by Jody Brenner
Civilians have supported military operations since the founding of the United States. With each successive war, their contributions have increased as they work in supply, transportation, engineering, maintenance, communications, and medical support. During Operations Desert Shield and Desert Storm, 2,000 Army civilians deployed to Saudi Arabia, where they performed functions ranging from repairing equipment to contracting for supplies.
The Persian Gulf War demonstrated that we cannot be sure when and where the next conflict will occur. Since that war's conclusion, Army civilians have been involved in numerous contingency operations, including Hurricane Andrew relief (101 Army civilians deployed) and Operations Restore Hope in Somalia (32), Vigilant Warrior in Kuwait (169), Uphold Democracy in Haiti (74), and Joint Guard in Bosnia (252). It is projected that in the future the Army will rely even more on the use of civilians during contingency operations because of the downsizing of the military forces.
Because the need for civilians to deploy in support of future contingency operations only will increase, it is important that civilians be motivated to perform with the same dedication as soldiers. It is vital that a pay and benefits plan be provided to civilians that will encourage them to volunteer to deploy in support of our forces. However, if the Gulf War illustrated the growing importance of civilians, it also revealed shortcomings in their pay and benefits plan. These shortcomings still exist. The current pay and benefits plan provides very little incentive for civilians to volunteer for contingency operations.
Areas of concern affecting the pay and benefits of civilians include the overtime pay rate, tax exclusion, annual leave, life insurance, and a bonus plan. I would like to examine each of these areas, as well as present a couple of alternative bonus plans, all with the idea of developing a total benefits package for deploying Army civilian employees.
Overtime Pay
A General Schedule (GS) employee whose basic rate of pay does not exceed that of a GS-10, step 1, will be paid at a rate of 1½ times his basic hourly rate for each hour of work authorized and approved over the normal 8-hour day or 40-hour week. An employee whose rate exceeds that of a GS-10, step 1, will be paid at the rate of 1½ times the basic hourly rate of a GS-10, step 1. This creates a problem, because most employees who currently participate in contingency operations are GS-11's and -12's.
Obviously, this payment plan offers little motivation for employees graded GS-12 and higher to work overtime during a contingency operation. For example, under the current plan, a GS-12, step 10, is paid an overtime hourly wage of $25.41, which is less than his basic hourly pay rate of $29.01.
This situation should be corrected by paying overtime at the rate of 1½ times the basic hourly rate for all employees. This corrective action would benefit all employees who are GS-10, step 2, and above. For our hypothetical GS-12, step 10, employee, overtime pay would increase to $43.52 per overtime hour worked (1½ times his basic hourly rate). The proposed overtime pay plan would motivate civilians to volunteer to participate in contingency operations because they will be compensated fairly for working overtime hours.
Tax Exclusion
The current payment plan for civilians does not provide a tax exclusion for wages earned during contingency operations designated as combat situations or national emergencies. The military officers who deployed to Bosnia in support of Operation Joint Guard received a tax exclusion of $4,254.90 per month. A tax exclusion for civilians would be a strong motivational factor for civilians to participate voluntarily in support of contingency operations.
A logistics assistance representative (LAR) told me in an interview that the tax exclusion is the biggest issue of concern in the LAR community. He explained that he earned more than $10,000 in additional income due to overtime, danger, and foreign post differential pay while he was deployed to Bosnia during 1997. This additional income placed him in a higher tax bracket for that year. He concluded that the payment of additional taxes made him reconsider the overall worth of working 7 days a week and 12 hours a day to earn extra income.
The absence of a tax exclusion might be the reason for one group in particular to decide against volunteering for contingency operations: civilian employees who have spouses with well-paying jobs. These employees would have no incentive to volunteer for deployment because the additional funds they earned would place them in a higher tax bracket. They therefore would be working long hours in a hostile environment only to receive a very minimal reward.
Civilians in Bosnia are performing functions just as important as those of the soldiers. Rewarding soldiers with a tax exclusion and not providing a similar tax exclusion for civilians is bad for morale. Military officers and civilians are on the same team and are attempting to achieve the same goals. The absence of a tax exclusion for civilians could have a divisive effect on the total force. For example, civilians who are upset about the lack of a tax exclusion might perform at an average pace and allow extra duties to become the responsibility of soldiers. This could create animosity against civilians in some soldiers.
A tax exclusion that had been under consideration by Headquarters, Department of the Army, would have given civilians deployed to support combat situations and national emergencies a $500 tax exclusion. This tax exclusion would not have been fair and equitable. For example, consider a GS-12 who recently deployed to Bosnia. This individual could possibly earn approximately $55,000 in the 6 months that he is deployed. (I arrive at this figure by assuming that a GS-12 earns approximately $50,000 per year and that foreign post differential and danger pay amounts to 40 percent of base pay. I also assumed that the individual worked 28 hours of overtime per week.) A $500 tax deduction on total wages of approximately $55,000 would not have helped the employee reduce his taxable income.
[Editor's note: Since this article was written, the Army has taken further steps to address the problem discussed by Mr. Brenner. The Army's current legislative proposal requests a tax exclusion equal to the amount excluded for enlisted personnel, currently $4,653.]
I believe that a tax exclusion of 60 percent of the total wages a civilian earns while deployed should be implemented as soon as possible. At 60 percent of total wages, a GS-12 would have a tax exclusion of approximately $33,000 for a 6-month period. This would be approximately $5,500 per month. Remember that this is just an approximation, but a 60-percent tax exclusion could be distributed equitably among the variously graded employees who participate in deployments. The implementation of a 60-percent tax exclusion would greatly motivate civilians to volunteer to participate in contingency operations.
Those individuals with spouses earning a substantial income would be more inclined to take part in deployments. They could lower their total taxable income rather than raise it and thus would enjoy more disposable income. A single civilian who has numerous investments in addition to his Government salary would give serious consideration to participating in deployment operations because of this generous tax exclusion.
It is difficult to estimate the number of civilians who would consider volunteering to take part in deployments because of this tax exclusion, but I think the number would be substantial. A survey of a group of civilians who regularly take part in contingency operations, such as LAR's, could provide more solid data. I believe the LAR community would be very receptive to this tax exclusion. (It should be noted that contractors receive a tax exclusion of $72,000 while employed in a foreign country.)
Annual Leave
According to the Department of the Army Civilian Employee Deployment Guide—
Any annual leave in excess of the maximum permissible carry over is automatically forfeited at the end of the leave year. Annual leave forfeited during a combat or crisis situation that has been determined by appropriate authority to constitute an exigency of the public business may be temporarily restored. However, the employee must file for carry over. Normally, the employee has up to two years to use restored annual leave.
Civilians currently are limited to carrying over 30 days of annual leave from one year to the next. An LAR supports his unit during all contingency operations, of which there have been a number since Desert Storm. It therefore is possible that an LAR would have to file to carry over leave every year and would eventually lose annual leave because of the 2-year time limit on using restored leave.
The policies of mandating that an employee file to carry over leave and limiting the carry-over time period to 2 years are too restrictive. These restrictions could dissuade individuals from participating in contingency operations. Most people do not like to do any additional paper work unless they are forced to do so.
I suggest three actions to correct the annual leave carry-over problem. The first would allow the employee to sell to the Government additional hours or days of annual leave accumulated above the 30-day limit at the end of the year. This "sell back" feature would be very attractive to individuals who were deployed for most of the year, and the payment of money would serve as a small bonus for their efforts during a contingency operation. The Government essentially does the same thing for employees at retirement, by paying the retiring individual for his balance of annual leave.
The second corrective action would allow employees to transfer the additional annual leave hours into their sick leave totals. This would be especially advantageous for civilians who deploy with regularity. It is common knowledge that, as the number of contingency operations in which an individual participates rises, the greater are his chances of injury or sickness. An accumulated sick leave account would provide the employee with a fairly secure safety net in the event of sickness or injury.
The third corrective action would change current policy to allow employees who participate in contingency operations to carry over annual leave for a 2-year period without filing to carry it over. At the expiration of the 2-year period, the employee would be given the opportunity to sell the excess annual leave hours to the Government or transfer those hours into his sick leave account.
Life Insurance
A civilian who has a life insurance policy with a private insurance carrier often is at a distinct disadvantage during a contingency operation. If the operation turns into a conflict or war and the civilian is killed, it is highly probable that his policy will be null and void due to a war clause. This is not a remote possibility: Operation Desert Shield started out as a contingency operation and quickly became a war. Considering the number of contingency operations since Desert Storm, such a scenario easily could happen again. If a civilian who has a policy with a private insurance carrier is killed, his family may have no recourse for collecting insurance money upon his death.
The only option that an individual in this position has is to spend additional money to purchase a policy through Federal Employees Group Life Insurance (FEGLI). Such a policy does not contain a war clause, and death benefits are payable regardless of cause of death. However, civilians who have an insurance policy with FEGLI can change their amounts of coverage only once a year, and changes are not permitted before deployments.
I have two suggestions for corrective action for civilians who have life insurance policies with companies other than FEGLI. The first would change Government policy to authorize the payment of any amount of an insurance policy that is not paid because of a war clause. Upon application by a beneficiary, the Office of the Secretary of Defense would investigate the claim and, if valid, would certify the claim and forward it to the Secretary of the Treasury for payment from the General Treasury. If approved, this corrective measure would be a big motivating factor for civilians who have not volunteered to participate in contingency operations because of their life insurance dilemma.
The second corrective action would be for the Government to pay for life insurance coverage with FEGLI as long as the individual is actively participating in contingency operations. The Government could provide this benefit to an employee for a given time period, after which it would be the employee's responsibility to pay for the life insurance coverage himself. This approach would show the Government's appreciation for the employee's participation in contingency operations. If implemented, this change will have a substantial impact on a large number of civilians who have not chosen to participate in deployments because they could not purchase life insurance or increase their coverage before deploying. An individual would be more inclined to participate in deployments if he knew for sure that, in the event of his death, his spouse or heir would receive his life insurance benefit.
Bonus Plans
I would like to discuss two possible bonus plans to encourage civilian participation in contingency operations. Bonus plan one would require civilians to commit to participate in contingency operations for a 3-year period. A maximum number of contingency operations in which a civilian might have to participate would be identified for this period. A pre-established bonus based on grade level then would be invested in the Thrift Savings Plan by the Government. The employee would have the right to select the specific funds in which he wanted to invest his bonus. If an employee failed to participate in a contingency operation for reasons other than sickness, or if he left the deployment area without permission, he would forfeit all of his invested bonus money. At the end of the 3-year period, the employee could receive his total bonus compensation and would be given the opportunity to sign up for another 3 years. If he did sign up for another 3 years, he would be given the choice of withdrawing his accumulated bonus or leaving it in the investment fund.
The biggest advantage to the Government under this bonus plan would be the retention of a highly motivated and dedicated work force. This system also would contribute to continuity of logistics operations because the same individuals would be available for a 3-year period. The biggest advantage to the employee would be a guaranteed bonus based on his grade that would be invested in the Thrift Savings Plan (a proven sound investment). He would have a bonus that he could either use in 3 years or reinvest if he signed up to participate in contingency operations for another 3 years. Some employees probably would continue to commit to participate in contingencies until they retired and thus would use their bonus money as additional retirement income.
The only two disadvantages of this bonus system would be that an employee would have to wait 3 years to take possession of his bonus money and that he would have to make a commitment to the Government to participate in contingency operations for 3 years.
Bonus plan two would offer a flat-rate bonus to all civilians regardless of grade upon successful completion of a contingency operation. The employee would forfeit the bonus if he left the deployment area without permission. This plan would be advantageous to the civilian because he would be paid his bonus upon completing his tour of duty and he would only be committed to participate in the current operation. However, this plan would not be advantageous for the Government. The Government would have a continually changing work force for every contingency. The United Nations has used this flat-rate bonus approach and has had a difficult time filling higher skilled and supervisory positions.
I believe that the best deployment incentive benefit package for civilians during contingency operations is one that incorporates bonus plan one. Such a package would provide improvements in the areas of—
· Overtime pay, by paying overtime at the rate of 1½ times the basic hourly rate for all employees.
· Tax exclusion, by excluding taxes on 60 percent of the total wages a civilian earns while deployed.
· Annual leave, by allowing employees to sell to the Government additional hours or days of annual leave accumulated above the 30-day limit at the end of the year; allowing employees to transfer the additional annual leave hours into their sick leave totals; and allowing employees who participate in contingency operations to carry over annual leave for a 2-year period without filing to do so.
· Life insurance coverage, by authorizing Government payment of any amount of a policy that is not paid by an insurance company due to a war clause; and authorizing the Government to pay for life insurance coverage with FEGLI as long as the individual is actively participating in a contingency.
The bonus plan in this package—my bonus plan one—would be mutually beneficial to the Government and the civilian employee. The employee would be paid a bonus each year based on his grade, and the bonus would be invested in the Thrift Savings Plan. In return, the employee would be required to make a commitment to the Government to participate in contingency operations for a 3-year period. This package would allow the Government to retain the most dedicated and skilled people, while at the same time rewarding those people for their efforts during contingency operations. ALOG
Jody Brenner is a case manager and developer in the Security Assistance Management Directorate of the Army Aviation and Missile Command, Redstone Arsenal, Alabama. He holds a bachelor's degree in business administration from Elizabethtown College and is working on a master's degree in logistics from Florida Institute of Technology. He is a graduate of the School of Engineering and Logistics at Red River Army Depot, Texas, and the Army Logistics Management College's Logistics Executive Development Course, where he prepared this paper.