Pentagon unveils 401(k), internships to compete with private sector

To keep traffic flowing swiftly and efficiently, a freeway must have well-designed on- and off-ramps. In a major speech last week at Georgetown University, Secretary of Defense Ash Carter drew on that freeway imagery as he outlined his plans to completely rethink the Pentagon’s workforce by redesigning the on- and off-ramps to both uniformed and civilian careers in the U.S. military.

Carter outlined more than 20 proposals aimed at recruiting and retaining service members and civilians. One of those—an expanded internship program—he pitched directly to his young audience at Georgetown.

“For you, we’re going to create what we call on-ramps to make it easier to contribute to our mission,” Carter said, noting only about 1 in 3 of the students there were likely to have had a family member serve in the military, compared with 3 in 4 for Carter’s generation. “This trend is likely to continue,” he told the Georgetown students, “so we want to provide more opportunities for those outside DoD to get to know us and to contribute to our mission, even if only for a time.”

A proposed change to one of the major off-ramps of a military career—retirement—would allow uniformed service members to participate in a 401(k)-type retirement plan, something DoD civilians have been able to do for a while. The change is significant because it would allow members who serve fewer than 20 years to leave with a small nest egg. Currently, service members who leave active duty before reaching the 20-year point—about 80 percent—receive no retirement at all.

Carter sees the high-tech industry as a model for innovation and workforce flexibility and has spent much of his short tenure as defense secretary building relationships with Silicon Valley. In another off-ramp program, he hopes to foster innovation and creativity within DoD by expanding fellowships and sabbatical programs with industry, academia, and other government agencies.

“We’re also going to create short-term off-ramps for those already serving, so that they can connect with ideas and innovators outside of the Pentagon,” Carter said. “We want to make it easier for more of our people to gain new skills, experiences, and perspectives.

A similar on-ramp called the Defense Digital Service would temporarily bring in talent from the technology community to work for DoD on specific projects and to bring “a more innovative and agile approach to solving our most complex problems,” Carter said.

The defense secretary also will ask Congress to make permanent the Career Intermission Program, a pilot initiative under which service members could take a sabbatical from active duty service for a few years to get a degree, learn a new skill, or even start a family. The program provides an on-ramp that allows participants to return to military service without negatively affecting their careers.

Carter is looking to the private sector for best practices, technologies, and personnel management techniques that will help the military attract the next generation of service members and bring the Pentagon’s antiquated bureaucracy into the 21st century. But he doesn’t have much time.

“I’m a man in a hurry,” he told Wired magazine’s Jessie Hempel in a recent lengthy profile. Carter has about a year to make changes before a new administration comes in with a likely new secretary of defense.

“He can’t fix the military in that time, but he can change it,” Hempel notes. “He can imprint upon it a new, more flexible way to work that will help it fix itself.”

The Associated Press contributed to this report.