Summary: GAO discussed the military services' manpower problems, focusing primarily on the implications of the administration's proposed freeze on basic pay and its affect on competitiveness with the private sector. GAO also discussed annual military pay adjustments, congressional proposals for a new postservice educational assistance benefit program, and the administration's proposal to make permanent the 50-percent limitation on retired pay cost-of-living adjustments for military retirees. GAO believes that, for cost-effective incentives to work, managers must identify the specific manpower problems, perform tradeoff analyses among the alternative solutions, and have the authority to select the most efficient and cost-effective mix of monetary and nonmonetary incentives. GAO concurs with the administration's proposal to freeze components of basic military pay because the current base pay line is generally competitive with the private sector and military pay adjustments should be delinked from civil service pay adjustments. GAO finds little justification at this time for either a new educational assistance benefit program or an increase in the current one. Finally, GAO believes that action on the proposed cost-of-living adjustment limitation should be deferred until the idea is evaluated more thoroughly.
