This initiative is an essential element of the  Department of the Navy’s Human Capital Strategy, which was announced in  June 2004. These limitations could have  adversely impacted the results of the review. We have shown that when the reserve  force can successfully meet deployment and operational requirements, it  can generally perform missions at a lower cost than the active force  because active units have all full-time personnel assigned whereas reserve  units have mostly part-time personnel assigned.By identifying capability  gaps in the active force as the primary criterion for determining the  required reserve manpower, the Navy failed to assess whether the lower  cost reserve force could be used to meet capabilities currently provided by  the active force. Additionally, our  prior work has shown that decisions about the manpower needed to  perform government functions should be driven by valid and reliable data.However, in its briefing to the Chief of Naval Operations, the Fleet Forces  Command acknowledged that many of these critical mission documents  were outdated. Zero-Based Review Results Would Change the Mix of Active and Reserve Forces, Reduce Manpower Costs, and Change Some Command and Control Responsibilities

Implementation of the Navy’s zero-based review’s recommendations will  change the mix of active and reserve forces by decreasing the number of  reserve personnel and increasing the number of active and civilian  personnel. The zero-based review’s recommendations will  also have the active force assume greater command and control  responsibility over the reserve force. As indicated in table 1, the Chief of Naval  Operations approved a net reduction of over 16,000 reserve positions, a net increase of about 880 positions in the active force, and a net increase of 450 civilian personnel positions. At the activities we visited, we found that the reasons for these  recommended changes in manpower varied. Manpower Changes Would Result in Some Cost Savings

The Fleet Forces Command initially estimated that implementing the  manpower changes recommended by the zero-based review would save  approximately $283.5 million annually. For  example, the Commander, Navy Reserve Force, will now report to the  Commander, Fleet Forces Command, for the training and readiness of the  reserve force. This realignment of responsibility is  consistent with the Chief of Naval Operations’ objective to create a more  integrated total force. Furthermore, using outdated mission  documents as a baseline for determining manpower requirements  substantially reduced assurance that the Navy activities started with the  best data for making quality manpower assessments. Recommendations for 	 To assist the Navy in meeting its human capital strategy goals and ensure  Executive Action  that ongoing and future Navy active and reserve manpower requirement assessments result in the most cost-effective force, we recommend that the  Secretary of Defense direct the Secretary of the Navy to take the following  two actions: develop and implement guidance to ensure that (1) ongoing and future  workforce reviews include cost analyses to determine the most cost­ effective mix of active and reserve manpower and (2) the methodology  for and results of cost analyses are documented and allocate the required resources to maintain current Navy mission  documents that would provide a valid baseline for ongoing and future  workforce reviews. To determine how the recommendations from the zero-based review will  affect the reserve’s manpower, funding, and command and control  relationships with the active force, we obtained and analyzed the  justification packages submitted by the 10 Navy activities, the  recommended changes in the number of required reserve manpower and  the cost factors used to calculate manpower savings as well as the  corresponding projected funding requirements for reserve manpower. As a result, the activity needed fewer  personnel.
Why GAO Did This Study

In 2004, the Navy completed a study of how many selected reserve personnel are needed to support the active force in meeting current and future mission requirements. The Ronald W. Reagan National Defense Authorization Act for 2005 mandated that GAO assess several aspects of the Navy's study. This report addresses (1) the criteria and process the Navy used to conduct the review and what limitations affected the Navy's analyses and implementation plan; and (2) how the recommendations from the review will affect the reserve's personnel, funding, and command and control relationship with the active force.

What GAO Found

In conducting its review of Selected Reserve personnel requirements, the Navy established criteria and followed a structured process, but GAO noted two limitations that could have potentially affected the quality of the results. The Navy did not analyze the most cost-effective mix of active and reserve personnel and in some cases used outdated mission documents as the baseline for analysis. The Department of Defense personnel directive states that missions should be accomplished using the least costly mix of personnel. In addition, GAO's prior work has shown that when reserve forces can successfully meet deployment and operational requirements, they can perform missions for less cost than active forces, and that decisions about the number of personnel needed to perform government functions should be driven by valid and reliable data. The 10 activities' justification packages GAO reviewed did not indicate if or how commanders evaluated the cost-effectiveness of using active or reserve personnel. A key reason why cost-effectiveness was not evaluated is that the Fleet Forces Command provided no guidance requiring that such an analysis be conducted or submitted as part of the activities' justification packages. Additionally, because the Navy had not devoted the resources to update some of its baseline mission documents prior to the start of the review, some of the activities' analyses did not start with the best possible data, which may have resulted in inaccuracies in their determinations about capabilities and personnel requirements. Including cost-effectiveness in the criteria for the zero-based review and documenting such analyses, as well as ensuring data accuracy, could have better demonstrated a sound basis for the recommended personnel changes and, in some cases, may have led to different recommendations. The review's recommendations will result in a change in the force mix, some cost savings, and the active force assuming greater command and control over reserve forces. The Chief of Naval Operations approved personnel changes that would result in a net reduction of over 16,000 reserve positions, a net increase of about 880 positions in the active force, and a net increase of about 450 civilian personnel positions. The reasons for these recommended changes varied by activity. The Fleet Forces Command also initially estimated that the Navy could save approximately $283.5 million annually by implementing the personnel recommendations, although this estimate is changing as some activities reexamine their personnel requirements using more recent data. In addition to total force personnel changes, the active force is assuming greater command and control responsibility for the reserve force. For example, the active force is now responsible for the training and readiness of the reserve forces and is receiving their status reports. This realignment of responsibility is consistent with the Chief of Naval Operation's expectations for creating a more integrated total force.