WASHINGTON — Defense Secretary Chuck Hagel announced new funding and personnel cuts to the Office of the Secretary of Defense on Wednesday, including a 20 percent reduction in OSD’s operating budget over the fiscal 2015-2019 time frame, as well as an 8 percent reduction in the total OSD workforce.
The Defense Department estimates that these moves will save at least $1 billion over the next five years.
“With the Pentagon confronting historically deep and steep and abrupt spending reductions after a decade of significant budget growth, there is a clear need … to pare back overhead and streamline headquarters across this department,” Hagel said during a press conference with reporters at the Pentagon, in which he unveiled the cuts.
In a memo issued to senior DoD leadership, Hagel said that much of the savings will be achieved by using fewer contractors, but there will still be “significant reductions” in civilian personnel. The memo did not address how much of an impact the reductions would have on military personnel.
Hagel said the staff cuts are designed to occur primarily through workforce attrition rather than layoffs, but a DOD fact sheet distributed to reporters indicated that more abrupt cuts might be necessary if the Congress’ sequestration budget framework remains in place.
The final details of the planned cutbacks will not be available until the President’s budget request is submitted next year, but Hagel plans the following changes:
■ Restructuring the Office of the Under Secretary of Defense for Policy by eliminating some Senior Executive Service (SES) positions, including a Deputy Under Secretary position and four Deputy Assistant Secretary positions along with their support structure through consolidation.
■ Realigning the Office of the Director of Administration and Management (DA&M) and its components under the Deputy Chief Management Officer (DCMO) structure.
■ Transferring responsibility for business IT systems from DCMO to DOD’s Chief Information Officer.
■ Combining the Office of the Assistant Secretary of Defense for Intelligence Oversight and the Defense Privacy and Civil Liberties Offices into a single entity.
■ Directing the Office of Net Assessment (ONA) to report to the Under Secretary of Defense for Policy.
■ Rebalancing resources within the Office of Personnel and Readiness to focus more on force management, readiness, and compensation and benefits reform.
■ Directing the Under Secretary of Defense for Intelligence to plan how the organization should evolve after the post-9/11 drawdown.
■ Eliminating the five remaining non-Presidentially Appointed, Senate-confirmed (non-PAS) Deputy Under Secretaries of Defense.
These changes are to begin immediately and be fully in place by Jan. 1, 2015. Hagel said OSD staff members will be given more information about the transition plans by their leadership in the coming days and weeks.
These measures stem from an OSD organizational review led by former Air Force Secretary Michael Donley following the completion of the Strategic Choices and Management Review that looked at DoD budget scenarios. The review was designed to look for ways for DoD to find savings amid ongoing budget challenges, including staff reductions.
Combatant commanders, service chiefs, and other headquarters across DoD are also finalizing their own organizational plans to meet the 20 percent budget cut requirements for all major DoD headquarters dictated by Hagel following the SCMR. The details of these plans will be submitted as part of the President’s budget request next year.