STATEMENT OF

LIEUTENANT GENERAL FREDERICK E. VOLLRATH

DEPUTY CHIEF OF STAFF FOR PERSONNEL

UNITED STATES ARMY

MARCH 18, 1998

Mr. Chairman and members of the Subcommittee, I appreciate the opportunity to testify before you today on behalf of the soldiers of the United States Army. I would like to discuss with you today the current status of our Army.

ACTIVE ARMY END STRENGTH

The Army is implementing its portion of the Quadrennial Defense Review (QDR) recommendations by reducing end strength from 495,000 in fiscal year 1997 to 488,000 in fiscal year 1998 and finally 480,000 by the end of fiscal year 1999. Fiscal year 1998 Congressional guidance requires the Army to achieve an end strength of at least 487,575 (1.5% below 495,000). Current forecasts show the Army meeting its end strength target, requiring approximately 72,000 enlisted and 6,300 officer accessions. Accompanying the end strength reduction, a series of managed loss programs have been implemented to properly shape the personnel force to confirm to new force structure requirements. About 340 officers and 3,100 noncommissioned officers will participate in these loss programs.

The Army's fiscal year 1999 end strength is programmed at 480,000. About 71,000 enlisted and 6,200 officer accessions will be sufficient to achieve the programmed end strength. Continuing fiscal year 1998 force shaping initiatives, 1,100 officers and 2,400 noncommissioned officers will participate in managed loss programs.

The Army intends to support a relatively stable force structure with an end strength of 480,000 through fiscal year 2005. Maintaining the Army at a constant strength will require each loss to be replaced with a gain. Enlisted accessions will increase to approximately 80,000, while officer accessions decrease to 6,250 per year to meet this requirement.

OFFICER ISSUES

Officer Drawdown Update

At the end of fiscal year 1997, the officer corps had completed its drawdown. The primary focus of the fiscal year 1998 program is to shape our inventory, by grade, to meet both current and future force structure. Drawdown program objectives continue to be consistent with both OSD and congressional guidance to maximize voluntary separations, demonstrate care for soldiers and their families, maintain war-fighting readiness, and do it all within our budget. Main fiscal year 1998 officer drawdown programs include Voluntary Separation Incentive Program (VSIP) and Temporary Early Retirement Authority (TERA). The VSIP and TERA programs are limited to Army Medical Department (AMEDD) officers with selected skills who are at least one time non-select (1XNS) to the next higher grade and provide these officers an excellent base on which to transition to their non-military careers. We are also using a very limited Selective Early Retirement (SERB), separating 21 officers, to help shape our senior medical officer force.

We continue to support the Army National Guard Reform Initiative by allowing 150 basic branch officers with 2-3 years of service to separate early and serve the remainder of their obligation in an Army National Guard unit.

Fiscal year 1999 will be the last year that we will use TERA and/or VSIP as the authorities for both of these programs expire at the end of FY99. We do plan to use TERA in FY99 as one last force shaping tool for officers with more than 15 years of service and non-selected to the next higher grade. As we enter the next century, the Army does not see the need for future drawdown or shaping programs, assuming the programmed end strength of 480,000 remains constant. However, the Army is not opposed to the retention of these authorities.

Officer Accession Program

Officer active duty accessions for FY98 are about 6300. This breaks out to 3900 basic branch accessions, 975 warrant officer accessions, 1175 medical accessions, 100 chaplain accessions and 150 judge advocate general accessions. The FY99 numbers will be similar.

We expect the US Military Academy to produce about 880 officers for active duty, Cadet Command to produce about 3800 officers total for both active and reserve duty, and Officer Candidate School to produce about 425 officers for active duty. These numbers are similar to FY97 and should also be similar for FY99. With the end of the draw down, we are able to better forecast required accessions to sustain the force and provide our accessioning sources more concrete missions and goals.

OFFICER PERSONNEL MANAGEMENT SYSTEM

OPMS XXI

OPMS XXI is a revised system for managing Army officers. It is designed to address the needs of the Army into the future, as well as correct today's problems. OPMS XXI is based upon three primary criteria: (1) Enhance the war-fighting capability of the Army by stabilizing field grade leadership in units and by providing unit leaders with greater depth of experience and development. (2) Provide all officers with a reasonable opportunity for success, by promoting not only officers specializing in war-fighting, but also those officers who are specialists in those institutional functions associated with supporting the warfight and "running" the Army. (3) Balance the mismatch between the grades and skills required by the Army authorization documents, and the grades and skills of the field grade officer inventory.

OMS XXI accomplishes these objectives through a Career Field-based management system for field grade officers in which officers are developed and promoted in one of four Career Fields. The OPMS XXI system design provides an opportunity to develop better war-fighting skills and simultaneously build a bench of officers with the specialty skills required today and in the future.

OPMS XXI addresses officer management holistically, from a strategic perspective which focuses on improving the overall effectiveness of the Army as an organization, rather than merely concentrating on the near-term effectiveness of systems. Under OPMS XXI, specific management practices and policies are aligned both vertically and horizontally to ensure that officer development supports the Army's mission and strategic vision. Part of this holistic approach is an annual review process which continually assesses not only the effectiveness of OPMS XXI in achieving its desired outcomes, but also whether or not the outcomes being achieved are the correct ones in light of evolving Army requirements.

OPMS XXI is being implemented in two phases. Phase I is ongoing and consists of those administrative actions required to prepare for the transition to a Career Field-based management system. Phase II will begin in October 1998, and transitions the officer corps over a four-year period, with three year group cohorts undergoing the career field designation process each fiscal year until 2002. Following completion of the transition period, OPMS XXI will function as designed, with each cohort of officers designated into a Career Field following selection for promotion to major.

ENLISTED RECRUITING

Last year the Army met its active end strength with 82,000 enlisted accessions instead of the originally programmed 90,000. This year we plan to access 72,000. Continued progress in retention and attrition, along with other programs being implemented within the recruiting force and training base, should have continued payoff in the future.

While our internal actions can, to some extent, reduce annual recruitment goals, we still project long-term Regular Army annual enlistment requirements to be around 80,000; our Reserve enlistment requirements to be around 48,000, and the National Guard enlistment requirements to be around 61,000. Our intent is for all components to meet or exceed DoD specified quality marks.

Recruiting success depends on a number of factors: the youth marketplace dynamics; Army market presence; a quality, trained recruiting force; effective, efficient recruiting support programs; and a controlled, stable, resourced modernization plan.

The success, prosperity, and security of the United States today impacts heavily on the environment for Army recruiting. The competition for quality young men and women between business, education, and government has become more intense. The propensity of today's youth to enlist, coupled with current and potentially long-lasting economic good times, creates the most difficult marketing and recruiting challenge the all-volunteer military has faced recently.

Army recruiters serve across America, its territories, and in every U. S. military enclave overseas that can support enlistments. Despite challenging living and working conditions, Army recruiters are serving with pride. They are vigorously pursuing their assigned missions and they are enhancing the future of every young person they contact. We owe these recruiters and their families the training necessary to be prepared for their task, a quality recruiting environment, and adequate resources to do their jobs.

ENLISTED RETENTION

Maintenance of a viable retention program is critical to the sustainment function of the Army's personnel life-cycle. Given current budget constraints, our retention efforts demand careful management to ensure the right skills and grades are retained at levels that keep the Army ready to fulfill its missions world-wide.

The success of our retention program is dependent on many factors, both internal and external to the Army. Among the external factors that we cannot influence are: the economy, civilian job market, and the world situation. Included among the internal factors we can affect are: benefit packages, promotions, deployments, and attractive incentive packages including reenlistment bonuses. Each of these factors affect soldiers differently and the challenge facing the retention community is to provide incentives to qualified soldiers that make them want to stay in America's Army.

Our incentive programs provide monetary and non-monetary inducements to qualified soldiers looking to reenlist. The selective reenlistment bonus, or SRB, program offers monetary incentives to eligible soldiers, primarily in the grades of specialist and sergeant, to reenlist in skills that are critically short or that require exceptional management. We rely on an adequate SRB program to increase reenlistments in critical specialties such as Infantry, Special Forces, maintenance, and intelligence skills to keep our units battle-ready.

The Army retention program is healthy. Fiscal year 1997 retention efforts were successful; however, early concerns over budgetary constraints and uncertainties over end-strength required an intense management effort, mentioned earlier. Final fiscal year 1997 results indicate that the Army's active component reenlisted slightly over 80,000 soldiers, exceeding our annual 79,900 mission. Through the first quarter of fiscal year 1998, the Army has reenlisted 16,300 soldiers against an objective of 15,000. Our Reserve Component transition efforts during fiscal year 1997 were equally successful as we transitioned nearly 13,000 separating active duty soldiers into Reserve Component units, exceeding the 10,300 annual objective. As of the first quarter fiscal year 1998, we transferred 2,900 active duty soldiers into Reserve Component units against an objective of 2,800.

Active Army first term retention rates are at historic levels, as we saw them exceed 50 percent in fiscal year 1997. Mid-career rates have leveled off to pre-drawdown levels, approximately 70 percent. Career soldiers tend to remain at rates between 92 and 96 percent. As we conclude the drawdown and can begin to maintain manning levels at a steady state, we expect retention rates to continue at present levels. To date, the Army is keeping these soldiers in adequate numbers to sustain readiness due, in large part, to our existing incentive programs and the continuing involvement of concerned leaders at all levels.

Our major retention concerns for the remainder of fiscal year 1998 and beyond are the impacts of perceived erosion of benefits such as medical care, housing and educational opportunities, promotion slowdowns, continued availability of adequate bonus money, and residual effects of frequent deployments.

COMPENSATION

The purpose of the military's compensation system, like any compensation system, is to attract, retain, and motivate people. Military life offers unique opportunities for experience, skill training, national service, and personal growth, and imposes demands of selfless sacrifice. Today's all-volunteer force is more similar to the general population than at any other time in our history. In order to staff this military with quality volunteers, we must compete directly with the private sector. Compensation is key to remaining competitive. An effective military compensation system must be flexible and competitive in order to sustain growth and remain attractive, in comparison to civilian opportunities. We must motivate our service members by encouraging productivity and rewarding advancement, and keep our compensatory packages reliable, constant and predictable. This year's budget contains the by-law 3.1% pay raise and will be favorably received. The inclusion of Basic Allowance for Housing and Basic Allowance for Subsistence Reform in the 1998 National Defense Authorization Act was welcomed by the Army. These reforms, which align allowances with housing and food cost indices, is the first step toward making these allowances credible, reflecting the true cost to the soldier.

MILITARY RETIREES

Army retirees have served our nation honorably and selflessly. Many continue to serve in various way in their local and military communities. It is important that we honor the promises made by our predecessors to our retirees while they served on active duty during World War II, Korea, Vietnam, and now the middle east. Today's active duty soldiers are cognizant of promises broken and how we treat our retirees. After all, many of our active duty soldiers are the sons and daughters of our retirees. Active duty soldiers are making career decisions based on our promises kept to their parents and all retirees.

I would like to thank Congress for passage of the Retiree Dental Insurance Program. The plan became effective February 1, 1998, and early reports indicate it is being well accepted by our retirees. We are watching the progress of the program closely.

The major concern of our retirees is the continual erosion of access to military health care. As we continue to draw down the force, close installations, and consolidate medical facilities, access to military health care diminishes even further. Many who retired near an active installation with a hospital now discover that the installation and hospital has downsized, reorganized, or closed, leaving them without access to military health care. For many, especially those in their advanced years, health care is either unattainable or too expensive for their retirement budgets. Approximately 39% of military retirees are age 65 and older making legislative proposals concerning Medicare Subvention and the Federal Employees Health Benefit Program (FEHBP) of added importance. We urge Congress to favorably consider full Medicare Subvention authorization and permit military retirees the option of enrollment in FEHBP.

Cost-of-Living Adjustments (COLA) to military retired pay and maintaining military commissaries and post exchanges remain important factors to the quality of life of our retirees. Reductions, delays, elimination of COLAs, or even the threat of such actions, creates concern, not only to our retirees, but to our active duty soldiers. All perceive such actions as a break in faith and a reduced standard of living. Our failure to appropriate necessary funding for commissaries reduces the overall compensation for active duty soldiers and retirees. Commissaries, post exchanges, and retired pay, as well as active duty pay, are part of the overall compensation package for soldiers.

Our retirees, fully support the active force in opposing any further changes in the military retirement system. The full effect of changes in retired pay computation made in 1980 and 1986 cannot be assessed at this time. We simply do not know what the future holds, and what impact it will have on recruiting and retention beyond 2000 and 2006. We cannot, as a world leader and power, make further changes that will continue to erode the value of our military retirement program, which ultimately impacts on the quality of life of our soldiers and retirees, and will cause our soldiers to lose faith in their country and their promises.

EQUAL OPPORTUNITY

The Army remains committed to providing a proactive Equal Opportunity (EO) program. The Equal Opportunity Program formulates, and sustains a comprehensive effort to maximize human potential and to ensure fair treatment for all soldiers based solely on merit, fitness, and capability which all support readiness. Our leaders strive to ensure that equal opportunity and fairness are provided for all soldiers and their family members irrespective of race, color, religion, sex, or national origin, and to provide an environment that is free from sexual harassment.

Our Equal Opportunity philosophy is based on fairness, justice, and equity. Leaders at all levels are responsible for sustaining a positive EO climate within their units. Specifically, the goals of the EO program are to provide fair treatment for military personnel, civilians, and family members both on and off a military installation. Additionally, we strive to create and sustain effective units by eliminating discriminatory behaviors or practices that undermine teamwork, mutual respect, loyalty, and shared sacrifice of the men and women of America's Army. All soldiers have the right to compete for advancement based upon their individual abilities and merits.

EDUCATION

The Army Continuing Education System (ACES) is the Army's premier education program supporting readiness, recruitment, retention, and quality of life. ACES provides education opportunities for soldier self-development which enhance the competitive edge of the Force XXI Army. Also, ACES provides training and education for the civilian workforce and adult family members.

Tuition Assistance (TA) is an important component of ACES and, beginning October 1998, the Army will support the OSD-directed Service-wide standardized TA policy. Servicemembers will receive 75 percent of tuition costs up to $187.50 per semester hour, whichever is less, with a maximum total yearly amount of $3,500.00. For soldiers, this uniform policy will further enhance benefits because they will have less out-of-pocket expenses, and the total number of courses enrolled may potentially increase.

ACES is currently reviewing efficiencies associated with outsourcing selected education services, not previously contracted out, Army-wide. After completion of a contracted Activity Based Costing to provide precise cost and effectiveness of outsourcing, decision about ACES outsourcing will be made.

Also, as a part of reengineering initiatives, ACES is developing a more standardized voluntary education system addressing the unique needs of both the Active and Reserve components.

To support Army's Distance Learning Plan, ACES is planning to create and manage multi-use learning environments, technology-based facilities providing necessary training, education, and support materials for soldier development to meet unit and individual needs. ACES acquisition of distance learning capabilities for education programs (multi-media computers, Internet, CD-ROM, cable, video teleconferencing, and other available electronic resources) will support comprehensive education and training requirements, military and civilian, and support the Administration's efforts to use new technology to expand access to education and training.

CIVILIAN WORK FORCE

The Total Army Team includes the skilled, dedicated members of the Army civilian work force. Simply stated, America's Army could not go to war or conduct peacekeeping operations without the continuity and expertise that Army civilians provide in such vital functions as research, development, and engineering; contracting; logistics; base operations; medicine; and communications. As of late February 1998, 77 Army civilians were deployed to Bosnia, Croatia, and Hungary in support of Operation Joint Guard. Additional Army civilians are now being deployed to the Gulf Region as part of Operation Southern Watch.

Civilian Manpower

We have made a lot of progress since the drawdown and reshaping of the Army's civilian workforce began in FY 1989. Forty percent fewer civilians are on the Army roles today when compared to the end of FY 1989. Based on our current planning estimates, the percent of decrease will reach approximately 46 percent by the end of FY 2003. This includes 17,000 reductions related to the Quadrennial Defense Review (QDR) and 8,000 from prior reduction initiatives. The result will be an Army civilian work force comprised of approximately 218,000 employees serving throughout the world.

While approximately 160,000 employees have been reduced from Army roles since FY 1989, only 4,500 were separated through involuntary means. This has been made possible, to a large extent, by the tools you have given us. These include voluntary early retirement approval (VERA) and voluntary separation incentive pay (VSIP). The Army will need VERA and VSIP to continue into the future if we are to continue to be successful in our drawdown initiatives.

As we continue the reshaping of the workforce in the QDR phase of the drawdown, we will do it without a reduction in readiness and in the spirit of treating people fairly. Further program reductions in the workforce are related to our competition and competitive outsourcing initiatives and other efficiency initiatives; force structure reductions; functional transfers; base closures and consolidations; and other program review workload decisions. In addition, the Army has included a ten-percent reduction in our management headquarters account in this budget.

Need to Improve Civilian Force Planning

While we have been successful in our downsizing, we are at a stage where the Army's civilian work force must be managed carefully. The composition of our work force has been changing dramatically in recent years. The downsizing of the Army civilian work force has left us with an unbalanced age distribution. In our white-collar, permanent population, only 14 percent of Army civilians are now under age 35. Fully 55 percent are over age 45. In this population, 61 percent are "baby boomers" who will begin reaching retirement eligibility in large numbers in 2003, when the median age is projected to have risen to 52. As these people retire, with fewer Army civilians in the pipeline behind them, we anticipate keen competition with the private sector and other agencies for replacements in many occupations. Effective planning for their replacement needs to take place now. Now is also the time to plan the composition of the work force of the future, in order to put in place the policies and programs to support it.

The need to improve civilian force planning has, therefore, become increasingly important. We have a number of initiatives under way. These include competition and competitive sourcing to determine what the private sector can do, assessments of current and future capabilities to determine what the Civilian Objective Force should be, workload-based requirements determination, and revitalization of the Army's civilian intern program to "grow from within" our future leaders. Taken together, these initiatives will improve our use of current capabilities and our ability to plan for the future. We are bringing them together under the umbrella of Civilian Personnel Management System XXI (CPMS XXI), a process that will help us to determine how to manage and administer the civilian work force (to include contractors) supporting Army After Next.

Army Civilian Leader Development

To counter the losses we expect as the "baby boomers" in our work force reach retirement age, it is critical that we significantly increase our civilian recruitment at the entry grade levels, particularly in professional and administrative occupations.

The Army Civilian Training, Education and Development System (ACTEDS) intern program is the Army's primary means of accessing and providing initial occupational and leadership training to those who will become our future civilian leaders. Studies show that interns hired and trained through this program are better educated, include a higher representation of minorities, are more mobile, and have a much better retention rate than employees hired at the same grade levels from other sources.

ACTEDS also ensures the planned development of our future civilian leaders as they progress from the intern level through key positions. It provides a combination of progressive and sequential work assignments, formal training, and self-development similar to the military system. Through ACTEDS, the Army is committed to the development of the competent, confident leaders critical to a high-performing work force.

Over time, uncertainties of the civilian drawdown and continued reductions to the ACTEDS budget have had a significant effect on the Army's ability to maintain an adequately sized intern pipeline. Funding for the ACTEDS program was reduced by 46 percent from FY 89 to FY 98; programmed funding levels reduce it further. The Army faces increasing difficulty in filling critical journey level vacancies and building a cadre of future leaders.

CLOSING

With today's all-volunteer force, we must continue to provide incentives and programs that will continue to attract quality soldiers and ensure an excellent quality of life for all soldiers and family members. Our soldiers have served their country proudly and have done a magnificent job. The American public expects and deserves no less.