WASHINGTON (AFNS) --
In the months since the 2012 defense strategic guidance first reflected a new budget reality, Pentagon officials and military leaders have been working on the department's longer-term budget and strategy, Defense Secretary Chuck Hagel said here Nov. 5.
In the keynote address before the Center for Strategic and International Studies' Global Security Forum, Hagel said a needed realignment of missions and resources is being undertaken across the department that will require significant change across every aspect of the enterprise.
"I have identified six areas of focus for our budget and strategic planning efforts going forward," the secretary said.
"Working closely with the service secretaries, service chiefs, combatant commanders and DOD leaders," he added. "These six priorities will help determine the shape of our defense institutions for years to come."
The priorities include institutional reform, force planning, preparing for a prolonged military readiness challenge, protecting investments in emerging capabilities, balancing capacity and capability across the services, and balancing personnel responsibilities with a sustainable compensation policy.
During his first weeks in office, Hagel said, he directed a Strategic Choices and Management Review that over several months identified options for reshaping the force and institutions in the face of difficult budget scenarios.
"That review pointed to the stark choices and tradeoffs in military capabilities that will be required if sequester-level cuts persist, but it also identified opportunities to make changes and reforms," Hagel said.
"Above all, it underscored the reality that DOD still possesses resources and options," he said. "We will need to more efficiently match our resources to our most important national security requirements. We can do things better, we must do things better, and we will."
Addressing the six priorities that will shape future defense efforts, the secretary began with a continued a focus on institutional reform.
Coming out of more than a decade of war and budget growth, he said, there is a clear opportunity and need to reshape the defense enterprise, including paring back the world's largest back office. This summer, Hagel announced a 20-percent reduction in headquarters budgets across the department, beginning with the Office of the Secretary of Defense.
"Our goal is not only to direct more of our resources to real military capabilities and readiness," Hagel said, "but to make organizations flatter and more responsive to the needs of our men and women in uniform."
The second priority is to re-evaluate the military force-planning construct -- the assumptions and scenarios for which U.S. military forces organize, train and equip themselves.
"I've asked our military leaders to take a very close look at these assumptions (and) question these past assumptions, which will also be re-evaluated across the services as part of the (Quadrennial Defense Review)," the secretary said. "The goal is to ensure they better reflect our goals and the shifting strategic environment, the evolving capacity of our allies and partners, real-world threats, and the new military capabilities that reside in our force and in the hands of our potential adversaries."
Hagel said the third priority will be to prepare for a prolonged military readiness challenge. In managing readiness under sequestration, he added, the services have protected the training and equipping of deploying forces to ensure that no one goes unprepared into harm's way. This is the department's highest responsibility to its forces, the secretary said, and yet already, "we have seen the readiness of non-deploying units suffer as training has been curtailed, flying hours reduced, ships not steaming and exercises canceled."
The Strategic Choices and Management Review showed that sequester-level cuts could lead to a readiness crisis, and unless something changes, Hagel said, "we have to think urgently and creatively about how to avoid that outcome, because we are consuming our future readiness now."
The fourth priority will be protecting investments in emerging military capabilities -- especially space, cyber, special operations forces, and intelligence, surveillance and reconnaissance, the secretary said.
"As our potential adversaries invest in more sophisticated capabilities and seek to frustrate our military's traditional advantages, including our freedom of action and access ... around the world," he said, "it will be important to maintain our decisive technological edge."
The fifth priority is balance across the services in the mix between capacity and capability, between active and reserve forces, between forward-stationed and home-based forces, and between conventional and unconventional warfighting capabilities, Hagel said.
"In some cases we will make a shift, for example, by prioritizing a smaller, modern and capable military over a larger force with older equipment," he said. "We will also favor a globally active and engaged force over a garrison force."
The services will look to better leverage the reserve components, with the understanding that part-time units in ground forces can't expect to perform at the same levels as full-time units, at least in the early stages of a conflict. In other cases, the services will seek to preserve balance, for example, by controlling areas of runaway cost growth, the secretary said.
The sixth priority is personnel and compensation policy, which Hagel said may be the most difficult issue.
"Without serious attempts to achieve significant savings in this area, which consumes roughly now half the DOD budget and increases every year, we risk becoming an unbalanced force, one that is well-compensated but poorly trained and equipped, with limited readiness and capability," he said.
Going forward, the department must make hard choices in this area to ensure that the defense enterprise is sustainable for the 21st century, the secretary said.
Hagel said Congress must permit meaningful reforms as it reduces the defense budget, and the department needs Congress as a willing partner in making tough choices to bend the cost curve on personnel, while meeting its responsibilities to its people.
"Even as we pursue change across the Department of Defense, the greatest responsibility of leadership will always remain the people we represent, our men and women in uniform, their families, and our dedicated civilian workforce," the secretary said.