Fiscally Informed Military Manpower Requirements

There is concern that requirements for the Navy’s military manpower are being developed with insufficient attention to cost. In this sense, today’s requirements may be called “fiscally uninformed.” While today’s requirements may be sufficient to accomplish the mission, it is important that they accomplish the mission at lowest cost. In this study, we describe the current manpower requirements determination process, identify why requirements are not fiscally informed, and develop ideas for more market-based, cost-informed requirements determination. We find some evidence that supports expectations of how cost incentives affect activities’ decisions. Military manpower requirements would become more fiscally informed if the people making the decisions about requirements and authorizations faced the same resource tradeoffs as the Navy. We propose two general variants of more market-based processes for military manpower requirements. In each process, end users pay for the manpower they use, and have greater financial fungibility, or the ability to exchange programmed funds in one appropriation for another. An initial step toward fiscally informed requirements would be to make prices (or programming rates) more granular by manpower type. Flexible-price mechanisms, such as auctions, would result in better prices but may be more difficult to implement.