Hagel warns Pentagon officials that change is coming

He decries spending on overly costly and risky weapons systems

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If anyone thought Chuck Hagel wants to be a caretaker defense secretary, he worked hard to disabuse them of the idea in an April 3 speech to a roomful of generals and other senior officers at Washington’s National Defense University, an elite school chartered by the Joint Chiefs of Staff.

Hagel, a former Senator and longtime Washington politician, knows that the first tasks of any policymaker seeking major change are to broadcast intent and build a constituency — and he clearly sought to begin that process in his first major address since being confirmed in March by the smallest margin of any defense secretary.

“The world today is combustible and complex,” Hagel said, before making clear that everything done by his two predecessors — Robert Gates and Leon Panetta — is now up for grabs, due to the austere fiscal climate and Hagel’s own stated desire to refocus his department more carefully on future military threats.

Yes, both men organized cutbacks in planned spending, Hagel said. “However, we will have to do more.” Hagel said he is now seeking 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.”

His premier targets, he said, will be the three areas responsible for the greatest spending growth in recent years: acquisitions, personnel costs, and overhead.

Essentially backhanding the past four years of incremental change in Pentagon procurement practices under Obama, Hagel said “the military’s modernization strategy still depends on systems that are vastly more expensive and technologically risky than what was promised or budgeted for.” His point was underscored last week by a Government Accountability Office report that said the largest 86 Pentagon weapons programs were a total of $400 billion over their initial budget, and an average of 27 months behind schedule.

Hagel warned that if current trends continue, the steady growth in funding for “existing structures and institutions,” personnel, and replacements for aging weapons will prevent needed spending on operations, readiness, and new technologies. He said the Pentagon needs instead to design “an acquisition system … that rewards cost-effectiveness and efficiency, so that our programs do not continue to take longer, cost more, and deliver less than initially planned and promised.”

In a passage that doubtless made some weapons program managers squirm, Hagel approvingly quoted a warning from retired admiral and former chief of naval operations Gary Roughead that without reform, the Pentagon risks spending all its money on “limited quantities of irrelevant and overpriced equipment.”

He also said the number and type of civilian and military personnel employed by the department would be re-evaluated, and that he intended to “re-look” at the funding for the Pentagon itself and its myriad agency headquarters, including the Missile Defense Agency.

His speech was notably lacking in detailed prescriptions, and comes less than a week before the department’s release of a proposed budget for fiscal year 2014 that was largely drafted by Panetta. Hagel  also gave himself an out: “It could turn out that making dramatic changes in each of these areas could prove unwise, untenable, or politically impossible.”

But Hagel has told top officials to present some new ideas to him by May, a timetable that makes the defense budget deliberations on Capitol Hill this year likely to be even more uncertain and interesting than they were in 2012.