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U.S. STATEMENT ON STRATEGIC CHOICES

U.S. SECRETARY OF DEFENSE CHUCK HAGEL – STATEMENT ON STRATEGIC CHOICES AND MANAGEMENT REVIEW

PENTAGON PRESS BRIEFING ROOM – WEDNESDAY, JULY 31, 2013

Good afternoon.

Earlier today, I briefed key congressional committee leaders on the findings of DoD’s Strategic Choices and Management Review. This afternoon, I want to discuss these findings and clarify the major options and difficult choices ahead.

I directed the Strategic Choices and Management Review four months ago to help ensure the Department of Defense is prepared in the face of unprecedented budget uncertainty. Although DoD strongly supports the President’s fiscal year 2014 request and long-term budget plan for the entire federal government, the deep and abrupt spending cuts under sequestration that began on March 1st this year are the law of the land. Sequestration will continue in the absence of an agreement that replaces the Budget Control Act.

The purpose of the Strategic Choices and Management Review – which was led by Deputy Secretary Ash Carter with the full participation of General Dempsey, Admiral Winnefeld, the Service Secretaries and Service Chiefs – was to understand the impact of further budget reductions on the Department, and develop options to deal with these additional cuts. It had three specific objectives:

• Help DoD prepare for how to deal with sequestration if it continues in FY 2014;
• Inform the fiscal guidance given to the military services for their FY 2015 through 2019 budget plans;
• Anchor the upcoming Quadrennial Defense Review, which will assess our
defense strategy in light of new fiscal realities and the many threats, complexities and uncertainties of this new century.

The Strategic Choices and Management Review did not produce a detailed budget blueprint. That was not the purpose of this review. It generated a menu of options, not a set of decisions, built around three potential budget scenarios:

• The President’s FY 2014 budget, which incorporates a carefully calibrated and largely back-loaded $150bn reduction in defense spending over the next ten years;
• The Budget Control Act’s sequester-level caps, which would cut another $52bn from defense in fiscal year 2014, with $500bn in reductions for the DoD over the next ten years;
• An “in-between” scenario that would reduce defense spending by about $250bn over the next ten years, but would be largely back-loaded.

It is important to remember that all these cuts are in addition to the $487bn reduction in defense spending over the next decade required by the initial caps in the Budget Control Act of 2011 which DoD has been implementing. If sequester-level cuts persist, DoD would experience nearly a trillion dollars in defense spending reductions over the next ten years.

To help DoD balance strategic ends, ways and means under these budget scenarios, the Strategic Choices and Management Review scrutinized every aspect of DoD’s budget, including: contingency planning, business practices, force structure, pay and benefits, acquisition practices, and modernization portfolios. Everything was on the table.

As I discussed last week at the VFW Convention in Louisville, four principles helped guide this review:
• Prioritizing DoD’s missions and capabilities around our core responsibility of defending our country;
• Maximizing the military’s combat power by looking to reduce every other category of spending first;
• Preserving and strengthening military readiness, and;
• Honoring the service and sacrifice of DoD’s people.

Those principles, and a rigorous review process, resulted in packages of options that included management efficiencies and overhead reductions, compensation reforms, and changes to force structure and modernization plans.

Allow me to share with you some of the options the review identified in each area I just mentioned.

MANAGEMENT EFFICIENCIES AND OVERHEAD REDUCTIONS

A tenet of the review was that we need to

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