Military Retirement Reform: A Review of Proposals and Options for Congress

Charles A. Henning
Specialist in Military Manpower Policy

Few military subjects have generated as much interest or commentary as the military retirement system and efforts to reform the system have been many. Heightened concern over the national debt crisis, the economic recession, and stubbornly high unemployment has resulted in renewed congressional interest in the cost and effectiveness of the system. This report reviews various reform proposals and presents several potential options for Congress, ranging from maintaining the current system to a national commission to review military compensation, benefits, and retirement.

The military retirement system is a noncontributory, defined benefit plan which guarantees a specific monthly payment after 20 or more years of service. Vesting occurs at 20 years of service, regardless of age, and is therefore an “all or nothing” proposition. Retirement age varies, but most military retirees are young enough to pursue private-sector careers following their military service. Most observers note that ,while effective as a retention tool, military retirement is also very expensive—in FY2010 there were 2,271,000 retirees and survivors receiving a total of $50.842 billion from the federal government. However, because of the way the government accounts for military retirement, the direct cost to the Department of Defense (DOD) is significantly less. In FY2009, DOD paid $17.5 billion to the Military Retirement Fund to fund the future retirement of the military cohort who entered the military during 2009.

Critics of the military retirement system frequently cite several points in addition to cost: (1) It is inefficient because it defers too much compensation until the completion of a military career; (2) It is inflexible because it does not facilitate force management or encourage longer careers; and (3) It is inequitable because most servicemembers never qualify or vest.

The military retirement system has evolved over time (see “Major Legislative Reforms of Military Retirement”). Today, active component servicemembers choose between two retirement systems at their 15th year of service (either High-3 or Redux), reservists are restricted to one system (a modified version of High-3), and disability retirees also have the opportunity to choose between two systems (High-3 or Disability retirement). Many observers have agreed that a reformed retirement system could enhance retention, provide an improved force management tool, and provide an equitable retirement regardless of component or special situation. A review of past legislative proposals finds that they have been controversial, unpopular with DOD and servicemembers, and generally focused on reducing the cost of military retirement. The Redux option, in particular, has become a less attractive option and fewer and fewer servicemembers are selecting it.

The cost factor, combined with the recent emphasis on reducing costs in DOD and the overall federal deficit, resulted in a number of studies, commissions and reports in 2010. However, these efforts did not result in comprehensive policy changes. In addition to the most recent commission and think tank reports, two other efforts within the past five years included detailed recommendations for retirement reform. The 2005 Defense Advisory Committee on Military Compensation (DACMC) established a framework for a comprehensive restructuring of military retirement. This was followed in 2008 by the 10th Quadrennial Review of Military Compensation (QRMC) that further modeled, refined, and amplified on the work of the DACMC. Both efforts supported applying a reformed military retirement system to new entrants only; currently serving and already retired members would be grandfathered.


Date of Report: November 17, 2011
Number of Pages: 29
Order Number: R42087
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Wartime Contracting in Afghanistan: Analysis and Issues for Congress

Moshe Schwartz
Specialist in Defense Acquisition

Government contracting in Afghanistan and other wartime environments is different than contracting in peacetime. In peacetime, the goal of contracting is generally to obtain the good or service that is required. The measurements of success are generally getting the right good or service, on schedule, and at a fair price. In wartime, however—and particularly in a counterinsurgency environment—cost, schedule, and performance are often secondary to larger strategic goals of promoting security and denying popular support for the insurgency.

From FY2005 through 2011, the U.S. government obligated more than $50 billion for contracts performed primarily in Afghanistan. Because a primary goal of defense contracting in Afghanistan is to support the overall mission, it is deemed essential that contracting is not only thought of as a response to immediate needs but also as part of the larger strategy. As General Allen, Commander, International Security Assistance Force, recently wrote, “We must improve our contracting practices to ensure they fully support our mission.”

Many of the weaknesses of the current government acquisition process can be exacerbated and exploited in a wartime environment, making it more difficult to adhere to best practices. These weaknesses include inadequate acquisition planning, poorly written requirements, and an insufficient number of capable acquisition and contract oversight personnel. For example, in a wartime environment, it is more difficult to research and evaluate companies bidding on a contract and more difficult to conduct oversight of projects built in dangerous locations.

In Afghanistan, an effort is currently underway to improve contracting. This effort, led by senior military officers, seeks to take a strategic approach to contracting by (1) articulating the role of contracting in current operations; (2) identifying specific acquisition weaknesses and creating the infrastructure to address them; and (3) using reliable data to make better acquisitions decisions.

Two of the major initiatives to improve contracting in Afghanistan that are well underway are Task Force 2010 and the Vendor Vetting Cell. Task Force 2010 was established in 2010 to help DOD commanders and acquisition personnel better understand with whom they are doing business, to conduct investigations to gain visibility into the flow of money at the subcontractor level, and to promote best contracting practices. The task force also supports efforts to track and recover goods stolen while in the possession of contractors providing logistics support. As of October 2, 2011, Task Force 2010 assisted in recovering over 180,000 pieces of equipment worth over $170 million and successfully suspended or debarred over 120 companies or individuals.

The Afghanistan Vendor Vetting Cell was established to ensure that government contracts are not awarded to companies with ties to insurgents, warlords, or criminal networks. The cell was set up in the fall of 2010 and is based in CENTCOM headquarters in Tampa, FL. In June 2011, the vendor vetting cell consisted of 14 analysts capable of vetting approximately 15 companies a week. The cell is expected to have 63 analysts by December 2011.

The billions of contracting dollars spent to support military operations and reconstruction efforts in Afghanistan raise a number of potential questions for Congress that may have significant policy implications for current and future overseas operations. These questions include (1) to what extent are U.S. government development and CERP contracts contributing to the overall mission in Afghanistan; (2) how will contract oversight be impacted by a troop drawdown; and (3) to what extent is DOD preparing for the role of contractors in future military operations?


Date of Report: November 14, 2011
Number of Pages: 20
Order Number: R42084
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The Intelligence Appropriations Process: Issues for Congress

Richard A. Best Jr.
Specialist in National Defense

It is now publicly acknowledged that intelligence appropriations are a significant component of the federal budget, over $80 billion in FY2010 for both the national and military intelligence programs. In an era of fiscal austerity, it is likely that Members of Congress will review intelligence programs to ensure they are both effective and affordable. The appropriation process for intelligence activities is, however, complex and not widely understood. Critics charge that it does not permit the Director of National Intelligence, or any other official, to provide overall management and direction, reduce inefficiencies, and undertake necessary transfers and reprogrammings to respond to a rapidly changing global environment. Others, including the 9/11 Commission, have argued that strengthening congressional oversight of intelligence, and especially intelligence appropriations, is a difficult and important problem.

A number of changes have been proposed. Some, such as the proposal by the 9/11 Commission to combine authorization and appropriation responsibilities in a single committee, would be inconsistent with congressional practice during the past century. Other proposals to separate intelligence appropriations from defense appropriations are less radical, but meet with considerable opposition not only from those who defend the current appropriations subcommittee jurisdiction and practice, but also from observers who argue that many, even most, intelligence systems are so closely related to defense systems that removing them into a separate appropriations act (or even a separate title in an appropriations act) would make oversight more, rather than less, difficult.

Over 90% of intelligence appropriations are included (or “hidden”) within the budget of the Department of Defense (DOD). However, budget submissions prepared by DOD differ in format from those prepared by the Office of the Director of National Intelligence. In addition, there is significant overlap between national and military intelligence as well as between intelligence and some communications and weapons programs. It has proved difficult both in the executive and legislative branches to ensure a coherent and seamless approach to funding and executing intelligence programs.

Making total amounts of intelligence spending public has, however, occurred at a time, unlike the situation in some earlier decades, when there is a general consensus regarding the importance of the nation’s intelligence effort given the persistence of terrorist threats. Despite this consensus, there are likely to be those who argue that intelligence activities must be reduced in line with reductions in other government programs. Others, however, may argue that as active duty force levels are reduced, intelligence assets become more important to provide better awareness of foreign threats and allow more efficient force dispositions. According to this view, intelligence accounts should be spared major reductions.

As a result, the congressional intelligence appropriations process is likely to receive continued attention. Congress may choose to review appropriations procedures to ensure that they most effectively enable decision making at a time when both national budgets and international conditions are grave matters of public concern.


Date of Report: November 9, 2011
Number of Pages: 21
Order Number: R42061
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Veterans and Homelessness

Libby Perl
Specialist in Housing Policy

The wars in Iraq and Afghanistan have brought renewed attention to the needs of veterans, including the needs of homeless veterans. The Department of Veterans Affairs (VA) reported that in FY2008 it assessed more than 1,500 veterans who served in the Operation Iraqi Freedom and Operation Enduring Freedom theater of operations for participation in its Health Care for Homeless Veterans Program. Both male and female veterans have been overrepresented in the homeless population, and as the number of veterans increases due to these conflicts, there is concern that the number of homeless veterans could rise commensurately. The current economic downturn also has raised concerns that homelessness could increase among all groups, including veterans.

Congress has created numerous programs that serve homeless veterans specifically, almost all of which are funded through the Veterans Health Administration. These programs provide health care and rehabilitation services for homeless veterans (the Health Care for Homeless Veterans and Domiciliary Care for Homeless Veterans programs), employment assistance (Homeless Veterans Reintegration Program and Compensated Work Therapy program), and transitional housing (Grant and Per Diem program) as well as other supportive services. The VA also works with the Department of Housing and Urban Development (HUD) to provide permanent supportive housing to homeless veterans through the HUD-VA Supported Housing Program (HUD-VASH). In the HUD-VASH program, HUD funds rental assistance through Section 8 vouchers while the VA provides supportive services. In addition, two newly enacted programs focus on homelessness prevention through supportive services: the VA’s Supportive Services for Veteran Families program and a VA and HUD homelessness prevention demonstration program.

Several issues regarding veterans and homelessness have become prominent, in part because of the Iraq and Afghanistan wars. One issue is ending homelessness among veterans. In November 2009, the VA announced a plan to end homelessness within five years. Both the VA and HUD have taken steps to increase housing and services for homeless veterans. Funding for VA programs has increased in recent years (see Table 5) and Congress has appropriated funds to increase available units of permanent supportive housing through the HUD-VASH program. In each of the FY2008, FY2009, and FY2010 HUD appropriations acts, Congress provided funds sufficient to support more than 10,000 new vouchers per year, which have been distributed to housing authorities in all 50 states, the District of Columbia, Puerto Rico, and Guam. The FY2011 Department of Defense and Full-Year Continuing Appropriations Act (P.L. 112-10) provided an additional $50 million for HUD-VASH, which funded 6,790 vouchers.

A second issue is the concern that veterans returning from Iraq and Afghanistan who are at risk of homelessness may not receive the services they need. Efforts are being made to coordinate services between the VA and Department of Defense to ensure that those leaving military service transition to VA programs. In addition, concerns have risen about the needs of female veterans, whose numbers are increasing. Women veterans face challenges that could contribute to their risks of homelessness. They are more likely to have experienced sexual trauma than women in the general population and are more likely than male veterans to be single parents. Few homeless programs for veterans have the facilities to provide separate accommodations for women and women with children.


Date of Report: November 9, 2011
Number of Pages: 45
Order Number: RL34024
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Navy Nuclear Aircraft Carrier (CVN) Homeporting at Mayport: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The Navy’s five Atlantic Fleet nuclear powered aircraft carriers (CVNs) are all homeported at Norfolk, VA. The Navy wants to establish a second Atlantic Fleet CVN home port by homeporting a CVN at Mayport, FL. Navy plans call for having Mayport ready to homeport a CVN in 2019. Transferring a CVN from Norfolk to Mayport would shift from Norfolk to Mayport the local economic activity associated with homeporting a CVN, which some sources estimate as being worth hundreds of millions of dollars per year.

The Navy’s proposed FY2012 budget requests $14.998 million in military construction (MilCon) funding for the Massey Avenue Corridor Improvements project, a roadway construction project that is part of the Navy’s plan for establishing a CVN home port at Mayport. In addition, the Navy states that of the $84.36 million in funding requested by the Navy for FY2012 for MilCon planning and design activities, about $2 million is requested for the project to establish a CVN home port at Mayport.

The Navy’s proposal to homeport a CVN at Mayport is an issue of strong interest to certain Members of Congress from Florida and Virginia. Certain Members of Congress from Florida have expressed support for the Navy’s proposal to homeport a CVN at Mayport, arguing (as do DOD and the Navy) that the benefits in terms of mitigating risks to the Navy’s Atlantic Fleet CVNs are worth the costs associated with moving a CVN to Mayport. Certain Members of Congress from Virginia have expressed skepticism regarding, or opposition to, the proposal, arguing that the benefits in terms of mitigating risks to the Navy’s Atlantic Fleet CVNs are questionable or uncertain, and that the funding needed to implement the proposal could achieve greater benefits if it were spent on other Navy priorities.

A March 2011 Government Accountability Office (GAO) report on the Navy’s proposal to homeport a CVN at Mayport stated:

GAO’s independent cost estimate suggests that the total one-time cost of homeporting a nuclear-powered aircraft carrier at Naval Station Mayport is expected to be between $258.7 million and $356.0 million, in base year 2010 dollars. The Navy’s estimate of the one-time cost is $537.6 million—also in base year 2010 dollars—which is outside the upper range of GAO’s estimate…. For recurring costs, GAO’s independent cost estimate suggests that the total is expected to be between $9.0 million and $17.6 million per year. The Navy’s estimate of $15.3 million per year is within GAO’s estimated range. 

In October 21, 2011, letters to three Members of Congress from Florida, and in letters of the same date to six Members of Congress from Virginia, Admiral Jonathan Greenert, the Chief of Naval Operations, commented on the issue of homeporting a CVN at Mayport in the context of the ongoing Department of Defense strategic and budget reviews.


Date of Report: November 7, 2011
Number of Pages: 68
Order Number: R40248
Price: $29.95

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