WASHINGTON, April 3, 2013 - Defense Secretary Chuck Hagel today signaled possible big changes ahead for his department in acquisition, personnel and organization as he delivered his first major policy speech as Pentagon chief.
Hagel outlined his plan of attack for the strategic and financial challenges the Defense Department faces during remarks at the National Defense University here.
"We need to challenge all past assumptions, and we need to put everything on the table," he said.
Hagel said DOD's task is to prepare for the future, "but not in a way that neglects, or is oblivious to, the realities of the present."
At his direction, Hagel said, Deputy Defense Secretary Ash Carter, working with Army Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, is leading a review of the department's strategic choices and management. The review is intended to identify the challenges, uncertainties, risks and opportunities connected to both strategic priorities and budget uncertainty. It's also "about matching missions with resources -- looking at ends, ways and means," he said.
The review will consider big choices -- "change that involves not just tweaking or chipping away at existing structures and practices but, where necessary, fashioning entirely new ones that are better suited to 21st-century realities and challenges," the secretary said.
Reshaping the defense enterprise means confronting "the principal drivers of growth in the department's base budget -- namely acquisitions, personnel costs and overhead," Hagel said.
The Pentagon's biggest budget challenge is not its top-line budget, he said, but "where that money is being spent internally."
Spiraling costs to sustain existing structures and institutions, to provide personnel benefits, and to develop replacements for aging weapons platforms will, if unchecked, eventually crowd out spending on procurement, operations and readiness, he said, which are the budget categories that enable the military to be, and stay, prepared.
Hagel said the U.S. military has grown more deployable, expeditionary, flexible, lethal "and certainly more professional" since 9/11.
"It has also grown significantly older -- as measured by the age of major platforms -- and it has grown enormously more expensive in every way," he said.
The department will "get out ahead" of challenges, Hagel said. He said he has told the senior leaders across the department and the services that "we are all in this together, and we will come out of it together."
Hagel said the military's modernization strategy "still depends on systems that are vastly more expensive and technologically risky than what were promised or budgeted for." The department must develop an acquisition system that responds more quickly and effectively to the needs of troops and commanders in the field, he said -- one that rewards cost-effectiveness "so that our programs do not continue to take longer, cost more and deliver less than initially planned and promised."
On the personnel front, Hagel said, DOD leaders must determine how many military and civilian people they have, how many they need, and how to compensate them for their service. He said that process will involve questioning the right mix of civilian and military members, the right balance between officer and enlisted service members, and the appropriate troop strength dedicated to combat, support and administrative duties.
Hagel said he also advocates a hard look at defense organization. The military's operational forces, its battalions, ships and aircraft wings, have shrunk dramatically since the Cold War era, he noted.
"Yet the three- and four-star command and support structures sitting atop these smaller fighting forces have stayed intact, with minor exceptions," he added, "and in some cases, they are actually increasing in size and rank."
Hagel said the review will examine funding for those headquarters and support structures, along with DOD elements including the Office of the Secretary of Defense, the Joint Staff, the combatant commands and the defense agencies and field activities.
"The military is not, and should never be, run like a corporation," Hagel said. "But that does not mean we don't have a good deal to learn from what the private sector has achieved over the past 20 to 30 years, in which reducing layers of upper and middle management not only reduced costs and micromanagement, it also led to more agile and effective organizations and more empowered junior leaders."
The secretary acknowledged that making dramatic changes in acquisition systems, benefits and force structure could prove unwise, untenable or politically impossible. "Yet we have no choice but to take a very close look and see how we can do all of this better," he said.
Hagel noted that his two immediate predecessors as defense secretary -- Leon E. Panetta and Robert M. Gates -- each led efforts to cut costs across the department. But sequester cuts and budget uncertainty have "led to far more abrupt and deeper reductions than were planned or expected," he added.
"Now, DOD is grappling with the serious and immediate challenges of sequester -- which is forcing us to take as much as a $41 billion cut in this current fiscal year, and if it continues, will reduce projected defense spending by another $500 billion over the next decade," the secretary said.
Much more hard work, difficult decisions and strategic prioritizing remain to be done, he said, and "deep political and institutional obstacles to necessary reforms will need to be engaged and overcome."
The secretary said the department's enduring mission -- defending the nation and advancing America's strategic interests -- must be approached in the context of "unprecedented shifts in the world order, new global challenges and deep global fiscal uncertainty."
The 21st-century security landscape is marked by the threat of violent extremism from weak states and ungoverned spaces in the Middle East and North Africa, Hagel said. Other security issues, he said, include the proliferation of weapons and materials; increasing access to advanced military technology among state and nonstate actors, risks of regional conflict that could draw in the United States, and "the debilitating and dangerous curse of human despair and poverty, as well as the uncertain implications of environmental degradation."
Hagel said cyberattacks, "which barely registered as a threat a decade ago, have grown into a defining security challenge" which allows enemies to strike security, energy, economic and other critical infrastructure with the benefit of anonymity and distance.
All in all, Hagel said, the world is combustible and complex, and America's responsibilities are enormous. The military's role in meeting those responsibilities is essential, he said, but as part of a total government approach.
"Most of the pressing security challenges today have important political, economic, and cultural components, and do not necessarily lend themselves to being resolved by conventional military strength," the secretary noted.
Defense leaders need time, flexibility, budget certainty and partnership with Congress to effectively explore new approaches to acquisition, personnel, and overhead costs, he said. Hagel emphasized that future strategic planning will emphasize DOD's "inherent strengths" of leadership development, training, mobility and logistics, special operations, cyber, space, and research and development.
"The goal of the senior leadership of this department today is to learn from the miscalculations and mistakes of the past drawdowns, and make the right decisions that will sustain our military strength, advance our strategic interests, and protect our nation well into the future," Hagel said.
The secretary concluded with some comments on the nation's role in the world. Amid budget turmoil, financial crisis and a war-weary population, Hagel said, questions arise about America's global leadership.
"America does not have the luxury of retrenchment," the secretary asserted. "We have too many global interests at stake, including our security, prosperity, and our future."
If America leaves a leadership vacuum, he said, the next great power may not be as judicious or responsible as the United States has been since World War II.
"We have made mistakes and miscalculations with our great power," Hagel said. "But as history has advanced, America has helped make a better world for all people with its power. A world where America does not lead is not the world I wish my children to inherit."
Quoting President Theodore Roosevelt, Hagel said America "cannot bear these responsibilities aright unless its voice is potent for peace and justice ... with the assured self-confidence of the just man armed."
What distinguishes America and its people, he said, is "our commitment to making a better life for all people."
"We are a wise, thoughtful and steady nation, worthy of our power, generous of spirit, and humble in our purpose," he added. "That is the America we will defend together, with the purpose and self-confidence of the 'just man armed.'"