Research for Formals

The military services, the Department of Defense, and the U.S. Congress have all expressed concern about the shortages of spare parts for aviation units and about the workarounds, including the cannibalization of parts, that are required to achieve readiness goals. In this paper, we provide a theoretical framework that should help decision-makers understand why cannibalizations occur; what factors influence cannibalization rates; and, given the interaction of those factors, how to predict cannibalization rates. We start with a description of the theoretical model and then provide a numerical example. Next, we examine several policy implications and offer some suggestions for future research. Upon request, we will provide a spreadsheet calculator that will allow users in the Navy and Air Force to derive simulation results using their own parametric values.

CNAC and its Russian counterpart, ISKRAN, held their 15th seminar here at CNAC on 7 December 2001. This is a report of that seminar. The report is also based on other discussions the Russian visitors had in the Washington area, including with Deputy Secretary of State Armitage and Vice Admiral Keating, Deputy Chief of Naval Operations for Plans, Policy and Operations. The CNAC program dates back to the fall of 1990, when we invited Andrey Kokoshin, among others, to the CNAC Annual Conference, to the fall of 1991, when a CNAC group took its first trip to Moscow, and the spring of 1992, when the first CNAC-ISKRAN seminar was held, here in Washington. The discussions focused on new opportunities for Russian American relations and for NATO-Russian cooperation following September 11, following President Putin's initiative to support the United States on September 24, and following the Bush-Putin summit meeting in November ("the Crawford Summit"). These discussions stood in some contrast to the discussions we held in Moscow in July 2001. Then there was an almost complete obsession among our Russian interlocutors, with the impending demise of the ABM treaty, and with it, as they said, the end of strategic stability. There was also a discussion during the seminar on whether the last decade had seen a great deal of progress in the improvement of U.S.-Russian relations or was a time of wasted opportunities during which the chances for a real Russian-American partnership, especially in matters of security, were squandered.

Are the most senior enlisted service members adequately compensated? Given the varying levels of responsibility assigned to them, is the compensation sufficient to ensure that we retain the talent we require? Because these senior enlisted personnel are more apt to be retirement-eligible, are the best retiring too early? Are there sufficient incentives to induce the most competitive to remain in service? Service members in grade E-9 usually fall into two categories: the technical or duty expert of a certain occupational field; or the senior enlisted advisor to the commanding officer of a given unit, usually a unit with its own organizational colors. In discussing these issues, this paper starts with a short history of non-commissioned officers, concentrating on the most senior grade. Then we'll present a current overview of the E-9s in each of the services and describe what we see as the challenges facing the E-9 community today. We'll turn then to the current experience distribution of E-9s, promotion timings, and the pattern of retirements. Finally, we'll return to the question of incentives for E-9 retention and a proposal for an E-10grade.

The Ninth Quadrennial Review of Military Compensation (QRMC)is reviewing ways to structure military compensation to improve military recruiting, retention and manning. Retirement pay is a significant component of the current compensation package, and there is concern that the structure of these benefits is not competitive with that offered by the private sector. The current military retirement system is a defined benefit program, with some limited ability to participate in a thrift savings plan (TSP). In contrast, the private sector increasingly uses defined contribution plans, which give the employee an opportunity to manage at least part of the retirement plan benefits. Expansion of the TSP component of military retirement benefits would potentially increase the attractiveness of military compensation. Given the sheer size of the military, however, several concerns have been raised about the implications of such a dramatic shift in compensation. At least four major questions have been asked-questions surrounding the level of service member participation, potential effects on total saving, implications for federal tax revenues, and the administrative costs associated with such a program. In light of these concerns, this research memorandum summarizes both the theoretical and empirical literature devoted to these issues. The evidence suggests that participation and contribution rates are strongly related to the size of matching contributions made by the employer. In addition, surveys show that military personnel would increase participation in TSP if the government were willing to make matching contributions. Given the financial risk associated with these plans relative to insured, defined benefit plans, there is also evidence that financial education (preferably provided by the emplyer) increases employee saving and improves contribution allocation.