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women in the military, our efforts in the war against drugs, and family issues.

Since we will discuss many of these areas when I come back here next week, I will limit my oral remarks today primarily to force management and manpower requirements issues.

First of all-end strength. In order to avoid the hollow force that you mentioned and maintain readiness while fully supporting our forces, DOD was required to cut force structure and manpower in our adjusted fiscal year 1989 budget request.

We currently plan for 2.1 million Active personnel, 1.2 million Selected Reserve forces, and 1.1 million civilians. Each of these numbers represent reductions from the levels we requested in the President's fiscal year 1988-1989 biannual request last year.

For fiscal year 1989, this is a total reduction of 109,000 personnel. Because of the speed at which the services had to adjust their budgets, not all the manpower reductions are yet identified with specific programs. That will occur during the development of the 1990 through 1994 POM.

The first specific area I would like to discuss briefly is the total force mix. As a result of some of the things we discovered during our efforts on the Officer Requirements Study, we are taking major steps to improve OSD oversight of the total requirements process for military personnel and for civilians.

Frank Carlucci has already instructed the services and my office to do certain things, such as institutionalize future manpower reviews based on the requirements study methodology, modify manpower management systems to align program budget categories with program execution, and align officer manning levels with the results of the study.

In the near term, OSD will more carefully examine the data requirements submitted during the budget development process. Further, we will look at the consistency that requirements have with the force structure and with OSD and service policy and the adequacy of justifications for growth based on such things as force structure, doctrine, emerging technology, joint activities, wartime shortfall, et cetera.

As a start, the fiscal year 1989 defense manpower requirements report will incorporate officer type analyses similar to that conducted during the Officer Requirements Study which you have just received.

For the longer term, we will institute a comprehensive approach that revises OSD manpower policy guidance, as well as POM preparation instructions and sets up service baseline files that clearly depict manpower in relation to force structure.

Providing a better oversight process is the Department's highest priority, and I intend to augment my staff to the point where they can exercise proper oversight.

During the next year, we intend to focus major attention on total force policies to ensure that we in OSD perform our job better and the services can accomplish their missions in an efficient, responsive, and effective way. I am aware of what DOD's role needs to be—that is to monitor progress and evaluate results.

For these reasons, I have undertaken a Total Force Initiative. I want OSD to fully understand and concur with the criteria used by each of the military services as they make their force mix decisions. In that regard,

we will look at past decisions that were made in the mix of Active Reserve and civilian personnel.

This will include reviewing the processes and data used by the services when they made these decisions. In looking at how these decisions were-and are-made and adjusting where necessary, we can minimize some of the inconsistencies between what we have and what we need.

In the final analysis, I want to make sure that the manpower adjustments are closely linked to force structure and that our manpower requests meet our mission requirements and in the case of our civilian work force, funded work loads.

I have requested that the Office of the Joint Chiefs of Staff, the Military Services, and other OSD offices such as Health Affairs and Reserve Affairs cooperate with me on this effort.

The next area I want to cover briefly are general and flag officers. As you are aware, since 1982 we have submitted to the Congress legislation that would establish a permanent basis for determining GFO levels. Recognizing that we needed a better rationale basis on which to base our requests, we commissioned a group to validate all DOD general and flag officer requirements.

The study will be completed soon, followed by internal reviews of the joint staff and the services. We do not expect to request any change in the overall numbers of general flag officers until that review is completed.

That study, however, will provide to the Congress a zero-based validation of requirements for general and flag officers and a methodology and framework for the services to uniformly validate their requirements in the future. In addition, it will provide OSD the oversight methodology that it has long needed.

Defense agency manpower is next. Secretary Carlucci earlier this month directed Defense agencies and DOD field activities to reduce military and civilian end strengths, as required by the Reorganization Act of 1986. The services have moved out in their headquarters reduction and reorganizations as required by that act, and we predict that they will be pretty much completed by the end of fiscal

Despite the conclusions, however, of five independent studies that Defense agencies were well run, performed essential missions, and in some cases needed more manpower, the Secretary was required by the law to reduce the affected agencies and activities by 5 percent from the fiscal year 1986 manpower level. This amounted to a reduction of about 5,000 people.

However, he has expressed serious misgivings to the Congress over the adverse impacts of these cuts on readiness levels. They are over and above the workload reductions already effected in the 1989 budget and therefore cut into operational muscle.

We have submitted legislative language which would forego any additional reductions in fiscal year 1989. I request your support of this proposal

Finally, let me address what may be the most important subject today-that is officer reductions. In the conference report of the fiscal year 1988–1989 Defense Authorization Act, Congress directed that the Secretary of Defense report the results of a comprehensive

year 1988.

officer requirements study. We submitted that report the first of this month.

Let me briefly summarize what we did in that study and then address our plans for fiscal year 1989. These are two separate and distinct efforts.

The foundation of officer requirements is the planning process that sizes the force structure. The study began with a review of each service's requirements development process. Each was found to be structurally sound, although execution and historical factors have sometimes mitigated against total compliance. As an example, capacity and hiring freezes sometimes caused requirements to be filled by officers when under different circumstances that might not have been the case.

To the extent that problems were identified in this review, they are more related to program execution and OSD oversight than with the service manpower requirements process, particularly at the organizational and unit levels.

The study found growth in the number of officers between fiscal year 1980 and fiscal year 1986 of 33.6 thousand. Of that, 25.9 thousand or 77 percent were validated against force structure changes, doctrine, new technology, and so forth.

In parallel with the study and as directed by the Congress, during fiscal years 1987 and 1988, DOD has already reduced, or is reducing, officer billets by 8,800. The total impact of that reduction exceeds the 7,733 non-validated growth reflected in the study by more than 1,000.

We request your support in repealing the remaining 4 percent reduction.

The second area I would like to discuss is what we have done and are planning to do in fiscal year 1988 that is consistent with ongoing force structure and end strength reductions. In executing 1989, reductions, which incidentally have been briefed to your staff, we have some problems. The difficulties center on the fact that there are three simultaneous and somewhat unconnected events going on that the services are trying to manage:

One is that we allocated a 1-percent reduction for fiscal year 1988. That was done in early January; second, the budget-force structure-end strength reductions for fiscal year 1989, which were accomplished over the December to January timeframe;

And finally, the Officer Requirements Study which essentially drove yet other reductions and was not available to the services until the end of February.

So what the services now need is time to integrate all of these various reductions into their 1990 POM.

Let me give you some examples of things the services are doing in fiscal year 1989. Again, remember this is separate from the requirements report that you have been provided. Through fiscal year 1988, the Air Force has taken 3,510 officers down. This more than meets the unvalidated officer positions in the requirements study.

In addition, the Air Force has identified a thousand more officers for conversion to civilians—500 in fiscal year 1989 and 500 in fiscal year 1990. In their fiscal year 1990 POM, they will also identify another 2,100 officers for programmatic reductions.

This totals 6,610 officers through fiscal year 1990, or a 6.1 percent reduction from the 1986 base.

In the case of the Army, the officer requirements study did not accept approximately 3,500 of their officer growth. In addition, the Army has identified with force structure reductions in fiscal year 1989 another 1,100 officers. Thus, the total required "target" that the Army is looking at is a 4,700 officer reduction.

Through 1988 they have cut 3,100. So in theory, they still owed 1,500. However, since the study was completed, the Army verified the addition of 600 officers to their divisional forces, the tightest part of the force structure. Now the net remaining officers they owe us is 900, and to satisfy this they have planned to take out 500 in 1989 and another 428 in fiscal year 1990. These are not conversions, these are actual takedowns.

The Navy is a little different situation. Here we have frozen their growth and, despite the fact that we found 631 non-valid officer growth in the Navy, they are still short over 1,300 officers. This freeze as you recall, was directed even though their ship growth in 1988 and 1989 was increasing. For the Navy, we were not requesting that officers be added at this time, but further reductions would certainly not be wise.

For the Marine Corps, the reduction from the 1986 base is 76 officers. The study found 46 that were not validated, but as you can see they have already taken in excess of that. The Commandant is still looking at force structure reductions and we need to let him finish that before we evaluate any further officer cuts in the Marine Corps.

In summary, from the 1986 baseline we have taken down or will soon take down more than 10,000 officers-reduction of 3.3 percent.

We feel that these reductions satisfy the recommendations in the study. Further, they accommodate the fiscal year 1989 force structure cuts and comply with the intent of Congress.

As I have mentioned, and consistent with all of these actions, the Secretary has directed the services to do several things:

To align the officer force with the study results; to address military-civilian conversions; to improve the match between budget actuals; and to take reductions in a balanced fashion, which is one thing I know this committee is certainly concerned with. Finally we will address further force structure changes in the summer DRB review.

The impact of any reductions beyond those we have already taken or identified for fiscal year 1989 and fiscal year 1990 will be to significantly reduce total force structure, readiness, capability, and sustainability. The loss of combat potential and its essential support base will far exceed in importance to national security the minimal dollar savings that might accrue over time.

There are other issues I have not discussed today that are just as important, particularly as they relate to attracting and retaining quality military and civilian force. While I understand that we will go more deeply into these areas when I come back on the 24th, I would like to mention them.

First is the 4.3 percent military pay raise. This will allow military compensation to fall no further behind private sector compensation.

Second, the 3.4 percent increase in variable housing allowance. This will keep military members from having to pay a larger share of their housing cost than they are currently paying.

Third, our bonus programs, including enlistment bonuses, pilot bonus, re-enlistment bonus, and special pays. These give DOD its most cost effective tool in manning particular skills.

Fourth, title 4 of the DOD Reorganization Act, Joint Officer Management. Here we need to modify certain provisions of the law so that we can realistically and sensibly manage our officer force.

Last, civilian personnel management, including the flexibility to reward quality performance. Changes here will allow us to improve the quality of this important part of our total force.

The Secretary has made some hard, painful decisions in arriving at this budget. It has taken a lot out of our hide, but it includes the funding of a fair and equitable compensation package and quality of life measures. It is now up to the Congress to help us follow through

I pledge to work with you in a bipartisan way to show our people through our actions, not just through our words, that they are truly our number one priority.

Thank you.

[The prepared statement of Mr. Green follows:]

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