the time constraints imposed, your cooperation in providing timely responses to requirements would be appreciated.

Attachment.

JOHN G. FINNERAN,
Vice Admiral, U.S. Navy,
Deputy Assistant Secretary of Defense.

Question 1. It is our understanding that the Department of Defense views the AVF as a peacetime concept for personnel procurement and the draft as a wartime concept. We would appreciate the following information: Definition for "peacetime" and "wartime."

Answer. In this context wartime is defined as anytime a major mobilization of ready reservists is required such as could be the case for countering a major Warsaw Pact offensive in Europe.

Question 24. In going from a peacetime force of 2.1 million in 100,000 increments, what is the additional cost of each additional 100,000 increment?

Answer. The incremental cost for adding to active force strength is dependent on (1) the posture (mobilization or non-mobilization) we are in during the increase; (2) period of time over which the increase is achieved; (3) method used to provide the additional strength; and (4) the reason (type of people needed) for the increase.

Costs in a non-mobilization period

During non-mobilization periods we can increase the active force by retaining more active duty people and by the direct recruitment of people not already in the force. The cost of retaining more people in peacetime is extremely dependent on the timing of the increase and on the type of people needed. Since these parameters are not specified in the question, we have addressed the question as a direct recruitment one. Provided at TAB A are estimates of the cost of increasing the force by 100,000, 200,000, and 300,000 people for three different scenarios. Costs in a mobilization period

During a mobilization period DoD would increase the force quickly and would have more options available. These include (1) involuntarily extending people on active duty; (2) mobilizing the reserves; and (3) returning to a draft system. The costs of increasing the force under each of the options are discussed in TAB B.

Question 2B. At what point do we have to resort to a draft?

Answer. We would return to the draft when authorized by Congress and would request this authorization when faced with a major mobilization.

INCREASING STRENGTH THROUGH DIRECT RECRUITMENT

The costs of increasing the DoD active force by 100,000; 200,000 and 300,000 people through direct recruitment depends on the quality of the recruits, on how the increases are distributed among the Services and on the period of time over which the increase occurs. Table 1 shows three illustrative cases of how strength could be increased.

TABLE 1.-INCREASING ACTIVE FORCE STRENGTH BY 300,000 IN 100,000 INCREMENTS

Tables 2, 3, 4, and 5 show the detailed strength and costs estimates for each of the cases listed in table 1.

TABLE 3.-COSTS OF INCREASING ACTIVE FORCE THROUGH DIRECT RECRUITMENT DURING BUILDUP 1

1 Additional annual recruiting costs during period strengths are being increased. 2 Assumes that the resources required to assure supply of male HS, MGI-111 high school graduates will result in sufficient numbers of females and nongraduate enlistees.

3 Average cost of examination ($157) times additional annual accessions.

Assumes following training costs per accession (from attrition cost paper) Army ($1,700), Navy ($2,200), Marine Corps ($1,400), Air Force ($2,000).

Adjusted standard Rate plus PCS travel, travel plus quarters plus support from "Average Cost of Military and Civilian Manpower in the Department of Defense," September 1977. Assumes accessions arrive at constant rate over the year. Assumes 0-2 for officer and E-2 for enlisted.

TABLE 4.-COSTS OF INCREASING ACTIVE FORCE THROUGH DIRECT RECRUITMENT
[Sustaining the increase; in thousands of dollars] 1

Average cost of examination ($157) times additional annual accessions.

1 Additional recruiting costs required on an annual basis to sustain increased strength. 2 Assumes that the resources required to assure supply of male HS, MGI-III high school graduates will result in sufficient numbers of females and nongraduate enlistees.

Based on same cost categories as table 3. Assume E-5 approximates force-wide cost of officer/enlisted force.

Assumes following training costs per accession (from attrition cost paper) Army ($1,700), Navy ($2,200), Marine Corps ($1,400), Air Force ($2,000).

APPENDIX TABLE 5.-MALE HIGH SCHOOL DIPLOMA GRADUATE MG I-III ENLISTEES AND ASSOCIATED
RECRUITING RESOURCE CHANGES

Source: GRC analysis of marginal recruiting costs (recruiters, recruiter aids, and advertising)-Cobb Douglas multiplicative model.

1. Increasing the Force through the involuntary extension of people on active duty

The Active Forces separate about 450,000 male and female enlistees and officers annually. About one-third of these separations occur prior to the end of the members' term of service. This means that about 300,000 persons complete their active duty obligation and leave service annually. In wartime, periods of regular enlistment may be involuntarily extended (10 USC 506 and 10 USC 671). Delaying separation by a period of four months would result in a 100,000 increase in active force strength. A one-year extension-assuming normal enlistments-would increase strength by 300,000. The additional pay costs for such a strength increase would be approximately $1,285 million.1

2. Increasing the Force through the mobilization of the reserves

An immediate strength increase could be obtained through a recall of reservists. The President has authority to recall up to 50,000 selected reservists without declaring a national emergency. Upon declaration of a national emergency the entire ready reserve could be recalled. At the end of June 1977, there were 1,203.000 members of the ready reserve. The increase in military pay mobilizing the increases would be $1,135 million per 100,000 strength increase. 3. Increasing the Force through a return to the draft

Our previously stated estimates are that a return to the draft at current force levels would save about $500 million per year. These savings result from smaller expenditures for active and reserve recruiting and enlistment bonus programs. Offsetting these savings would be the one-time cost of activating the Selective Service System. Estimates of this cost are not available in DoD, but are available from the Director of the Selective Service System.

8

The cost of increasing the force by the draft per 100,000 is approximately $1,085 million during the “buildup" year and $1,300 million per year in steady state.

1 Cost estimate based on existing grade mix and compensation package. See detailed costs of Case C. table 4 of Tab A.

Cost based on active duty pay and benefits ($1.285M) minus reserve pay and benefits ($150M)=$1,135M. Active duty costs explained in Tab A, table 4. Reserve pay based on the per capita rate of $1,500 for a typical Pay Group A (48 drill and 2 week active annual training) reservists.

3 Cost assume that (1) the draftees split between the Army (70%) and the Marine Corps (30%); (2) draftees would enter the Service in first two months of the year (%1⁄2 in first month, 1 in second month). Cost estimates use training and pay and benefit costs discussed in Case A, table 3, Tab A.

Cost from Case A, table 4, Tab A.

Senator NUNN. Doesn't this really tell us that you couldn't expand the force very rapidly and afford to do it? If you could find the manpower, you couldn't afford to do it without making some radical changes.

Mr. SHANEFELTER.. It would be very expensive if you chose to do so. Senator NUNN. An expanded Volunteer Force would be almost prohibitively expensive. If you are going to expand, you would have to change an awful lot?

Senator NUNN. Yes, sir.

Senator NUNN. Even assuming you could get the manpower?

Mr. SHANEFELTER. Yes sir. I don't know if we would be in a position to say it would be prohibitive or not.

Senator NUNN. Well, I think that if it was $31 billion or $21 billion. it would be a judgment question. I wouldn't ask you to conclude that. If there are additional costs related to the attempts to increase manpower for Guard and Reserve components, decrease the doctor shortage, and increase the enlistment bonus, and so forth, do you think we will be faced with another significant jump in the cost of All-Volunteer Force or did your report go into the additional costs in the future?

Mr. SHANEFELTER. No, sir; we did not include any future costs because of the speculative nature of it and the fact that really rests on congressional decision an example being the Reserve readiness component improvement program which the administration estimated threequarters of a billion dollars, but the Congress has authorized an enlistment bonus for the Reserves in lieu of the entire package. Assuming that trend would continue, you can expect increased costs.

Senator NUNN. On the subject of first term attrition costs that you have attributed to that attrition, we have talked a lot about the revolving door policy-increases in manpower requirements for the military increases in training base and also increases in costs; that is, taking a lot more people in. You now are going to stay in and select them based on who can make the grade and turn the others out. Your report places some dollar value on these costs and states $86 million in training funds is spent before these people fail, $75 million in costs to separate the people and send them home, and $115 million in unemployment claims paid when they do go home. That totals $276 million.

Could you focus briefly on each one of those costs as to how you arrive at that?

Mr. STAATS. May I turn that over to the staff?

Senator NUNN. Yes, sir.

Mr. LOONEY. On the cost of attrition, as stated in our report, we have $85.7 million additional training costs, and that includes what we did was we costed attrition during the first 6 months of service. We did not look beyond 6 months, we recognized that there are costs there. but we felt too many assumptions would have to be made to costs beyond 6 months of service.

What these represent, these costs, are the costs of training an individual during that first 6 months period. We backed out of that cost because we have covered them elsewhere in the report, the cost of the recruiting, pay increase, and separation, so you understand what we are talking about is a net figure as far as attrition is concerned, which is the double accounting that was mentioned earlier.

What was the other part?