Pentagon needs greater authority to issue bonuses, report says

U.S. Marine Corps

A presidentially chartered study released Thursday recommends granting the Defense Department authority to modify incentive pay for more military members.

The Quadrennial Review of Military Compensation found that service personnel -- particularly those in critical career fields such as special operations forces, linguists and translators, and remotely piloted vehicle operators -- often receive bonuses to compensate for staffing shortfalls and monthly incentives to remain on the job.

A 2008 law consolidated Defense’s authority to provide such incentives for enlisted members and officers with specialized skills. Although the 2008 authorities are in a 10-year transition period and not all have been implemented, according to Thomas Bush, director of the 11th QRMC, the current study recommends granting the department the additional power to offer bonuses to more military personnel.. The recommendation would require legislation to implement.

The report suggests evaluating incentives in the military community where civilian opportunities are lucrative and training requirements are extensive, Bush said. The study’s directors developed a model to help determine the effect of incentive pay on staffing and the cost to the Defense budget. Each military service has its own process for incentive pay, and the study recommends the department conduct more quantitative analyses.

The study also pointed out a “misaligned” tax code in Defense’s compensation structure for combat compensation, Bush said.

Combat zone tax exclusion benefits often favor high-ranking officers, the study found. Junior personnel are typically in a lower tax bracket and thus less likely to benefit from tax exemptions; they also are most likely to be sent to the most dangerous regions, the study found.

“The tax code is based on income,” Bush said. “It has no bearing on exposure to danger.”

The QRMC recommends instituting new tax credits to replace the combat zone exclusion that assures members receive a full tax benefit regardless of their liabilities and are prorated according to a service member’s exposure to danger.

Currently, service members sent into combat zones are designated as receiving “hostile fire pay” or “imminent danger pay.” The study recommends setting hostile fire pay higher and establishing more than one level of imminent danger pay, depending on the level of exposure to harm. Because dangerous zones change, the study also recommends annually recertifying what is considered a “combat zone” -- the same process the president uses when declaring a state of emergency.

The QRMC is commissioned by the president and conducted independently of the Defense Department every four years.

It examines general military compensation; special and incentive pay; combat compensation; compensation for wounded warriors, caregivers and survivors; and compensation and benefits for reserve components.

The study’s recommendations are not necessarily taken up by Defense or Congress, and it is too early to tell whether any will be incorporated into this year’s budget process or the Pentagon’s fiscal 2014 budget request, said Jeri Busch, director of military compensation policy in the department’s personnel and readiness directorate.

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