$40,000 DoD VSIP pay may be here to stay

Congress wants to solidify an increase in early retirement pay for Defense Department civilians.

Last year, Congress approved a pilot program that increased Voluntary Separation Incentive Pay (VSIP) for DoD civilian workers to $40,000 for one year.

The House Armed Services Committee now wants to extend that incentive to 2021 in the 2018 defense authorization bill. Committee aides said the goal is to give DoD more options to control the size of its workforce.

Before Congress created the pilot program last year, VSIP had remained stagnant since 1993 at $25,000.

“The $25,000 has been in place for a very long time and it has not really kept up with inflation, so for people who were on the fence about whether or not to retire, the $25,000 was just not enough of an incentive for people to retire,” said Sheila McCready, defense consultant for the American Federation of Government Employees.

DoD used VSIPs in the past to mold the defense workforce. The department offers early retirement to positions that are not needed anymore or are in less demand so DoD can then hire employees for more needed jobs.

VSIP “provides the insurance to shape the workforce in a way that is beneficial and is beneficial to those who need to retire or want to retire, and it’s beneficial to those who want to remain in their jobs in their field set,” McCready said. “You don’t have the bump and retreat. You don’t have people being transferred to jobs where they’re less than qualified … You’re able to move people more surgically out of the jobs that we don’t need anymore.”

DoD is also in the midst of headquarters staff cuts. The Pentagon is cutting 25 percent from its headquarters staff by 2020. Despite objections by DoD, the 2017 defense authorization bill makes future cuts to headquarters staff and puts ceilings on the number of people the department can have on its headquarters payroll.

The Senate version of the 2018 bill makes further cuts to the civilian force.

It requires DoD to reduce the number of deputy assistant secretaries of defense by 20 percent.

The bill continues to slash the number of Senior Executive Service personnel in the Pentagon by 10 percent.

The committee also wants to remove one assistant secretary from each military department.

A handful of critics think DoD’s staff has expanded far beyond its need.

“The growth in Defense infrastructure has been continuous. The tendency has been to add, rather than subtract. As we have added more staff, more layers and more infrastructure, we have slowed the decision process, expanded the number of players and made the overall system more risk adverse, at a time when we need to take more risk and make quicker decisions,” Arnold Punaro, a member of the Defense Business Board, told the committee last year.

The Pentagon was successful in meeting its goals to cut civilian workforce spending and reducing the staff by about 7 percent from 2012 to 2016. However, as that happened, contractor spending rose by more than $1 billion from 2014 to 2016.

McCready said AFGE was instrumental in upping the VSIP payout. AFGE provided Congress with a survey of federal defense workers showing they would be more likely to retire early if the VSIP were increased.

DoD is offering other ways for federal workers to leave on their own terms. This summer, it started implementing the phased retirement program.

Retirees who sign up for the program agree to work part-time at their posts while receiving half of their salary and half of their accumulated retirement annuity. During the transition, outgoing federal workers mentor employees seeking to take over their workplace responsibilities.

DoD civilian workers had been waiting and asking for the phased retirement policy, Smith said. DoD currently has about 77,000 people in the Civil Service Retirement System and Federal Employees Retirement System who are eligible for retirement.

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