DOD officials attributed the decrease to a  combination of reduced overseas contingency operations, a reduced  annual average strength of the force, and a favorable recruiting climate. Obligations for Special and Incentive Pays for Active Duty Personnel Decreased from Fiscal Years 2005 through 2015

Our analysis of DOD budget data shows that from fiscal year 2005  through fiscal year 2015 the department’s active duty S&I pay obligations  decreased by 42 percent, from $5.8 billion to $3.4 billion (see figure 1). DOD officials told us that the services would likely need  to make programming changes to various financial and personnel systems in order to separately track and report Reserve Component S&I  pay obligations in their budget materials. The Military Services Varied in Their Application of Key Principles of Effective Human Capital Management in S&I Pay Programs for Selected Occupations and Have Not Taken Steps to Fully Ensure Effectiveness in Program Design

The military services have largely applied key principles of effective  human capital management in using S&I pay programs to retain  servicemembers within our selected case study occupations (nuclear  propulsion, aviation, and cybersecurity). The extent to which the  principles were applied varied in consistency by service and by  occupation. Nuclear Propulsion Occupation

The Navy’s nuclear propulsion program demonstrated consistent  application of all seven principles throughout the use of S&I pays for both  officers and enlisted personnel. In the absence of measures for ensuring efficiency in  S&I pay programs, DOD and the services generally assess their S&I pay  programs’ effectiveness by the extent to which they achieve desired  staffing targets. However, this approach does not ensure that S&I pay  programs are using resources in the most efficient manner, as DOD  guidance requires. Until DOD reviews whether its S&I pay programs have  incorporated the key principles of human capital management that we  identified, reviews whether the programs have used resources efficiently,  and prioritizes and completes the establishment of measures for efficient  use of resources, DOD and the services may lack assurance that S&I pay  programs are effective and that resources are optimized for the greatest  return on investment. Recommendations for Executive Action

To facilitate DOD’s oversight of the military services’ S&I pay programs,  and to fully ensure the effectiveness of these programs, we recommend  that the Secretary of Defense take the following five actions:
Direct the Under Secretary of Defense (Comptroller), in coordination  with the military services, to explore cost-effective approaches to  collect and report S&I pay program data for the Reserve Components;
Direct the Under Secretary of Defense for Personnel and Readiness,  in coordination with the military services, to  review whether S&I pay programs have incorporated key  principles of effective human capital management and used  resources efficiently, and prioritize and complete the  establishment of measures for the efficient use of resources;  routinely assess the impact of non-monetary incentive approaches  on retention behavior and on the necessary levels of S&I pays;  clarify existing guidance for S&I pay programs regarding the  extent to which personnel performance should be incorporated  into retention decisions; and
Direct the Secretaries of the Military Departments to develop  approaches to directly target SRBs to cybersecurity skill sets. In its  written comments, reproduced in appendix VI, DOD concurred with three  of our recommendations and partially concurred with two. However, this has not been completed. This report assesses  (1) trends in DOD obligations for S&I pay programs for fiscal years 2005  through 2015 and the extent to which DOD reports such obligations  department-wide and (2) the extent to which the military services applied  key principles of effective human capital management in the design of  S&I pay programs for recruitment and retention of servicemembers in  selected high-skill occupations for fiscal years 2010 through 2015.
Why GAO Did This Study

DOD uses S&I pay programs to compensate and incentivize servicemembers for occupations that are dangerous, less desirable, or require special skills. Senate Report 114-49 included a provision for GAO to review the effectiveness of DOD's S&I pay programs. This report assesses (1) trends in DOD obligations for S&I pay programs for fiscal years 2005 through 2015 and the extent to which DOD reports such obligations department-wide; and (2) the extent to which the military services applied key principles of effective human capital management in the design of S&I pay programs for selected high-skill occupations for fiscal years 2010 through 2015.
GAO analyzed DOD S&I pay obligations for fiscal years 2005 through 2015; reviewed a nongeneralizable sample of S&I pay programs for nuclear propulsion, aviation, and cybersecurity occupations, chosen based on their pay programs' attributes; compared DOD and service policies and documents with key principles of effective human capital management; and interviewed DOD officials.

What GAO Found

The Department of Defense's (DOD) special and incentive (S&I) pay obligations for active duty servicemembers decreased from fiscal years 2005 through 2015 from $5.8 billion to $3.4 billion (about 42 percent) in constant 2015 dollars (see fig.). DOD officials attributed the decrease to a combination of reduced overseas contingency operations, a reduced annual average strength of the force, and a favorable recruiting climate. DOD does not collect and report complete S&I obligation data for the reserve components because, according to officials, there is no requirement to do so and the services would likely need to make changes to their financial and personnel systems to separately track the obligations. However, according to officials, DOD has not explored cost-effective approaches to collect and report this information, which would better position the department to know the full cost of its S&I pay programs.
The military services largely applied key principles of effective human capital management in the design of their S&I pay programs for nuclear propulsion, aviation, and cybersecurity occupations. However, the application of these key principles varied by service and occupation. Only the Navy's S&I pay programs for nuclear propulsion and aviation fully addressed all seven principles; programs for other occupations and services generally exhibited a mixture of full and partial application. GAO found that, according to officials, DOD and the services had not taken steps to fully ensure consistent application of the principles. For example, DOD has not reviewed the extent to which its S&I pay programs have incorporated principles of effective human capital management and used resources efficiently. DOD also has not established related measures to ensure efficient use of resources. Without such measures, DOD and the services generally assess the effectiveness of S&I pay programs by the extent to which they achieve desired staffing targets. However, this approach does not ensure that S&I pay programs are using resources in the most efficient manner, as DOD guidance requires. Until DOD reviews the extent to which S&I pay programs have incorporated human capital management principles and used resources efficiently—and develops related measures for efficient use of resources—DOD and the services may lack assurance that S&I pay programs are effective and that resources are optimized for the greatest return on investment.

What GAO Recommends

GAO is making five recommendations, including that DOD explore reporting reserve S&I pay program data, review the incorporation of human capital management principles and use of resources, and develop related measures. DOD concurred with three recommendations and partially concurred with two. GAO continues to believe that actions to fully address these two recommendations are needed, as discussed in the report.