Compensation to service members is one of the largest components of the Department of Defense (DOD) budget. Its role in recruiting, retaining, and motivating the nation's uniformed services also makes it one of the most crucial elements of the budget. Without adequate compensation, the nation would be unable to sustain the all-volunteer force, in the size and with the skill set needed, to support the missions called for in the national security strategy. Today's demands on the force in operational theaters around the world, competition from the private sector in recruiting and retention, and changing interests of today's youth all demand robust action on the part of the uniformed services in attracting and sustaining their workforce. A critical tool in that endeavor is the compensation system. The Tenth Quadrennial Review of Military Compensation (10th QRMC), chartered by the President in August 2005, embarked on its review of the compensation system with the challenges of the current national security environment as context. It also considered the principles that should guide its efforts tenets against which its findings and recommendations would be evaluated and judged. The QRMC adopted four such principles to guide its analyses: 1. All-Volunteer 2. Flexible and Responsive 3. Strategic Best Value 4. Support Achievement of Strategic Objectives and Outcomes. These principles underpin a compensation system that must meet a wide range of essential and challenging force management goals. Against this background, the 10th QRMC focused its attention on seven compensation-related areas: 1. adequacy of compensation 2. special pays and bonuses 3. pay for performance 4. housing allowance 5. retirement system 6. health care 7. quality of life The first four topics are addressed in this volume, Volume 1, of the QRMC's report and are summarized below. The latter three will be covered in Volume 2.