The Costs and Benefits of Converting to Lump-Sum SRBs

The Selective Reenlistment Bonus (SRB) Program is one of the principal force-shaping tools used by the Navy and plays an essential role in mitigating retention problems in critical military specialties. It is also an expensive program: between 2000 and 2007, the Navy's expenditures on SRBs exceeded $150 million per year. It has long been conjectured that the long-term cost of the Navy's SRB program could be reduced if the service were to award lump-sum SRBs (LSSRBs) in place of the current anniversary payment SRBs (APSRBs) in which bonuses are paid in annual increments over the term of reenlistment.

The Navy could gain these savings by capitalizing on sailors' strong preferences for receiving immediate rather than deferred payment. Without changing the value that sailors place on these reenlistment incentives, the Navy could offer smaller LSSRBs at the beginning of the term of reenlistment in place of larger APSRBs that are spread across the term of reenlistment.