High retention, tight budget mean bonus cuts

[Mary, Proud Mom of Nick]

By Mark D. Faram - Staff writer
Posted : Monday May 4, 2009 18:08:27 EDT

Right now, the Navy has all the people it can handle. And it’s paying the price — or trying to.

With retention high and the five-year-long drawdown halted, the Navy has found itself is in the middle of the perfect personnel storm.

Fueled in part by a bad economy, more sailors are staying in the ranks and fewer are being kicked out before the end of their enlistments. Officials are working harder to stretch the budget.

Those factors mean the Navy can be more picky than normal about deciding who will stay or go.

The Navy has already decided to halt funding as many as 14,000 permanent change-of-station moves to help pay for a projected $350 million manpower shortfall. It’s seeking supplemental funds from Congress to pay the rest of the bill.

Because of high retention, the service has twice slashed selective re-enlistment bonuses, and officials plan to review all other bonus programs.

In addition, they’ve expanded the Perform to Serve re-enlistment approval system — which had been for first-termers only — to sailors with six to 10 years in, with plans to include sailors in the 10- to 14-year category. And this fall, most E-7s and up with more than 20 years of service and three years time in grade will begin to face an annual stay-or-go board.

Officials ended the drawdown to continue to supply as many as 14,000 individual augmentees for the war effort, mostly in Iraq and Afghanistan. That demand, which became clear after the Navy had decided to start drawing down, is not expected to go away anytime soon.

“We worked to quantify the individual augmentee bill and the impact on the readiness of the force, then requested to program and budget for the necessary manpower,” Chief of Naval Personnel Vice Adm. Mark Ferguson said. “It was about supporting the mission as well as capturing the cost and the impact on readiness.”

Taking those IA billets “out of hide” took a toll on the readiness of the Navy’s deploying commands over the past few years. Though officials have started to get sailors to volunteer for these assignments as regular tours, they still need bodies to fill the billets. That’s why, Ferguson said, he went to Chief of Naval Operations Adm. Gary Roughead and then-Navy Secretary Donald Winter to halt the drawdown.

Ferguson says the new plan is to keep the force near 329,000 for the next few years, but he will have to get funds from Congress to afford it — or cut other programs.

The original drawdown plan was to cut to 328,200 at the end of fiscal 2008, reaching 325,300 by Oct. 1 of this year.

Without supplemental funds, the Navy is projecting a $350 million shortfall in fiscal 2009 and plans to recoup about $89 million of those funds by freezing “normal rotational” PCS moves for up to 14,000 sailors until October. This accounts for more than half of the remaining moves slated for this fiscal year.

As of mid-April, 50,331 PCS orders had been written, including 19,000 for sailors scheduled to transfer between April and September. Those sailors, provided their orders are already cut, will be allowed to rotate as planned, said Rear Adm. Don Quinn, commander of Navy Personnel Command.

As for the rest of the year, 26,000 more sailors are scheduled to transfer before Oct. 1; of those, 14,000 won’t be able to make the move unless the Navy gets a gift from Congress. “We are still writing orders up until June,” Ferguson said “When funds are restored, we will reverse our actions to the greatest extent possible.”

Officials expect a decision on the extra funding by the end of June at the latest.

Permission to stay
Meanwhile, sailors in Zones B and C are facing Perform to Serve rules, while sailors after the 20-point prepare for the stay-or-go boards.

“Controlling the number of sailors in specific ratings provides better advancement opportunities for sailors, while helping the Navy manage manpower requirements as we stabilize the force,” Ferguson said.

Ferguson said the mechanics of Perform to Serve for more experienced sailors will mirror the five-year-old system for zone A sailors. In the program, sailors must apply for and receive a re-enlistment quota before re-upping.

The request states whether a sailor wants to ship over in his current rating or if he is willing to convert to another skill.

Zone D sailors, those with 14 to 20 years of service, will be exempt from Perform to Serve because retraining so late in a career is not cost-effective, officials say.

But don’t expect immediate results, Ferguson said. “It will be mid-to-late FY10 before we see the benefits … as long we have a stable demand signal,” he said.

The full benefit won’t be felt for two to three years, he said.

Rethinking SRBs
The high retention already has begun affecting bonuses normally paid to keep sailors in.

On May 1, the Navy drastically reduced the sizes of bonuses and the numbers of people who qualify. Gone are the expansive, semiannual bonus lists with rates that stay in place for months or even years at a time. In their place are bonuses offered to a select few in the most critical ratings and skills. And they are available only for short periods of time.

The Navy wants to see whether larger bonuses offered to critically needed sailors for short periods of time will entice them to stay.

For example, in February, officials tested a new quick-hit bonus system when the Navy offered the nuclear-power community a 90-day window to snare a maximum $90,000 SRB. When the window closes May 11, the level will drop to $75,000.

With budgets tight and sailors staying in without regard to bonuses, this could be the model for future SRB programs. It also could spread to other bonus programs.

Ferguson has ordered a complete review of all bonus programs to see whether they still are necessary and to determine if the payouts are in line with “market demands,” but he has yet to fully define the scope of the review or when sailors might see its results.
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