Mr. KELLEY. The increases here are due almost entirely to the active force pay increases previously described. During the same time frame, increases in budget of the total Guard. and Reserve reflect the great emphasis which has been placed on improving combat readiness through more modern equipment and better training. In large part, these actions are the key to making the total force concept work. GUARD AND RESERVE BUDGET AUTHORITY Mr. KELLEY. As discussed with your committee earlier, it is necessary to invest money in other areas besides pay to eliminate reliance on the draft. These additional requirements include the following: 1. The ordinary requirements of daily living, such as decent housing and medical care, must be available and within the financial reach of military personnel. 2. Military life must be reasonably satisfying and challenging, and must offer opportunities for individual growth and development through education, training, and personal responsibility. 3. Military people and the uniform they wear must be treated with respect. 4. Recruiting services must reach a wider audience and provide reliable and persuasive counseling to young people who are making their initial occupational choices. The level of effort for programs to support these requirements in the fiscal year 1973 budget from funds specifically earmarked for Project Volunteer is $272 million; in fiscal year 1972, it was $320 million. These programs include service initiatives, recruiting improvements, and the scholarships and increased subsistence for ROTC and Marine Platoon Leaders Class students which the Congress authorized in fiscal year 1972. Effective performance of the recruiting function of the services is a keystone of our effort to end the draft. The Project Volunteer recruiting allocation for fiscal year 1973 is $121.9 million for Active Forces and $23.5 million for the Reserves and National Guard-78 percent more than was spent for recruiting in fiscal year 1971. Both the quality and scope of military recruiting have been enhanced considerably, a fact reflected in the very substantial increases in enlistments. Action by the last Congress in authorizing 2,500 additional ROTC scholarships, doubling subsistence payments for ROTC from $50 to $100 a month, and initiation of like payments for the Marine Corps Platoon Leaders Class (PLC) will assist in meeting officer needs in a no-draft environment. There is already increased interest in ROTC and PLC programs because of these scholarship and subsistence increases. It is believed these improvements will meet the ROTC and PLC portion of our officer supply needs. One of our most urgent needs is for the additional medical scholarships approved by the House in H.R. 2 and now pending in the Senate. The accession requirement for physicians in fiscal year 1973 is estimated at about 3,300. The present scholarship program is 642. The allocation of Project Volunteer fiscal year 1973 funds for additional medical scholarships is $40 million, enough to fund about 3,300 more scholarships. Even if the legislation is promptly passed, the earliest product of the increased scholarship program would be 125 medical officers entering active duty in fiscal year 1974. The fiscal year 1973 Project Volunteer program also includes $103.4 million for service initiatives to improve the quality of service life and to improve living conditions. This amount includes $10.6 million for barracks improvement. In addition, the Army has budgeted significant amounts for related programs. The type of actions included in this program are: Increased educational opportunities. Provision of constructive facilities and activities for off-duty hours. Improved medical services for dependents. Eliminating menial work details for lower grade enlisted personnel. More convenient commissary hours. The actions funded for fiscal year 1973 are the result of carefully considering the comments and recommendations of enlisted men, NCO's, junior officers, and commanders in evaluating the fiscal year 1972 program of service initiatives. Implementation of the fiscal year 1972 Volunteer Force program is generally on schedule, except for barracks improvement programs which have lagged because of delays in the availability of funds. Implementation of the fiscal year 1972 program is illustrated below: Number of new recruiters (in place). Complete (fiscal year 1971 funds). Obligated (fiscal year 1972 funds) ROTC scholarships (committed)_. Service initiatives (obligated fiscal year 1972 funds) - MANPOWER ISSUES Percent 70 85 78 10 90 50 Mr. KELLEY. Thus far we have reviewed the size and basic composition of our military forces, the reasons supporting their need, and their cost. I would like now to briefly discuss some of the key considerations of Defense manpower-the All-Volunteer Force, the vital role of Guard and Reserve components in our total force, military retirement, the military grade mixture, the importance of having a stable and fully-manned force, and certain quality considerations in the personnel makeup of our forces. Policy and basic practices in these areas will determine in large part how effectively our human resources will be utilized in future years, and at what cost. ALL-VOLUNTEER FORCE A year ago, I appeared before your committee for a discussion of the actions needed to end reliance on the draft and move toward an All74-696 0-72—pt. 1- -3 Volunteer Force. That was just after 1970 in which we drafted 163,000 men, the lowest level since before Vietnam. Last year, we drafted 98,000 of whom 84,000 were drafted in the first 6 months. During the first quarter of 1971, 64,000 were drafted and there will be no draft calls during the first quarter of this year. I told you then why we favored an All-Volunteer Force over one that relies upon forced entry. Our experience of the past years bears out the accuracy of these reasons. In the adult work world, the Armed Forces (like other organizations) function best in a free environment where they compete with others for people. An organization composed of volunteers, having survived the test of free competition, tends to be more efficient than one that relies on forced entry. The alleged pitfalls of the voluntary military organization-that it will be dominated by mercenaries, who will take over our Nation, or be all black—are gratuitous and false claims, totally unsupported by the makeup of that portion of the military organization that is volunteer. Once the transition to an All-Volunteer Force has been accomplished, the military organization will be totally more effective and will consist of many fewer people than its conscripted counterpart. Besides ever-declining draft calls, further signs of progress toward an All-Volunteer Force in the past year were: Seven of 10 enlistees are true volunteers, compared with a ratio of six of 10 a year ago, and five of 10 two years ago. In the last 6 months of calendar year 1971, 25,000 more true volunteers enlisted than in the same period of 1970. The mental skills of enlistees (sometimes called the quality mix), measured by the results of Armed Forces qualification tests, were better in 1971 than in 1970. Also 12 percent more high school graduates enlisted than in 1970. Combat arms enlistments in the Army increased from a monthly average of 250 in the last half of 1970 to 3,000 in the last half of 1971an increase of 1,200 percent. In January 1972, almost 10,000 soldiers separating from active duty enlisted in Army Guard and Reserve units. This enlistment program for prior service personnel was tried in 1971 at two Army posts and expanded to 20 posts this year. These progress signs are most encouraging. They reflect results achieved before the military pay raises were effective, and they were accomplishments of a year whose second half saw very low draft pressure. But there are remaining problems, and as I told this committee a year ago, it was then (and continues to be now) extremely unlikely that we could totally replace the accession power of the draft in fiscal year 1972. Let me briefly mention two problem areas. As expected, the impact of low draft calls in 1971 was greatest on the Guard and Reserve since more than 75 percent of their new enlistees have been draft motivated. At the end of December 1971, the Guard and Reserve were 45,000 below their congressionally mandated strengths, despite greater emphasis on their recruiting programs. If the shortages continue, we will seek congressional support for bonuses and other actions to stimulate enlistment and retention in the Guard and Reserve. The problem of meeting our requirements for physicians and other health professionals in a no-draft environment is complicated by the national shortage of professionals in these categories. Dr. Richard Wilbur, the Assistant Secretary of Defense (Health and Environment), has taken the lead in developing solutions which will address this problem while increasing the efficiency of our military health care system. In coordination with the Surgeons General, Dr. Wilbur has in the final stages of review a series of programs to expand continuing medical education; improve promotion opportunities for outstanding senior clinicians; increase stability of assignments; and make pay of military health professionals competitive with their civilian counterparts. Programs to increase the efficiency of the military health care system include requiring that all health professionals and facilities within a military department, in a particular geographical area, be under the operational control of a central health authority; establishing better space standards for existing health facilities so that doctors can be used more efficiently; and providing new equipment for existing facilities. Earlier, reference was made to increased scholarships for health professionals, a proposed bill which has passed the House and is pending in the Senate. Its passage would enable us to take an important step toward solving the doctor supply problem. Problems remain in achieving the All-Volunteer Force, and their solutions may require additional programs and transitional funds. But I am encouraged by the progress to date and prospects for the future. Before the end of calendar year 1972, we will be able to determine the means necessary to ending reliance on the draft by July 1973, without impairing our national security system. THE ROLE OF THE GUARD AND RESERVE IN THE TOTAL FORCE CONCEPT The problems of the Guard and Reserve forces relate to causes other than pay, and they won't be solved just by increasing pay or by offering bonuses to people. Before and during the buildup of our active forces in Southeast Asia, the credibility and overall effectiveness of the Guard and Reserve were diminished by the following factors: A questionable combat mission, since their units were seldom mobilized. A marginal capability, due in large measure to the lack of equipment needed to be combat-ready and deployable. Units dominated by people who perceived membership in the Guard and Reserve as a safe haven from the war and the draft. These factors are being eliminated, and there are highly encouraging signs of revitalization within the Guard and Reserve. Equipment inventories are being replenished at an annual rate in excess of $500 million, thus facilitating a big step-up in training and deployability. Guard and Reserve budget increases continue, from $2.1 billion in fiscal year 1969 to $4.1 in fiscal year 1973. And as already noted, Guard and Reserve enlistments are responding to increased recruiting efforts. The increased readiness of Guard and Reserve units, coupled with the high cost of manpower in the active forces, underscore the urgency of increased reliance on the Guard and Reserves in our national defense system. In fiscal year 1973, it will cost $9,100 to pay, clothe, and feed the active force military member-which is five times the cost of maintaining his Guard or Reserve counterpart. The implication is clear. With greater reliance on the Guard and Reserve, we can provide more defense for the dollars invested. In short, the Guard and Reserve is a security bargain, and we intend to fully exploit its potential. MILITARY RETIREMENT An essential ingredient of effective force management is a retirement system that encourages the retention of the desired size and quality of force, and provides adequate benefits for retiring members at manageable costs. Currently, the interaction between grade limitations, advancement opportunities, and the military retirement system is troublesome. Unlike most private and public plans, the military system provides no retirement equity until the member has completed 20 years of service. As a result, the military services tends to retain more people than they need to the 20-year point to establish their retirement rights. Conversely, those who retire with 20 years service can do so with incomes that typically exceed those of their counterparts remaining in service. This is because the combination of military retired pay and civilian job income in a second career almost always exceeds regular military compensation of the active duty member. Thus, on the one hand the system operates to over-supply the military services, and on the other hand as a retention disincentive for long-service career members whose retired colleagues have higher incomes. It was because of these and other considerations that the President convened an Interagency Committee a year ago to study the military retirement system and to make appropriate recommendations for changes in it. This committee, of which I am chairman, has completed its study of nondisability retirement and survivor benefits for the active and Reserve forces, and will complete the remainder of its study soon. In the meantime, we are reviewing these matters with the military departments preliminary to presenting legislative recommendations that reflect the best judgment of the Department of Defense and the executive branch, both as to the military retirement plan and its interaction with policies governing tenure and career progression. MILITARY GRADE MIX During the recent period of rapid and substantial force reduction, the proportion of senior officers in the Armed Forces increased just as it decreased during the earlier periods of rapid buildup. In fiscal year 1973, however, as we approach our baseline force, the picture changes. Excluding physicians, dentists, and nurses, the distribution |