Defense budget picture begins to take shape.

• Author: Farrell, Lawrence P., Jr.
• Position: President's Perspective

* As the new fiscal year gets under way, the budget landscape is beginning to shape up. Critical decisions will be made that will have huge implications for defense.

Major adjustments will be required across the defense community--the military services, agencies, commands and industry. Significant decisions are becoming harder and harder to duck.

In fairness, some notable decisions have already been made, beginning with former Defense Secretary Robert Gates efficiency initiatives in 2009 and 2010. This was followed by spending reductions of $487 billion over 10 years as stage one of the Budget Control Act of 2011 (BCA). Then came the continuing resolution of 2013 accompanied by across-the-board sequester of funds for failure to comply with the funding caps in the BCA. This caused the latest squeeze as the services were forced to curtail training and maintenance, and to cancel or slow procurements as they reprogrammed funds from procurement accounts to shore up readiness from unacceptable to marginal, at best.

With all that as background, what's next?

Recall Defense Secretary Chuck Hagel's Strategic Choices and Management Review (SCMR), the results of which he unveiled July 3l. He has followed that up with a mandate to cut headquarter staffs by 20 percent. From fiscal year 2015 through fiscal year 2019, the services are to reduce budget dollars and personnel--both civilian and military--by 4 percent per year, starting, if feasible, in fiscal year 2014.

These cuts apply to personnel, contractor costs, facilities and information technology programs. By organization, they apply to the office of the defense secretary, defense agencies, Joint Staff service secretaries, service chiefs, service four-star major commands, service component commands and combatant command staffs. Intelligence staffs will be affected as well--both military and national intelligence program-funded centers. The directive is to eliminate and not shift to other areas. "Subordinate headquarters should not grow," said the memo from Deputy Defense Secretary Ash Carter. Plans are to be submitted Sept. 23 along with the program objective memorandums, which are the military's five-year budgets.

To implement some of the choices in the SCMR, Hagel has stood up a team that will make efficiency recommendations, to include the aforementioned 20 percent reduction in headquarters and OSD staff.

The team is led by former Air Force Secretary Mike Donley. It will additionally seek to...