1. Personnel and Readiness Personnel and Readiness Current Issues Dr. David S. C. Chu Under Secretary of Defense (Personnel and Readiness) March 9, 2007

2. 2 Assumptions We are engaged in a long, irregular war The All Volunteer Force is our paradigm Cost of manpower will rise more rapidly than budget We will complete transition to an Operational Reserve Civilians can play a larger role Operations will be integrated Geographic focus is on Mideast, South/Southeast Asia, East/Northeast Asia

3. 3 Military Compensation 9 th QRMC: identified significant gap in military member’s regular military compensation Goal: ensure military pay would be equal to the 70 th percentile of earnings for private sector employees with comparable education and experience FY2000/2001/2002: Congress makes annual pay raises equal to ECI + 1/2% / targeted raises are introduced / President adds $1B to mil pay FY2001-2004: officer pay gap closed and 73% of enlisted gap 2006: 97% of enlisted pay gap closed Combination of increase in basic pay (ECI + ½) & substantial increases in BAH 2007 raise eliminated the gap 2.2% across-the-board pay raise Targeted pay raises for mid-grade and senior enlisted as well as warrant officers. Expanded military basic pay table from 30 to 40 years of service 2008 proposed basic pay equals ECI (3% across the board)

4. 4 Defense Advisory Committee on Military Compensation Recommendations Change non-disability retirement system (i.e. vesting) Revamp Basic Pay table to better reward performance and to support longer career profiles where desirable Change housing allowances/other allowances (remove discrepancies in pay unrelated to performance) Consolidate and simplify Special and Incentive Pays Revise the health benefits for retirees -- more closely align benefit’s value to retiree with its cost to the Department of Defense Periodically evaluate of quality-of-life programs to ensure they are cost-effective and adequate Review Reserve Component pay/benefits to ensure equality to Active Component members

5. 5 Personnel Costs* vs. DoD Topline * Source: OUSD(C) and WHS, excludes costs not on the DoD budget (e.g., VA) ** Source: WHS, which categorizes contracts as Procurement, RDT&E, or Services *** Retirement, DHP, Family Housing

6. 6 Transform Department civilian human resources management system Advance DoD’s critical national security mission Respond swiftly and decisively to national security threats and other missions Accelerate DoD’s efforts to create a Total Force Retain and attract talented and motivated employees committed to excellence Compensate and reward employees based on performance and mission contribution Expand DoD’s ability to hire more quickly and offer competitive salaries Making Civilians a Stronger Partner – National Security Personnel System (NSPS)

7. 7 Major Design Elements of NSPS Human Resources (HR) System Classification - Simple, flexible pay banding structure Compensation - Performance-based, market-sensitive Performance Management - Linked to agency mission; results oriented; annual pay increase based on performance rating Staffing – more flexible authorities to allow SECDEF to act quickly to respond to mission needs: the right person, in the right place, at the right time Workforce Shaping - Streamlined, mission-responsive reduction in force procedures Adverse Actions and Appeals - Enjoined Mission oriented disciplinary system with streamlined processes to quickly resolve disputes Labor Relations System - Enjoined Collective bargaining approach that recognizes unique national security mission of DoD Reduced scope of bargaining Streamlined bargaining process aimed at quicker resolution of labor disputes and focus on mission

8. 8 FY 1973 – FY 2006 AC: - 38.5% RC: - 10.7% The Role of the Reserve Components DoD End Strengths ( FY73 – FY06) Reductions from Peaks AC: - 38.5% (FY 1973 – FY 2006) RC: - 29.9% (FY 1989 – FY 2006)

9. 9 Reserve Force Mobilization Statistics Current Selected Reserve Members Ever Mobilized for ONE/OEF/OIF Data as of: Feb 28, 2007 Members Mobilized Once for ONE/OEF/OIF 301,111 Members Not Mobilized for ONE/OEF/OIF 447,543 Members Who Served More than Once in ONE/OEF/OIF 74,458 Not Mobilized – 54.4% Mobilized – 45.6%

10. 10 An “Operational” Reserve Concept: The new guard and reserve will be organized, trained and equipped to support operational military mission requirements to the same standard as the Active component. Individuals and units will be tasked to prepare for and participate in missions, across the full spectrum of operations, in a cyclic or periodic manner that provides predictability for service members and their families and employers. Key attributes: Limits involuntary mobilization to predictable and sustainable rates (e.g., one year in every six) Reduces the need for involuntary mobilization during the early stages of a rapid response operation Provides a range of participation opportunities and enhances volunteerism

11. 11 A New Readiness Paradigm: Are Forces Ready for Assigned Missions? Notional Data

12. 12 From: Unit status Inputs / resources Deficiencies Service centric Periodic Multiple reports / systems Defense Readiness Reporting System Represents a Real Change… To: Mission assessments Outputs / capabilities Their implications Joint centric Continuous Enterprise views Unclassified Answers Ready for What? Unclassified

13. 13 Family Support: Ten Key State Issues IssueEvaluation Criteria Care of the Guard and Reserve National Governors Association (NGA) quantifies state support into six categories: state employee support; education assistance; tax and financial benefits; family support; licensure, fees and registration; and protections, recognition and employment support. Severely injured support States are facilitating the continued support for the severely injured and their families as they transition to local communities. In-state tuition Allow where assigned, and allow continuance of in-state rates upon reassignment. School transition of military children Addressing solutions for the best educational opportunities for military dependent children. Five criteria: kindergarten age and immunization requirements, transfer of records/coursework, redundant/missed entrance/exit testing, incompatible graduation requirements Spouse employment Improve ability for spouses to obtain/transfer teaching and nursing licenses. Use American Board for Certification of Teacher Excellence (ABCTE) and Spouses to Teachers (STT) as the measures for teach and the Nurse Licensure Compact (NLC) for nurses. Unemployment compensation State eligibility for unemployment compensation for trailing military spouses. Payday lending Limit to double-digit annual interest rates, longer minimum payment periods and restrictions on rollovers and multiple loans can cut the cycle of debt. Overseas Voter Assistance 9 specific guidelines: 45-day ballot transit time, elimination of the notary requirement, late registration procedures, special state write-in absentee ballot, reference to the Uniformed and Overseas Citizens Absentee Voting Act in the state election code, electronic transmission of election materials, expanded use of the federal write-in absentee ballot, emergency authority for chief election official, enfranchise citizens who have never resided in the U.S. Foreign Language Support Childcare for Guard and Reserve

14. 14 Governors’ Scorecard 1 2 3 5 6 7 9 10 11 12 13 14 15 16 17 23 19 20 21 22 18 24 26 27 28 29 30 31 32 33 35 36 37 39 40 41 43 45 46 47 49 4 Number in state/territory represents the ranking by size of total force and families residing within the state. States/territories meeting at least 75 percent of criteria States/territories meeting between 50 – 74 percent of criteria States/territories meeting less than 50 percent of criteria VT 51 NH 50 MA 34 RI 48 CT 38 NJ 25 DE 44 MD 8 GU 52 PR 42 VI 53 AS 54

15. 15 Defense Language & Culture Transformation “Experiences and education that contribute to broader cultural awareness and enable better communication in a global operating environment are crucial underpinnings to support strategic national interests.” Deputy Secretary of Defense Memo August 3, 2006

16. 16 Defense Language & Culture Transformation Service Academies Expanded study abroad, summer immersion and foreign academy exchange opportunities Adding instructor staff for strategic languages USMA & USAFA requiring at least two semesters of language study; USNA established two new language majors of strategic interests Service ROTC Programs Embedded cultural awareness studies in ROTC curricula Developed pilot program to provide select ROTC schools grants to enhance language programs of strategic importance Units are encouraging ROTC cadets to take language electives, when available and feasible Pre-accession focus provides a language and cultural foundation

17. 17 Defense Language & Culture Transformation Using Foreign Language Proficiency Bonus (FLPB) to encourage change Authorized up to $500 per month in one language and $1,000 per month for high levels of proficiency in multiple strategic languages Achieved parity for Action and Reserve components It’s working -- pool of language skilled personnel is larger to meet operational needs... June 2006, a sailor contacted the Navy Foreign Language Office to inquire about FLPB and self-professed his skill in Uighur Proficiency testing validated his skills in Uighur, Mandarin Chinese, and Uzbek He volunteered and is now deployed using his language skills Incentivizing personnel to self-report, maintain, and improve skills

18. Personnel and Readiness QUESTIONS