Hagel outlines looming DOD budget cuts

Cybersecurity is one of a few areas set to receive a boost, at the expense of troop strength.

illustration dollar sign in vise

Pentagon leaders are preparing for some of the largest cuts in the history of the all-volunteer force, slashing hundreds of thousands of troops, aircraft inventory and other major platforms in favor of a smaller, more high-tech Defense Department.

Defense Secretary Chuck Hagel on Feb. 24 previewed some of the cost-cutting measures he plans to begin in fiscal 2015. Speaking at a Pentagon press conference, Hagel also warned Congress that if DOD faces another round of sequestration, even further cuts will be made, particularly to troop levels.

“We chose further reductions in troop strength and force structure in every military service – active and reserve – in order to sustain our readiness and technological superiority, and to protect critical capabilities like special operations forces and cyber resources,” Hagel said.

Cyber -- including intelligence, surveillance and reconnaissance (ISR) -- is one of a few areas set to receive a boost. Research and development in next-generation military technologies will also see an increase.

“We are repositioning to focus on the strategic challenges and opportunities that will define our future; new technologies, new centers of power, and a world that is growing more volatile, more unpredictable, and in some instances more threatening to the United States,” Hagel said.

Hagel pegged the fiscal 2015 DOD budget at around $496 billion, roughly the same as 2014. But he plans to ask Congress for another round of Base Realignment and Closure, a request that in recent years repeatedly has been denied. In the Army alone, troop levels are expect to decline from a war-time peak 530,000 to as low as 420,000.

Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, echoed previous warnings about cutting the number of soldiers that low.

“Four hundred twenty [thousand] is just too low,” Dempsey said at the briefing.

Hagel said the smallest Army since 1940 would be  one of many grim realities that must be faced, particularly if Congress does not heed the administration’s warnings on sequestration or BRAC. He said that the troop strength will be at the low end if lawmakers do not reallocate $26 billion cut under the 2011 Budget Control Act, and also said that if Congress continues to refuse requests for BRAC, Pentagon leaders would act on their own to institute similar changes.

Already, Hagel has been working to eliminate at least $1 billion by streamlining DOD headquarters operations, and he pledged to continue to find such efficiencies throughout the department -- including in “excess infrastructure” -- to free up money for priorities such as cyber and technology.

“It will be interesting to see how they balance the headquarters/back office cuts with cyber, because one of the hardest things is that cyber is part of IT in many ways,” said Roman Schweizer, aerospace and defense analyst at Guggenheim Partners. “You really have to get in there and parse out who are the people just doing the IT infrastructure piece versus those doing the value-added cyber defense stuff.”

The spotlight on cyber, ISR and research and development will be an area to watch in the coming weeks and months as budget details emerge and Pentagon leadership faces the heat on Capitol Hill.

“The idea of technological superiority is a rationale that really hasn’t been a dominant one for the U.S. military for the last 20 years or so. The notion was that it’s always been a given that U.S. technology was superior,” Schweizer said. “Now, for first time in a long time, people are questioning if we still have that advantage. And that’s an important part of the overall argument in defense spending going forward – are we spending the right way and enough to maintain that advantage?”

Note: This article was updated on Feb. 24 to correct the name of Roman Schweizer's employer, Guggenheim Partners.