American Society of Military Comptrollers

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The Department of Defense (DoD) should close excess bases, assess the size and structure of its civilian workforce, and reform the compensation package for military personnel, according to 25 expert defense analysts from 10 think tanks covering the whole political field.

In a letter to DoD Secretary Chuck Hagel and leaders of congressional defense oversight committees, the experts warn that failure to address these issues will result in a “smaller share of the budget to pay for manning, training and equipping of our armed forces.”

The group point to a statement from DoD that about 20 percent in excess capacity drains resources from other priorities. While recognizing that Congress wants to avoid “repeating the mistakes of the most recent round of bases closures in 2005,” the group calls for Congress to work with DoD to “identify the true scale of excess capacity and then work expeditiously to better match the Department’s vast network of facilities to its shrinking force.”

Even so, closing bases in the U.S. is proving a tough sale in Congress this year. A DoD proposal in the FY2014 budget for a Base Realignment and Closure (BRAC) round in 2015 has met with stiff resistance. So far in the congressional budget review, the House and Senate Armed Services Committees and the House Appropriations Military Construction/’VA Subcommittee have rejected the proposal, prohibiting even planning for a new BRAC.

The need to reassess the size and structure of the DoD civilian workforce is underscored by the 17 percent growth in the workforce between 2001 and 2012, while military end strength grew by only 3.4 percent, the letter stresses. That the civilian workforce grew 10 percent in just the last four years suggests this growth has been “unchecked and unbalanced,” the analysts said. Accounting for $74 billion of the total DoD budget, the department has “more civilian employees than it can afford and quite possibly more than it needs,” the letter charges. The solution, according to these experts, is “to rightsize this workforce and make permanent reductions in a thoughtful and targeted manner.”

The think tank defense experts also stress that the military personnel compensation system needs serious reform. They argue that the current system, including outdated forms of payment, has not changed much in the last 40 years. Today’s youth, they maintain, are more mobile and “value various forms of compensation differently.” Cost is also a consideration, the analysts contend. The cost of compensation between 2001 and 2012 has grown annually by an average 4.1 percent. These costs will continue to grow even as defense budgets shrink, they warn. As a result, funding for training, readiness, and equipment replacement will have to decline. The letter notes that last year Congress established a commission to evaluate military compensation and proposes that the commission’s recommendations be considered and voted on in the House and Senate.

These three recommendations are essential to maintaining a strong defense, but “are not sufficient to meet the fiscal and strategic challenges the military currently faces,” the letter concludes. The letter does not identify these other reforms, indicating there are differing opinions on them among the signatories. However, the letter stresses that the experts do agree that Congress and the administration must act quickly on the three specific reforms they propose.

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The Office of Personnel Management (OPM) has published a draft rule in the Federal Register to implement the phased retirement program for federal employees. The proposed rule includes information on eligibility, benefits and pay, and the transition from phased to full retirement. OPM on the draft rule must receive comments on the rule by August 5, 2013.

Congress passed and the president signed legislation authorizing phased retirement last July. Under the program, federal employees approaching retirement can continue working part time, while beginning retirement. 

The notice in the Federal Register states “the purpose of phased retirement is to allow the Federal Government to continue to benefit from the services of experienced employees who might otherwise choose to retire.”

According to the proposed rule, eligible employees must have been in full employment status for the previous three years and be eligible for immediate retirement under either the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS). Employees subject to mandatory retirement, such as law-enforcement officers, firefighters, air traffic controllers, and most Border Protection officers are not eligible for phased retirement. An employee in phased retirement status is considered a part-time employee, not a reemployed annuitant.

Part-time work by participants in the program is limited to half-time, except in very limited circumstances. The eligible employee receives income from a combination of part-time salary (50%) and partial annuity payments (50%). The phased retiree also accrues future retirement benefits proportional to the time they work.

Health insurance (FEHB) and life insurance (FEGLI) stay with the employing agency during the phased retirement period. FEGLI coverage is based on the full-time salary for the position and the FEHB employer contribution is the same as that for full-time employees. The legally set pay raise adjustment would apply to the employee’s salary portion of total pay. Retirement Cost of Living Adjustments (COLAs) would apply to the employee’s retirement annuity portion.

A phased retiree can return to full-time status if the employing agency agrees. However, after electing to return to full time status, the employee cannot go back into phased retirement. When such an employee fully retires, the phased retirement period is treated as part-time service when calculating the full retirement annuity.

When electing full retirement, the phased retiree receives a “composite retirement annuity.” This is calculated as the phased retirement annuity in force at the time of full retirement plus one-half of the annuity payable at full retirement as if the employee had been in full-time status during the phased retirement period.

Phased retirees are expected to spend 20 percent of their time mentoring other employees. According to the draft rule, this will “allow the Federal Government to continue to benefit from the services of experienced employees who might otherwise choose to retire.”