure we have the right balance in compensation.
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    I could not talk to this committee without talking about the total force. And here, I am talking about our reserves. Last summer when I left the 2nd Marine Expeditionary Force, I often pondered about how we managed to achieve our mission, but could only have done it with the support of the reserves. And we continue to get tremendous support from the reserve side of the Marine Corps. Today we have over 13,000 reservists that are activated.

    Quality of life: Important pay and non-pay benefits are very important to Marines and their families. There is no question that if a Marine and particularly his family is satisfied with the quality of life, he will stay. This really assists, not only in the retention goals, but also in our readiness goals. We are optimistic in the Marine Corps about our overall health in the personnel area.

    I thank you again for your great support and look forward to the questions today, and know that you are proud of the contributions and sacrifices that your Marines are making today. Ladies and gentlemen, I look forward to your questions.

    [The prepared statement of General Osman can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you very much, General.

    Gentlemen, thank you all. Let me start, just for a little bit of clarification, with General Osman. You said, sir, that you are absolutely confident by the end of this year you are going to meet your accession mission and your contracting mission. Those of us who have had the honor and the opportunity and the pleasure of dealing with the Marine Corps through positions on this committee understand your can-do attitude.
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    But I am just curious, is that a Marine can-do attitude, or do you have specific statistical or trend-line information that would give you that confidence? And I am not in any way denigrating the Marine can-do attitude. I want to make that very clear.

    General OSMAN. Yes, sir. Words can be hollow, and I understand what you are saying, sir.

    General Walt Gaskin, who is seated behind me here, is the Commanding General of the Recruiting Command. General Gaskin and I sat down several days ago and had a very candid discussion about the situation that we have had these last several months with regard to our mission for contracting.

    We discussed what the possibilities were for this month. And General Gaskin is quite convinced that, looking at the numbers, and of course, that is what counts in recruiting, we are on the glide slope to make that mission this month. More importantly, we talked about some of the initiatives that we have taken, particularly in trying to increase the number of recruiters that we are going to have on the street.

    I can tell you that I have certainly been very much involved and the commandant has been very much involved in ensuring that we get the numbers and the right kinds of Marines into our recruiters' school, so that we can put on the street those recruiters that we need in order to make those numbers that are so critical. We are looking forward to a good summer's worth of recruiting. And again, General Gaskin and I in our discussions feel that with the support of this committee, with the right kind of advertising, and with the tenacity of our recruiters that make that mission that when the 30th of September comes, we will have made both our accession mission as well as our contracting mission for 2005.
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    Mr. MCHUGH. I appreciate that. My dad had a great skepticism toward numbers and averages and percentages. He always used to say, ''You know, John, if you put one foot in a bucket of boiling water, the other foot in a bucket of ice water, on average you are comfortable.'' [Laughter.]

    And I look at the numbers of particularly recruiting—and you have to remember that is what they are, they are numbers. They are snapshots. But let's look at the snapshot we have: Through the last quarter, which ended in January, particularly on the guard and reserve side, these numbers are pretty frightening.

    With the exception of the Marine Corps, which got to 101 percent in the Marine Corps Reserve, the other ones, across the board they are falling short. The Air Force Reserve is 6 percent, but the rest, the Army National Guard, 24 percent short; Army Reserve, 20 percent short; Naval Reserve, 16 percent short; Air National Guard, 25 percent short.

    My dad would say, ''Well, remember they are numbers,'' but they are sobering numbers.

    So I would ask three other officers here, how do they view the future, particularly on the guard and reserve side, although the Army showed up 27 percent short for February in their recruiting. How do you view the future through the end of the year, given the status quo in Iraq and such, Buster?

    General HAGENBECK. Sir, with the current conditions, I would tell you that we are guardedly optimistic on the active side. We think that the metrics that we have out there for the monthly recruiting figures from March and April will be difficult to achieve, and that is the result of some of the recruiters that we are just now getting on the street. As you know, we have increased by 3,000.
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    We believe, however, based on the increase in the depth that we have for June and July that we can achieve our year to date by the end of September, meaning that we think we are going to get the recruits we need on the active side. It will be a challenge for us, but we have had meetings for the last two days looking at those analytics.

    We are less optimistic, very frankly, on the guard and reserve side in terms of recruiting. And we are working through that right now. The reserve recruiters have begun to flow to the field. But they will not all be on the ground until late in the summer or the early fall.

    The optimistic view on retention from all the components is such that we believe that we are going to retain at least the rate that we did last year or higher. Right now, for retention we are just under 101 percent on the active side and we are in the 90-plus percent on both reserve and guard. So that has been very helpful, and the incentives that Congress has provided us have done the job for us. But we have a big challenge for end-strength for guard and reserve for this fiscal year.

    Mr. MCHUGH. I appreciate that. My 30-second lecture, and I had a much longer version of that, I have rendered before this subcommittee on any number of occasions, I think what you just said with respect to recruiters on the street kind of underscores the message of this subcommittee through the time that I have had the honor of being chairman, and that is, recruiting has to be a 24–7 kind of initiative, 12 months out of the year, and not something that you plug in and plug out based on needs. We have to sustain a credible recruiting effort all the time, because of the lag factor, and that is kind of what you are dealing with right now.
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    Admiral Hoewing, any observations in this area?

    Admiral HOEWING. Yes, sir, and thank you for the question. As you know, fiscal year 2004 for the Navy was an excellent year for recruiting, as we exceeded all of our goals across the force, with the exception of some of the medical officer communities, we were short. But we did very well with reserve recruiting in 2004, also.

    So far, in fiscal year 2005, our active force continues to recruit on schedule or ahead of schedule. We already have in the delayed entry program the March, April, May and June numbers. We are totally green across the board there. And we have a few slots left in the July, August and September time frame, but it is very few. We feel very confident on the active side that we will get there.

    The same thing on the officer side; slight shortfalls in the medical community, and we will continue to press in these areas. On the reserve side, we are behind. We had a substantially increased mission on the reserve recruiting this year. We increased that mission by several thousand right at the end-game. So we are playing a catch-up game there a little bit. So we have shifted our resources in many directions.

    First of all, with reenlistment rates high, it means there are less people that are available to go into the reserves. So we are okay with that. That means that we have to shift our strategy on reserves in order to meet that mission.

    We are focusing more on our transition programs to ensure that everybody is offered that opportunity and they understand the values of the reserve mission. So a reserve outreach program is taking place. In many cases, we have reserve requirements that are higher than the number of people that we would ever have leaving the service. And in those areas, we are using a newly regenerated non-prior service program, where we are going out and bringing these sailors in, sending them to boot camp and sending them off to a school in order to give them those skills. That is new for the Navy. We used to bring them in, and have them sit there in the reserves and gain their experience on the side. So that will be able to fill-in some of those shortfalls.
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    And then we are using our national call to service opportunities also. And thank you also for the reserve incentives that came in that we are just now starting to put into place.

    My confidence level is that we will close the gap on the shortfall. I am not sure that we will make that total number of reserve recruits for this fiscal year.

    Mr. MCHUGH. Thank you.

    General Brady.

    General BRADY. Sir, as you know, our challenge has been a little bit different, in that we have been over end-strength. However, we are pledged to get 18,900 on board this year in the active duty.

    For the first part of the year, we have only been recruiting for 58 of our some 146 career fields. However, we are now poised to recruit the rest of those, now that we are very confident we are going to meet end-strength. And we have several thousand people in the queue now, just waiting for us to give them a date as to when to show up at training.

    The Air Force Reserve, our numbers are a little bit different, sir, than you indicated. As of the end of February, we are at 114 percent of our year-to-date goal, at the end of February, with the Reserves.

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    But you are correct, the Guard is short. They are at 78 percent of the year-to-date goal currently. And we believe that they will probably come in at about 85 percent to 90 percent of goal. Their better months are later in the spring, and so we anticipate that they will do better in the spring. But it will be a challenge for them to meet their goal, frankly, by the end of this year.

    Mr. MCHUGH. Just clarification. You are probably right. You added another month. The figures I cited, with the exception of the Army active, I did mention February, were through January. So you have another month there. It might account for that difference.

    So we have some problems across the board, by and large, with the exception, I guess, of the Marine Corps, on the Guard and Reserve side.

    Let me theorize to you that that may be because 43 percent of the total force in Iraq is guard and reserve. And perception is reality. And the perception is I think amongst most potential guard and reserve enlistees is that you go, you are going, you are going quick, you are going repeatedly, and you are going a long time.

    Mr. Secretary, you hear the folks in charge of these issues out here dealing with them, optimistic but acknowledging the challenges.

    Can you convince us that the Department has the kind of corporate awareness of this and the corporate policy, you are out there helping them to meet these challenges?
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    Secretary ABELL. Certainly we have a corporate awareness. We share many of the concerns that the four chiefs have described to you, some of the same concerns that you have mentioned as well.

    We are watching. We are speaking with the comptroller to make sure that monies flow to the bonus programs and to the recruiting advertising programs, because, as you have heard here, they are essential. We watch what is going on. We talk with them all the time. We share our observations with them to see if their observations are different than theirs. Normally they are not. And as I said in my opening statement, every once in a while we nudge a little bit, when we see maybe a reticence to move as quickly as we might think one should. But we are very aware. We are concerned. I want to share their optimism.

    Mr. MCHUGH. So do I, but I am finding it hard. But that is why we are here, to see what more we need to be doing.

    And I want to go on a little later on end-strength and some other issues, if they are not brought up by my colleagues.

    But I would be happy to yield to the ranking member, Dr. Snyder.

    Dr. SNYDER. The one advantage, Mr. Chairman, of sending the other panel home is we can keep these people here until after our pizza party tonight.

    I thank you all for being here and thank you for your testimony. We are sorry that the votes worked out the way they did.
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    Secretary Abell, you were the perfect person to have this discussion with this afternoon. You sit at the table there looking like Clark Kent, but in fact you have had a very impressive background as a—is it 26 years in the Army?—including multiple tours in Vietnam, was an enlisted man who then ended up, I think, as a lieutenant colonel, and was a Cobra pilot, Purple Heart.

    But then, perhaps very much significant part of your career, according to some of the people in this room, you became a staffer on the Hill, for eight years on the Senate side, on the Armed Services Committee, correct?

    Secretary ABELL. Yes, sir.

    Dr. SNYDER. And so, you spent 8 years with your 26 years of military background trying to get information out of the Pentagon.

    Secretary ABELL. Yes, sir.

    Dr. SNYDER. And now you sit here—this is just wonderful—with four years of experience in the Pentagon.

    And these issues, as you know, they are very complicated issues—human resource issues in the private sector, personnel issues in the military sector at a time of war—very, very complicated.

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    I just found it really difficult—I mean, this is the sum total of the testimony today from you folks at the table. We have this stack from the second panel. But it is like a really difficult crossword puzzle, sometimes. It should not be that hard to figure out where the problems are, where your challenges are. We want to help you. I frankly think it would be better, Mr. Chairman, if we just said, ''Could you give us each one sheet of bullet points of where your problems are and what we need to do?''

    And I know that you all have to have your formal testimony reviewed and I guess edited by OMB before it can come over here. I think that is a factor in why we do not get the information that we need. They sometimes become, for want of a better word, puff pieces that do not really go to problem areas. But it just becomes a difficulty.

    I go to I think page 41 of your written statement, Mr. Secretary, in which you talk—there is a section on force health protection. And you go quickly through some three or four sentences on different programs.

    You mention immunization programs and how they are highly effective and all. Well, I also know that our surveys have shown that some units have abysmal records—isn't that correct?—of getting their folks vaccinated that should be vaccinated. Wasn't that the situation that was had with some units? We have had reports here that we do not have good systems for checking on vaccines or mental health services.

    You outline a good process, but I do not think it has really begun yet, and there is a lot of, both in the press and within the V.A. and discussions within the military, we are not sure what the volume is going to be and we may not be at all prepared for the potential of not just Post Traumatic Stress Syndrome (PTSD), but counseling and all the issues of people dealing with disability.
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    The whole issue of medical readiness is a huge issue for the guard. When we had the first mobilization, I think, in Arkansas, we had over 20 percent of people who had been going every month for drills and their stuff in the summer, thinking they were ready to go, over 20 percent were not medically fit for deployment. Well, that is a huge national security problem for us: 20 percent of your Guard force.

    So I would just like to give you a chance—this is a process question: Why is this so hard? Why can't I pick up this section on vaccinations, the immunization program, and have it outlined: Here is the problems that we face today. Our units are not doing a good job; some are, some are not, on keeping track of who is vaccinated, who is not vaccinated, whatever the problem is?

    Secretary ABELL. Dr. Snyder, I think the general answer to your series of questions is that it is difficult for us to say to ourselves and to you that we are not working hard and we are not all achieving success in every program attempt. And certainly there are areas, you have listed some, where we have had shortcomings. I think we have addressed them all. The percentage of folks not medically ready now is down to three percent on average. We did not like 20 percent. You did not like 20 percent. It was a readiness problem. We are better now.

    The mental health, we think we have a screening program that talks to folks before they leave the theater, during their processing when they get back, and then checks on them again in about six months. Our recordkeeping initially on that was not very good. It is much better today. We believe we are in the high-90 percents of getting everybody through that system.
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    On the many programs to help recruiting and retention, if I gave you just a couple of bullets, it would be flexibility in the types and the amounts of bonuses. It would be authority to do lump sums, as well as payouts over time. It would be money for bonus and special pays now, as opposed to entitlement programs that 18-, 19-year-olds cannot even imagine—retirement, health care for life, those are not things that bother them. That is not why they enlist. That is not why they stay.

    When you get up into 18, 19 years of service, then you begin to think about those kinds of things, maybe even 16 years of service.

    But the challenges that these four gentlemen face—we are talking about compensation now, discounted net present value, that is what is important to the folks, that is what we——

    Dr. SNYDER. And I found some of those things in the written statements, and some of you all have mentioned some of those, but, man, it is like a tough Easter egg hunt. You have to go through a lot of brush before we find the golden egg.

    On page 7 of your statement, Mr. Secretary, you mentioned about the numbers that you say, in the reserve component forces that have been mobilized, up until November 30th of 2004, you say, it represents just under 36 percent of the 1.1 million-plus members who have served in the selected reserve during this period.

    Why do we only have numbers through November 30th? I would think with your system that we should be able to have numbers through February 28th or 29th or for March 10th. Should that not be an almost instantaneous kind of reporting? These are the people who have been mobilized; it was this number. That is three months ago. There has been a fair number of mobilizations. I would suspect it is substantially higher than 36 percent. But why is that information 3-1/2 months old for this committee here today?
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    Secretary ABELL. It is a strive for perfection or a reticence to be imperfect that drives that.

    Certainly, we have back-of-the-envelope numbers that would get you there, but to present them before a committee of the Congress and represent them as having the structure and the guarantee of the data behind them, that is why we are reluctant to give you things that all of our systems have not agreed on.

    Dr. SNYDER. Okay.

    General Hagenbeck, the issue of the added end-strength, and I want to get a sense of how much help you think that is and where we are at with that. I think we had a discussion at this morning's hearing, I think. I think that the Air Force—you still have Air Force personnel that are helping with some security matters, slots that would normally be Army, but have stepped in to help you with some of those things. I think there are some Navy personnel that have been helping with armoring vehicles, because of the shortage of Army personnel. You have had to put on substantial numbers of recruiters. I want to say 1,400. I am not sure if that is the right number or not. But as we look, in terms of trying to take off the stress of the force, you have got some things going on. That is just—those are the 3 that I know of that we would say 20,000—well, we have had to use 1,500 to 2,000 of those for recruiters.

    You will at some point, I suspect, your Navy and Air Force partners will say, ''You know, we need to have Army folks doing this, because we have got our own things to do.'' As you look ahead at end-strength, one of the statements says you do not see additional need for additional end-strength. So what do you see happening with things like the Air Force helping out, the Navy helping out, what you are going to do to make up the fact you have had to put on additional recruiters?
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    General HAGENBECK. Sir, it is a very good question.

    The statement in there has to do with permanent end-strength. As you know, it is open-ended right now because of NDAA. And we have over 640,000 soldiers mobilized at this time. And so that is really what gets to the question of what should the core strength be.

    I appreciate Congress' support in increasing the end-strength by 10,000 per year. We think that is reasonable. And we can absorb that without any substantial, additional cost in terms of training base and other things that we would need to associate that with.

    We do appreciate the support of the other services. I would just also like to say that the Army is a team player. And we also participated early on, as you well know, with up to 8,000 reserve and guard that provided some security forces for the Air Force early on, after 9/11. So we do try to take care of each other. And I think that is representative of the way we have gone about this.

    Dr. SNYDER. I think that green light must be on permanent go, Mr. Chairman. [Laughter.]

    Mr. MCHUGH. For you it is.

    Dr. SNYDER. Thank you.

    Mr. MCHUGH. The others, it will not be.
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    Dr. SNYDER. Okay, thank you.

    Mr. MCHUGH. Thank the gentleman.

    I want to get this right.

    The gentleman from New Jersey, Mr. Saxton.

    Mr. SAXTON. Thank you.

    Mr. Secretaries General, I have been curious about something. And the problems that we are experiencing, particularly in the Army Guard, might have something to do—well, have something to do with some things that are pretty obvious—but there is something that is maybe not quite as obvious that may be playing a role here. And I am just curious to know if you would—what you think of this.

    When folks sign up to be in the Army National Guard, they sign up. They know there are going to be some good things happening. They know there is a benefit package. They know they get some pay. They know that they are going to be doing something for their country. So those are very positive things.

    There are also a set of expectations. And the expectations, while guardsmen sign up to do their duty and to agree to be deployed, the expectation prior to Iraq was that that will not happen very often. And if it does happen, it will happen maybe once. And if it does happen once, it might not be for a very long time. That was the expectation, I think.
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    And then Iraq started and we found ourselves with 40 percent of the deployed force from the reserve, most of those or many of those from the Army National Guard.

    And so the benefit package essentially remained the same. And the expectation has now changed a great deal as to what the responsibilities are.

    Subsequent to us going into Iraq and having this experience, the expectations of the people who you are now enlisting in the Army National Guard may have changed.

    The benefit package is essentially the same. But the expectations are that if I sign up, I am probably going to be deployed. And if I sign up, I might be deployed more than once, and it might be for a relatively long period of time.

    And so the people that are signing up today are signing up with a different set of expectations than the guys and gals that signed up before Iraq.

    Any way of knowing what the result of these new folks who are now entering into the Army National Guard—what the results of that may be in terms of retention and performance and those kinds of things? Because they are signing up with their eyes wide open, and they now know what the deal is.

    General HAGENBECK. Sir, I would be happy to comment on that.

    I would say that you are absolutely right. The National Guard and the construct that existed prior to 9/11 was a Cold War construct in which the National Guard was to be, in the Army's instance, follow-on forces primarily for a European theater war. That changed with 9/11.
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    And so you are right. The new recruits that come to us have different expectations. And what we hear from them right now, on the recent surveys—really over the last 12 months all the way up through December of this year on surveys—is that they want to be told what the stability and predictability can be for the kinds of forces that they are signing up for with their states.

    Those that are a part of the organization already, and the reason retention has been so good is because they have come back and said they understand the instability that exists now because OIF, and it is the commitment that the National Guard and the Army has toward them that caused them to stay.

    So what we have to do as an army is to find ways in which to provide in the long term the stability and predictability for these National Guard soldiers.

    And we have begun to do that and we think part of the answer lies in—as we reorganize our formations into Brigade Combat Teams that we can put them on predictable cycles. And that is—we think we are headed in the right direction.

    Mr. SAXTON. Okay. Thank you for that.

    I have a second question, Mr. Chairman. And this is a more focused question.

    Special Operations Command (SOCOM) was having trouble with retention in the enlisted rank, particularly senior enlisted ranks, as you know. And General Brown was explaining to Mr. Hayes and I the other day, the bonus program that was put in place to try and solve that problem.
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    Essentially, the problem, as you probably know was that folks get into special operations command after they have been in the Army for five or six or seven years. They then become operators after a couple of more years of training, so they are in the Army eight or nine years before they become an operator.

    And now when they reach year 19 or 20, they were finding other things to do, because it was a fairly lucrative market because of the skill sets that they had.

    So General Brown—and I expect, General, with your help—devised a new bonus program to try to keep folks in for another five or six years.

    What is your experience with it so far? How is it working? And maybe describe it a little bit.

    General HAGENBECK. Sir, the experience has been very good at this point.

    I can get and I will get you numbers; dollars and the number of soldiers that have been signed at this point. It has been very effective. And I will tell you that we are looking inside the Army to the critical skills that we want to pay attention to so we do not also potential lose that experience in the long term.

    And we are looking at it under the umbrella, moniker, if you will, of, ''Buying the future force today.'' And so we are trying to solve problems before they actually exist. We do not want to have to come back to you when some part of the Army is broken, that we have lost a substantial part of our experienced force that we have got right now. So we think that it has got some legs. We want to look at it in terms of incentives, but not entitlements, and we are working that now before we come back to OSD with it.
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    Mr. SAXTON. Thank you, Mr. Chairman.

    Mr. MCHUGH. Thank the gentleman.

    Gentlelady from California, Ms. Sanchez.

    Ms. SANCHEZ. Thank you, Mr. Chairman.

    And thank you, gentlemen, for being before us again today.

    I just have one comment for Secretary Abell, first of all, and then I have a couple of questions.

    I would like you to take this back to DOD since you are the representative of DOD here today. And it is about the failure to produce the uniform code of military justice (UCMJ) article 120 update in a timely fashion.

    I am not pleased that you ignored the statutory mandate to respond to both the House and Senate Armed Services Committees by March 1st with respect to that item.

    And let me remind you that it was enacted by the Congress and signed by the President. It is not a flexible deadline. And the reason that we asked that we have it is because it is important for our legislative input as we move forward this year.

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    So if you would please take that back to DOD.

    Mr. MCHUGH. Will the gentlelady yield, and I will accommodate the time?

    If I may underscore that.

    Mr. Secretary, I do not have a lot in my life, but what I do have is my word, and I gave Ms. Sanchez, the subcommittee and the full committee my word that with or without DOD input we were going to take up this issue.

    Now, I would much prefer to do it with meaningful, meaningful DOD input, but as the gentlelady said, we have not received that yet. And if we do not, we are going to write it.

    So if you want us to write it without your input, we are going to write that.

    Secretary ABELL. We would rather you write it with our input.

    Mr. MCHUGH. I would hope that is the case. So we will anxiously await your expected response. Thank you.

    And I thank the gentlelady again.

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    Ms. SANCHEZ. Thank you, Mr. Chairman. I just wanted to make that clear since we had the personnel.

    I have a question. And this goes to all of the bonuses that we are giving out at this point.

    You probably know that I am a firm supporter of providing adequate compensation to our military personnel for their service to our nation.

    I am just a little worried that maybe we are not doing this through market analysis, maybe it is not fiscally sound. I am worried that maybe we are throwing money at a retention problem to provide a quick fix that might be difficult to sustain long term, in particular, if we are in Iraq for as long as I think we are going to be.

    I guess my question is: Are we using past experience with respect to bonus programs? Do we have studies? Have we done any research? How do we set these dollar amounts? Are these arbitrary amounts? Do they have any scientific basis? Are enlistment and retention bonuses comparable to those we have used in the past? Have we seen a surge because of using this? Have we looked historically?

    What happens when we do not give out enlistment bonuses or other types of the re-upping bonuses? What has happened in the past?

    And is it possible that we might be creating an entitlement mentality in the ranks with these types of bonuses that will be difficult to escape once we are not experiencing this kind of pressure on our service members?
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    Secretary ABELL. If you do not mind, I will start, and then I will ask my colleagues here to give the experience based on their service. I would tell you that this is the closet to a market economy that we have within the Department of Defense.

    We asked you for bonuses. We asked you for caps on that. And then we began searching in there for what it takes to affect human behavior, which is the ideal of any compensation system.

    Ms. SANCHEZ. But do you do focus groups? Do you do surveys? Or do you just go out and say, ''Okay, offer this guy 10, and offer this guy 15, and see where the difference is?''

    Secretary ABELL. No, ma'am, we talk to the folks right out on the ground. And recruiters tell us what they are hearing, what is effective for them. And it may be different for one specialty over another. It may be easier to get bulldozer operators than it is to get cardio-operators. And so it takes different amounts of money. But it is a constant testing of the market until you begin to achieve results. So that is a market-based approach. And I think that is common across all.

    And from OSD, we watch that. We do not want the numbers to go immediately to the limit of the authorities that you all give us, because we want to make sure that it is market based, that we are not paying economic rent, if you will.

    Ms. SANCHEZ. I am just wondering if we are not doing what happened to car manufacturers a while back, several years ago, when they were offering rebates up front and zero percent interest rates, et cetera. What they found was that ultimately they had cannibalized their buyers for the future with rebates of today.
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    And so in the same way you can do that with bonuses. And I just wonder if long term we are just not doing a quick fix versus really keeping somebody in who ultimately really wants to be there.

    Secretary ABELL. Well, again, I do not want to dominate the conversation. Because these gentlemen have unique experiences with their various services. But again, that is a topic that we look at from the DOD perspective. As a matter of fact this afternoon, there was what we call a status of forces briefing. Among them is the—what are the critical specialties? What does it take? I will tell you the specialties and jobs come on and off that list all of the time.

    So it is flexible. It is based on what is happening out there in the marketplace.

    But let me defer to these gentlemen to tell you what they do specifically in their services.

    General HAGENBECK. Ma'am, I share your concern, because it is something that we have to pay attention to. Certainly from the Army perspective, we do extraordinary detailed analyses, market analyses, from some really smart folks out there, from those that are internal to our service to external. And we work it every single day. And I get briefed on it every single month.

    And what we do at the recruiting level, we have a different menu, if you will, to recruit soldiers so there are different tangible and intangible mixes that they may get. And in the retention phase, too, we hold our commanders responsible for retention, keeping solders on the team, as we say. And we give them a mix as well. But the underlying premise that we try to ensure resonates with all of them is that this is not an entitlement. So if somebody signs up today—we make sure that commanders say, ''This is the incentives that exist today. They may not be here tomorrow. And they certainly may not be here next year.'' Because we recognize that our budget runs on a yearly basis. So we work through command channels to underscore the points you just raised.
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    Admiral HOEWING. Ma'am, thank you very much for the question. We, in the Navy, have a pretty long history, quite frankly, of using bonus programs, because of many of the long deployments that we have done over the past. So that gives us a very good historical baseline.

    We also have a very extensive market analysis process, including some very precise analytical tools that will watch us track the retention rates right down to the individual person, and we will adjust those SRV amounts up and down as necessary very, very rapidly in order to maintain our force shape very close to that true requirement.

    You have talked about experience of the past. We have some experience in the past also in those years when those realistic bonuses were not as robust as they are today.

    And our experience in the late nineties resulted in more than 20,000 gaps in our billets at sea.

    Right now, we have no gaps in our billets at sea, and we think that that is largely due to the robust tools that we have today. And that is why we are asking for the flexibility for the future.

    General BRADY. Let me add as well, Ma'am, that this is an extraordinarily important question, and it is a very important tool for us. And we are very appreciative of what the committee has done to support our bonus program.

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    As I mentioned in my opening statement, this is a very dynamic world in the personnel business, and so we have to remain competitive. We also have to make sure, as you very aptly pointed out, that this does not become an entitlement program. And if people in the Air Force think it is, they have been steadily disabused of that notion recently.

    In the last 2 years, we have gone from, for example, 44 career fields getting initial enlistment bonuses in 2004 to currently 12 of them get it. We had 62 skills in 2004 getting selective reenlistment bonus; we now have 32. We have reduced the bonus pool in this area by $130 million over the last 3 years. So we really appreciate it. It is important.

    Occasionally, people say, ''Well, gosh, Air Force has got so many people, why do they need any bonus money?'' Well, the reason is because we have some critical skills that we are short in. And to remain competitive, we need the great support that you have given us, and we need the flexibility to respond as rapidly as we need to respond so that we do not pay bonuses that we do not need and we do pay bonuses that we do need.

    Thank you very much.

    Ms. SANCHEZ. General, want to comment?

    General OSMAN. Yes, ma'am.

    I think you realize that the Marine Corps has a fairly frugal approach to the use of bonuses. If you look at the average bonus that an enlistee in the Marine Corps gets, it is less than $600.
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    If you look at our reenlistment bonuses, you will see that there is a tremendous amount of analytical work that goes on behind the determination as to how much of a reenlistment bonus one might be eligible for. In fact, the Center for Naval Analysis provides us with some real good data that helps us determine exactly how much we need in order to get the results that we seek.

    A good case in point: Last year, as we were working our reenlistment plan, we found that we were having a hard time making infantrymen. It turns out that we got the number we needed by the end of the year.

    Nonetheless, based on the analysis from CNA, they told us that we needed to up the multiples for an infantryman. Thus far this year because of that increase, we have realized ourselves being 20 percent ahead in the reenlistment of infantrymen, compared to last year.

    So it does work, if you are very careful about how you use it.

    The Marine Corps, to be honest with you, is concerned about what we call hip-pocket incentives. This is why I congratulate OSD on conducting a comprehensive compensation review panel to make sure that we really are putting the monies where they can really provide the best results.

    Ms. SANCHEZ. Thank you, General.

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    And I see, Mr. Chairman, that the lights work on my round. [Laughter.]

    Mr. MCHUGH. Yes, but the voice did not. You went four minutes over. So I think——


    Mr. MCHUGH. Well, they were valuable inputs, and we appreciate it.

    Gentleman from North Carolina, Mr. Jones.

    Mr. JONES. Thank you.

    Mr. Chairman, thank you very much. And, General Hagenbeck, I would like to bring a little situation from the 3rd District of North Carolina. It involves a young man who several months ago went down to the Army recruiter and wanted to go into the United States Army to become an infantryman, wanted to go to Iraq. And the recruiter did his job. The young man's eyes were very, very poor. Since that time, he has had LASIK, and his eyesight is 100 percent now.

    We are working with the recruiting again. And it is not a problem. I just want to bring something to your attention and everybody's attention.

    Is it your position—and maybe I should ask the Secretary—but if someone has had this surgery and they go back and the eyesight is 100 percent—what he has been told by the recruiter or above the recruiter was because of when he initially went to join the Army his eyesight was bad, now his eyesight is 100 percent—should he be able to get into the Army now?
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    General HAGENBECK. Sir, I can only give you my perspective. Not being a medical doctor, I do not know what consequences there might be long term for that. But my instincts tell me he ought to be able to get in.

    Mr. JONES. Okay.

    General HAGENBECK. And if you give me his name, we will work that real quick. [Laughter.]

    Mr. JONES. Okay. Well, I appreciate it.

    In fact, it is kind of interesting, General Osman. His daddy is a Marine sergeant major. And I got a letter from a retired two-star Marine General wanting to know why in the devil this man could not get in. So I appreciate your answer and we will get with you. I do think that we have talked to liaison office and they have been very helpful. But I do want to bring this to your attention, because this kid is ready to go, and God bless him for having that desire.

    I want to go back to, Mr. Secretary, and again, as Dr. Snyder said, thank you for your service to this nation, as well as everyone here at this panel and all of those in uniform today and who did wear the uniform.

    Are you all running any statistics or survey to get any idea of the guard and reserves who have left their jobs, now doing their duty, since they have been called upon to go to Iraq, and as to the financial hurt or suffering that they might be experiencing?
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    I think one of the problems—and Mr. Saxton said it much better than I could say—is that the guard and reserves, I think, truthfully, many of them were former active duty who did go into the reserves. I think they really, sincerely, are glad to serve their nation—but not get into the policy of Iraq—but what has happened to them is they have become full-time soldiers. And many times they have put a job they left behind that they are not coming back to anytime soon, so the family is somewhat in limbo of going—the salary, obviously, has dropped. Do you all have any ongoing surveys of seeing what kind of economic difficulty these reservists and National Guard might be in?

    Secretary ABELL. Absolutely do, sir. We have studies going on. I would love to be able to tell you the results, but they are ongoing. We do not have results yet. We do understand that compensation packages in the private sector and in the military are different.

    I think some of the discussion revolves around that. When the individual says, ''I am not making as much money. I am making less money in my military job than I was in my civilian job,'' we start scratching our heads and say, ''Okay. Are we talking about take-home salary? Are we talking about salary and benefits? Are we talking about deferred compensation? How does it all come together?''

    And we do not want to paint a picture that is inaccurate. On the other hand, we do not want to have a picture that is inaccurate guide us in the wrong direction, either, and that is the complexity of looking at this.

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    Mr. JONES. When do you anticipate the research or the survey would be completed? Several months? A year?

    Secretary ABELL. No, sir. In the 45-day to 60-day range is when I think we are going to have results.

    Mr. JONES. Let me ask each one of you in the armed services, as you talk about recruiting with every member on the committee, I wonder—I asked the two young men that were here last week—one Marine, one airman, and then a reservist in the Navy and a National Guardsman.

    I guess my question is, at that age, I know they are not thinking long-term benefits. They cannot ever imagine getting old. I know that. Believe it or not, I was there at one time in my life, too. But I did get old.

    But the point I am asking is that I am concerned that when people are being recruited, not all will ask the question, ''But what are going to be my benefits 20 years down the road?'' I realize that is probably a very small percentage that would say that.

    But if you get somebody 22 or 23 that is leaving a job or looking to, maybe they have committed to going to Iraq because of 9/11, my point is that, I am struggling, quite frankly, with the budget resolution, because there are some cuts over the next two or three years in the veteran's benefit area.

    And the point is, I wonder about those who have fought for this nation during Vietnam, which was 30 years ago, roughly, and now they are sitting there as 60-year-old men or 65-year old men, maybe 70, and looking and seeing that the Congress is debating whether this program should be in place, or that program.
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    Do you ever hear anything—and you can give me a yes or no. If you want to respond a little bit more, that will be fine. Is this at all even a slight issue with any? Do you hear this from your recruiters?

    General HAGENBECK. Sir, if I could, just very quickly, the short answer is, yes, we do. But we really hear it from the veterans that are what we view as a key component to the influencers.

    So that is the second-, third-order effect on our recruiting effort.

    Mr. JONES. Okay. Admiral.

    Admiral HOEWING. We hear it sometimes, yes, sir. We really do. I would say that we do also do an extremely detailed process in briefing folks when they do come in on what their benefits are going to be in 20 years from now.

    We think that TRICARE for life does in fact provide some more opportunities for them, particularly in the medical arena.

    But I understand your concern there, that they do not want to see benefits erode. And I believe that we are pretty steadfast in trying to make sure that they do not.

    General BRADY. Congressman, I think your assessment is correct. I do not think the average 18-year-old thinks about that a lot. But as Admiral Hoewing says, they are briefed on it and are kind of impressed when they see what is out there.
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    But as General Hagenbeck said, there are people who are reminding them, and I am not saying inappropriately so——

    Mr. JONES. I understand.

    General BRADY [continuing]. Saying, well, but will it be there 20 years from now. And so, I think there is something that they are perhaps thinking about more than they might have at that.

    Mr. JONES. Thank you, sir.


    General OSMAN. Sir, maybe a slightly different twist. I would submit to you that a young man or woman who is joining the Marine Corps and thinks that they might want to stay 20 years, really do not know what they are talking about.

    Because until you serve, how can you say, ''I want to do that for 20 years?''

    Our recruiters try to convince the young man or young woman serve your nation and your corps for four years. And then you can make a decision as to whether or not you want to stay longer.

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    When you look at the cohort that comes in, we want less than 25 percent to stay beyond that first enlistment. It is a young person's corps, and so what we want them for is to come and serve for four years and then we can take a look at the long term as they finish that first enlistment.

    Mr. JONES. General, thank you.

    Mr. Chairman, I know my time is about to expire, but I would like to say sometimes I wonder how some of my colleagues up here have been here 20 years, too, by the way. [Laughter.]

    Thank you, Mr. Chairman.

    Mr. MCHUGH. Thank the gentleman.

    The other gentleman from North Carolina, Mr. Hayes.

    Mr. HAYES. Thank you, Mr. Chairman.

    Thank you, gentleman, for what you do and what the men and women under your command do as well.

    The issue of continuing education is something vitally important. An all-volunteer force, and everybody is in agreement that they are the most well-trained, most skillful, most courageous folks that we have ever had in the military. One of the reasons for this is the money that we make available to them for continuing education.
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    At Fort Bragg, I know that that pot is dry at the moment. Just overall, what are we doing to make sure that that does not happen at Fort Drum or maybe not it is not happening there. Where is that on your radar screen as it relates to recruiting and retention?

    General HAGENBECK. Sir, as of 1200 hours today it is no longer dry at Fort Bragg.

    Sir, the bottom line on that, you are talking tuition assistance and the continuing education. And it was underfunded this year internally to the Army, and when this came to our attention, where it was, we shifted money, literally today, to the tuition assistance.

    It is an underlying premise that has great morale impacts and implications for the force. So I think we fixed it.

    Mr. HAYES. Great news. Don't tell me where you got the money from. Is there any more of it? I have got a couple of other issues. [Laughter.]

    Anyway, thank you all.

    We had a remarkable hearing last week with a member of every branch of the service talking about injured folks from Iraq and Afghanistan and other places.

    Again, remarkable story of not only their courage and resilience and desire to continue to serve, but I think it needs to be pointed out that the brass has rethought some of their positions on how these young men and women could continue to serve, and that is laudable.
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    We also talked, subsequent to that, about how we can do more with these young men and women who have been injured. In the hearing we talked about some specifics, but just so you all are aware, and I think that you are to some degree, there is a tremendous desire on the part of the public to participate.

    Each one of these cases is unique and remarkable in and of itself. It is hard to get the uniqueness of the cases into the—even though it is a fairly extensive network, both within and without the military, to fit those together and make sure that they have the kind of support that they need subsequent to their injuries.

    So I just wanted to let you know that the private foundation community which is geographically located in every state in the union and philosophically more on board with these kinds of issues than virtually anybody, but they represent a constituency far larger than we can imagine which provides the human component for the connection as well as the financial need that any of these folks may need.

    So if you all will kind of keep that up there, as you always do, and let's make sure that we not only take advantage of the opportunities that exist out there, but find a way to connect with all these folks, again because of the incredible service of these young men and women.

    Mr. Chairman, I appreciate you calling this hearing today and took care of my main issue. I will yield back my time.

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    Mr. MCHUGH. Thank the gentleman.

    Mr. Secretary, when one looks at the budget submission for this year, one of the things that is a little bit different is that there is no targeting of pay increases, additional pay increases to certain segments of the force, mid-grade, senior NCOs.

    One of the explanations has been Secretary Rumsfeld has established a Defense Advisory Committee on Military Compensation. And I guess the question that we are going to have to face is when is that report expected, and given your Hill experience, do you think we will have it before we go either to markup or more likely to conference?

    Secretary ABELL. Mr. Chairman, not to be too flip, I am confident you will have it before you markup, but not this year. [Laughter.]

    It is due to report out in about a year. It is just forming now. We have just had the individual identified to be the Chair of that in. He has not held his first meeting yet.

    And we have asked him for emerging results before the fall, but we do not expect that he will be able to get the job done with the credibility that he would want and we would want in time to help you this year.

    Mr. MCHUGH. Well, all right. How about you helping us? You have any thoughts on that area?

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    Secretary ABELL. Yes, sir.

    Mr. MCHUGH. Listen, I understand that the report is important. We want to get it right, based on whatever the findings are. But we have some pretty critical short-term challenges here.

    Secretary ABELL. Yes, sir, you are absolutely correct. We did not target base pay this year. It is Employment Cost Index (ECI) plus one-half, as the law would require. And we elected not to target additional money in the base pay this year.

    A couple reasons. One, we have some other requests that you are going to see as part of the legislative proposal for bonuses and special pays, and we view that as also a way of targeting. But when you only have a certain amount of dollars, we thought they were better put against those bonuses and special pays.

    And we want to see what this Commission tells us about base pay versus special pays versus bonuses and our compensation system in general. As you know, it is a system of Band-Aids on top of Band-Aids. And my analogy is the cut that caused the original Band-Aid may have healed years ago, but we still have the Band-Aid there. Hopefully this advisory committee will help us sort through that and talk about what is the best way to compensate our folks out there.

    But we are looking at things like increase in caps on selected bonuses. We are looking at ability to pay lump sums, as I have talked about before. And we have money against those kinds of programs in the budget, and that is how we have elected to put the money that would have been for targeting.
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    Mr. MCHUGH. When do you expect to submit that package?

    Secretary ABELL. Sir, that is on the way to you. It is out of the Department, it is in the Office of Management Budget.

    Mr. MCHUGH. Oh, God. It could be years. [Laughter.]

    But sooner, rather than later?

    Secretary ABELL. Yes, sir. I am disappointed you do not have it now.

    Mr. MCHUGH. Well, I am disappointed to hear it as well. I was going to ask you, and given what you just said, it would not be an inappropriate question, but it may somewhat conflict with what you are about to submit to us.

    But in any event, as you are aware, a lot of Members of Congress have proposed a whole menu of new initiatives on the pay and bonus issue. And some of the more notable ones was, for example, replacement income for reservists who lose family income when they are called to active duty, particularly when they are government employees, there seems to be a focus on that, paying reserve retirement benefits immediately or at age 55, something that clearly Mr. Saxton has been concerned about, and increasing the benefit levels paid under Selected Reserve GI Bill, basic allowance for housing inequities. Any of these ringing a bell in your package?

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    Secretary ABELL. As you might expect, Mr. Chairman, some of those we like a lot, some of those we would wish you would not consider quite as seriously.

    Mr. MCHUGH. Do you want to tell which ones, because I do not want to get it wrong.

    Secretary ABELL. I think we like the adjustments that we have heard discussed for the Selected Reserve and GI Bill. I think the housing adjustments make sense. I think reserve retirement at age 55 works contrary to what we might think. Our information shows us that it actually ends up with encouraging our folks to serve less time, rather than more time, pays people to retire, in a sense, as opposed to stay with us, which is not quite where we want to be.

    You have heard we have challenges in manning our reserve components, and we think this would be, first of all, inordinately expensive, and second of all, counterproductive in the overall approach.

    Mr. MCHUGH. Income replacement?

    Secretary ABELL. As I was mentioning earlier, sir, that is the one—we will have this study done. I have some concerns about it, but they are not based on the information from the study.

    But I do not want to get to a point where state and local agencies or Federal Government says to prospective employees, ''Gee, if you are going to be a member of the guard and reserve and you are mobilized, then I have to pay your salary anyway. So I do not want you to be—if you are going to be an employee, I do not want you to be a member of the guard and reserve.'' That is the wrong place and we have the potential here, at least, for a negative incentive. And that would be sending the exact wrong message, I think.
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    And we need to understand the extent and the type of income that we are trying to match. I think that is a terribly complex issue. And there may be some there there, but I cannot tell you where it is today.

    Mr. MCHUGH. Let me pose a hypothetical to you. I think it is pretty accurately reflective of members like the gentleman from California, Tom Lantos. His argument is, let's cause the Federal Government to have to do this for its employees, if for no other reason then it sets an example for other subordinate government units.

    Secretary ABELL. Sir, I appreciate that philosophy. Again, I am concerned about what the down-range effects of that might be. I am also concerned about the active duty, soldier, sailor, airman, marine, that is side by side with the reserve component guy who is now getting paid twice, while the active duty guy is only getting paid once.

    I have never believed that two privates in the rank ought to have to get the same amount of pay. As you have heard bonuses come and go. They are for different things at different times. But I do get concerned about this one.

    When the folks sharing a foxhole or the two folks on a Stryker riding down the streets of Mosul and one is getting paid by the Federal Government all of their civilian pay and all of their military pay, and the one is just getting their military pay, because one is active duty and one is reserve, I do not know what that, again, does to our active force. And we have to be careful that we do understand that before we act.

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    Mr. MCHUGH. Thank you, sir.

    The gentlelady from California has joined us. We are pleased that she is with us. Be happy to yield to her.

    Ms. DAVIS OF CALIFORNIA. Thank you, Mr. Chairman. And I am sorry. I had a markup and two votes. So I missed some of the discussion. In fact, I may have missed a discussion of stop-loss. Did you have one?

    Mr. MCHUGH. No. No.

    Ms. DAVIS OF CALIFORNIA. No. Okay. I wanted to bring this up—to all of you, thank you very much for being here, for your service as well.

    I wanted to bring it up, because I have had a number of e-mail messages regarding it. And I also, I must say, when I was in Iraq over at Christmastime with the troops, if there was one issue that came to me from them, and I have acknowledged that that was not the greatest time to tap morale, I think that was a tough time to be there. But they did talk about that.

    And this particular e-mail from a constituent who actually served in Vietnam, he was writing about his son who is an infantryman in Iraq. His son's enlistment expires in a few weeks, and he will not really be able to leave because of the stop-loss policy. And he was told by his platoon sergeant that he should go ahead and re-enlist, because all enlistment will soon be involuntarily extended for two years.
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    So what I am asking is was that an appropriate way for him to have been approached? Could you speak to that, General Hagenbeck, because, again, I mean, for the record, I think it helpful for people to know whether or not there are any plans, whether publicized or not, for an involuntary two years?

    General HAGENBECK. And that was absolutely an inappropriate way to approach that soldier. And there are absolutely no plans to do that.

    As you well know, the stop-loss program is focused on keeping teams together. And that is, recruiting and packaging units, by and large, with the same faces, the same people that will train together and deploy together and stay together for the fight and come home together, rather than the individual replacement system that existed prior to 9/11. So that is the notion. that we are not doing what we have done in the past, which was bad business, and shaking hands when we meet each other on the battlefield for the very first time.

    Ms. DAVIS OF CALIFORNIA. Is there a discussion about that so much out in the field then, so that these kinds of statements, or perception at least, is—people do not feel that this is happening a lot?

    General HAGENBECK. We hear about it occasionally now, but I will tell you that the noise level is very low, because our commanders and our soldiers have begun to understand us. Because it has been in effect, as you know, now into the third year. On average, for this fiscal year, we will have somewhere between 9,000 and 10,000 of that 640,000 that will be stop-loss.
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    So the numbers themselves are very small, but for those individual soldiers it is obviously very meaningful to them.

    Ms. DAVIS OF CALIFORNIA. Perhaps the rest of you would like to comment. Do you think that at least the discussion of stop-loss has hurt recruitment, has had minimal effect, or you continue to do it?

    Admiral HOEWING. Ma'am, the Navy does not use stop-loss, now. We had a very small stop-loss program during the actual engagement phase of OIF. We removed that shortly. So we think that stop-loss has no impact on our recruiting missions, no impact on our retention missions. But it is always a tool that is there, just in case you need it.

    General BRADY. Similarly, ma'am, we had two periods of brief stop-loss, during combat operations. Our last one ended in May of 2003. And we have not seen an impact.

    General OSMAN. The Marine Corps also had stop-loss during OIF–1. We are not using stop-loss today. And the commandant is very opposed to going back to that. It would literally be a last-ditch effort, if we had to go to stop-loss.

    Ms. DAVIS OF CALIFORNIA. Well, I appreciate that. And perhaps those people who are watching would hear that and feel somewhat differently about what they may personally be experiencing or in their family.

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    I wanted to just, very quickly as well—and you may have touched on this—again, I am building on press reports that are suggesting that there has been a decrease in the caliber of recruits that are going through basic training. Is there any reason that those concerns should be voiced? And what have you seen in your experiences?

    Are the number of GEDs that people are receiving in the service, have they increased at all? Are there other indicators that would suggest, and in fact, perhaps, more individuals who even have criminal records, be it minor, are being accepted as well? And again, for the record, is there any reason to be concerned about that?

    General HAGENBECK. Ma'am, the short answer is, we pay attention to it. And there is not reason to be concerned at this time. There is a DOD policy—as I am sure you are aware—that up to four percent of those recruited can come in what we call category four, which is the lowest mental category that we allow.

    We have an internal policy in the Army that says we will not exceed two percent without going back to DOD to tell them that. Last year, fiscal year 2004, we were just under one percent. And we are up to—potentially we think we will bump up against that two percent this year and not have to exceed it. So again, the numbers are very small. If we get the 80,000 we anticipate, you are talking 1,600 in that category.

    Admiral HOEWING. Ma'am, our experience is just the opposite. Our recruiting population right now has never been better. During 2004 and continuing in 2005, we have well exceeded the high school diploma graduate reception that DOD requires. We have increased the number of those with college credits in their resume by 25 percent over what it was in the year before. Our Armed Services Vocational Apptitude Battery (ASVAB) average scores are up around 70 percent, much higher than it has been in the previous year. And at the same time, we have increased the diversity accession missions and accomplishments, and the quality associated with all of our minority communities. So our experience is just the opposite.
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    General BRADY. No, ma'am, we have not had the experience you referenced at all. Our quality has remained high. In fact, this year, it may be just a little bit higher, because we are recruiting to the toughest skills to get.

    General OSMAN. And again, for the Marine Corps, we have experienced no problems whatsoever recruiting the quality that we are looking for. In fact, our statistics are probably higher now than they have been historically. We are doing very well.

    Ms. DAVIS OF CALIFORNIA. Okay, great. And perhaps—I think this was a New York Daily News article. Maybe, when those articles come out, if you all could respond to those, that would be helpful.

    Thank you, Mr. Chairman. My time is up.

    And, Secretary Abell, I would like to talk to you about SSI legislation, because there is a difference about pay which is considered earned versus unearned. And we know that those families who have a child that was receiving Social Security income are compromised by additional combat pay that they are receiving.

    I would certainly hope that you are aware of that. And we would love to talk to you about it and hope that you can support some legislation in that regard.

    Secretary ABELL. Yes, ma'am.

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    Ms. DAVIS OF CALIFORNIA. Thank you. I appreciate that.

    Mr. MCHUGH. I will forego the temptation of asking why California is reading the New York Daily News. [Laughter.]

    We are flattered—the New Yorkers. [Laughter.]

    The gentlelady from Virginia, who today, I am pleased to announce, was selected the Vice Chair for the majority on this committee, Ms. Drake.

    Mrs. DRAKE. Thank you, Mr. Chairman.

    Gentlemen, thank you all for being here. And as with Congresswoman Davis, I am very sorry to be late.

    But my question is, the Secretary of Defense has established a Commission on Military Compensation. And they are tasked to examine the complexity of the military compensation system with a view toward simplifying that system.

    I do know they are not due to finish their work until the end of 2005. But I wondered if you could discuss what types of reforms to the military's pay system that are being considered by this Commission?

    Secretary ABELL. Yes, ma'am. The individual designated to be the Chair of this Commission, or this advisory committee, was just in, chatted with Dr. Chu and myself. We gave him the charge, if you will, for his committee to work.
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    We want him to look at the entire range of compensation and look at how we got here, what we are tying to do and then what is the best way to do that. We may have asked them to look at more than they are able to do in the time frame that they have to do it. But it is a very competent group of folks, very experienced. And I am confident that they will come back to us and ask to narrow it, if we have given them too broad a charter.

    But we want them to look at it. We have not put anything off limits, including is our retirement benefit right? And as you know, that is a third-rail on almost any compensation discussion. But we did not want to limit them. If they thought that we ought to have a meaningful discussion about what the retirement system ought to be, then we are willing to have that discussion with them.

    But also we want to look at base pay. We want to look at bonuses. We want to look at special pays. We want to look at deferred compensation. Is the mix right? Is it wrong? Is there a better way to do it?

    Mrs. DRAKE. So everything is on the table.

    Secretary ABELL. Everything is on the table. And it is reserve component as well as active component. They are not limited to only the active duty folks.

    Mrs. DRAKE. Thank you very much.

    Thank you, Mr. Chairman.
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    Mr. MCHUGH. Dr. Snyder.

    Dr. SNYDER. Thank you. Thank you, Mr. Chairman.

    Secretary Abell, I wanted to ask if you would follow up, please on—I guess I am showing my family doctor background here on these health related issues. But when we talked about the fact I think the Arkansas National Guard—I forget what the number was—but when they mobilized the first round, it was about 18 months ago, they had about a little over 20 percent that were not medically fit for deployment. And it led to a lot of this medical hold business we had. But you said it has now been reduced to three percent. Would you explain why the reduction in the number?

    Secretary ABELL. Yes. We have looked at the process in partnership with the Army as to how we were doing it. And when we first started, we were probably clumsy about mobilizing people. We just reached out and grabbed the whole group, if you will, and brought and mobilized them. And now, we have got some sort of initial screenings that go on before they get to that process. And what we found before was we were mobilizing folks and then discovering their problems. And then they were on active duty. They were in med-hold status. They were unhappy. We were unhappy.

    And now, we are identifying those folks early. We are helping them. But they are not on active duty. They are not a part of the mobilizing unit. So they are not degrading the readiness of that mobilizing unit while we get them better. And then they might join later.

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    Dr. SNYDER. Is this our 25-day rule, that if somebody is called up and you discover they have untreated diabetes or something, they go back home. And they are not——

    Secretary ABELL. Yes.

    Dr. SNYDER. That is what I thought was the answer. But it does not change the fact that we still have probably 20 percent of our reserve component that are not medically fit for deployment today. We just choose not to call them up. We have screened them, and we send them back.

    So we still have an issue, whether there is a lack of health insurance or whatever it is, we still have that issue. In fact, your pool of people then that have not deployed is going to increasingly have medical problems within the reserve component.

    So we still have a real issue out there about the medical fitness of the reserve component. It is just, we are not getting them to the point where they are pulled up and activated and then makes it difficult to complete your roster with the kind of folks you need with good health status to go overseas.

    Secretary ABELL. Yes, sir, I do not take issue with that view. But it does not just stop there. These folks that——

    Dr. SNYDER. No, I understand that. In fact, that was part of what Congress did the last bill with our TRICARE for the reserve components when they come back, is to try to deal with this issue.
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    I think we see this a lot, that the military has to deal with, is the fact that we have not solved in this country how to deal with health insurance and the cost of health care. And so you all have to solve it somehow. And you do the best you can. But it becomes a very expensive proposition. But I agree with you. So the issue is it is how we count the numbers that is different, from the 20 percent to the 3 percent.

    One of the Easter eggs in your statement, Mr. Secretary, on page 39 which you outline—I just did not understand it very well. Would you give me a thumbnail sketch of the flexibility that you all are seeking for the Defense health plan in the money?

    Secretary ABELL. Yes, sir. Sir, for the last couple of years, and in the Defense appropriations bill, there has been language that prohibits the Department from moving funds from a military treatment facility to the managed care contractors. So when we give money to the hospital commander at some base, if they want to buy care downtown, if they have to buy care downtown, they do not have the option of buying it from our managed care contractor, who might well have a solid network in place to provide that capability at a lower cost. So now this military treatment commander must go buy it from someone other than the contractor and in most cases pays a higher price for it.

    I understand the intent to protect the military hospital and to guard against at least the perception if not the reality of a flow of money from the medical treatment facilities (MTFs) to the managed care contractor.

    But that was before we went to our new kinds of contracts. And now I think we are really—first of all, we are costing this military treatment facility commander more money. It costs him more money to go buy the service downtown then it might. I want him to be able to shop for the best deals.
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    Dr. SNYDER. So you could have a situation where an entire division is deployed. They take their medical team with them. Their dependents are left behind. But you have a decreased number of medical personnel available. And you are trying to find——

    Secretary ABELL. Or it might be that this hospital does not have an MRI. So he buys all of his MRIs, whether the division is there or not, downtown. And our contractor may have a deal with an MRI provider to do this for $100 a shot. If he cannot——

    Dr. SNYDER. I would like to see that price for an MRI, I will tell you that. Hypothetically speaking. [Laughter.]

    Secretary ABELL. But now he buys it for $200 a shot from the guy down the street that is not part of the managed care contract.

    Dr. SNYDER. I got it. I understand.

    So that is language that is not statutory. I mean it is not coming through the Defense bill. It is coming in appropriations.

    Secretary ABELL. No, sir. It is an annual general provision in the Defense appropriations bill. And we have talked with the appropriations staff and urged them to help us by this, by getting them to understand that we have changed how we do contracting. Our managed care support contractors are a different relationship now than they were before. But we have been unsuccessful in getting those couple of lines out.
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    Dr. SNYDER. Thank you all for being here. Thank you for your patience this afternoon.

    Mr. MCHUGH. Thank the gentleman.

    General Osman, I have to ask—and forgive me because I was in between the other chairman-like duties, whatever the heck those are, playing with this light thing, I guess—I heard you reference $600 in response to a question about reenlistment bonuses and such. Did I hear that correctly?

    General OSMAN. It was enlistment bonuses, sir.

    Mr. MCHUGH. And what was the context of the $600?

    General OSMAN. It was just we attempt to be frugal with the utilization of enlistment and reenlistment bonuses. And I was merely making the point that the average enlistment bonus for a Marine is $600 or less.

    Mr. MCHUGH. Well, that is frugal. I guess the next step is you make them pay you. Okay, I just wanted to make sure I heard that right.

    General OSMAN. That is correct, sir.

    Mr. MCHUGH. Mr. Secretary, we have a proposal that the subcommittee staffers are working on with Representative Markey, a gentleman from Massachusetts. And essentially what the bill would do is protect the combat-level pays for war-wounded personnel when they are repatriated, redeployed back home, and generally hospitalized, although I understand his intent that that income level, that war-theater income level, would be sustained until the individual either became deceased or separated from the service or was returned to active duty. So it is not just during hospitalization.
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    Have you had a chance to look at that, to think about that? And are you looking at any kind of initiative to protect that income? Because if you look at it holistically, some of these folks, under very trying circumstances, receive a big hit on their income and usually in a 90-day period. Is that part of the equation we are pondering?

    Secretary ABELL. Yes, sir. We are looking at that. As a matter of fact, just before I came to this hearing, I was meeting with OMB and the Domestic Policy Council to talk about what are possible solutions to this precise problem.

    As you know, some of those pays, by statute, expire 90 days after they come out of the theater, and I think that is the issue we are all talking about. There are several different approaches out there. And the administration has not yet settled on one, although I think it is fair to say that the West Wing folks have one they like more than others. But they are not ready to pick one yet. And they are interested in what we have got going as far as our studies on this arena.

    It has also been a discussion in other hearings, with the service chiefs and others who have expressed a desire to do something about this. And now I think our only dilemma is figuring out what it is. And, again, this is not long term in figuring it out, this is in short term. We should be able to come to a conclusion here fairly quickly.

    I have not seen the bill you are talking about, but I know the——

    Mr. MCHUGH. I was, frankly, more interested in the concept than in the provision. I am not cognizant with every line of the bill either. But the intent.
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    Secretary ABELL. Yes, sir.

    Mr. MCHUGH. I would be shocked if anybody did not support it, but I do not want to assume.

    I thank you, gentlemen.

    Any other subcommittee members want to be recognized?

    Well, thank you very much. And we do appreciate both your service and your patience here today. Obviously, this is an issue, as I mentioned in my opening comments, and I am sure all the members agree, that we are going to be following very carefully.

    This is the critical component of the success of our military, the men and women in uniform, and we have to continue to recruit and retain in both the active and the reserve components the finest, as you have serving with you right now. And in that regard, in my opinion at least, there is not too many people in this town that have more important jobs than you gentlemen. And thank you and God bless you for doing it. And we all wish you well. Mr. Secretary, thank you, sir, for your continued service.

    And with that, the subcommittee stands adjourned.

    [Whereupon, at 4:49 p.m., the subcommittee was adjourned.]

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