Hagel to Reveal Sequester Review, Three Paths for Pentagon Future

Defense Secretary Chuck Hagel will announce the results of the Strategic Choices and Management Review in a press briefing on Wednesday, Defense One has learned, the culmination of a months-long assessment by senior Pentagon officials of how sequestration will affect the department in the coming years. In the briefing, Hagel will present three options for how the Defense Department can proceed under a new era of defense spending cuts, according to a defense official. 

Hagel ordered the review after the Budget Control Act of 2011 took effect on March 1, just days after he took office. At the time, the move was criticized as an exercise that was duplicative of recent Pentagon strategy reviews, or as a stall tactic to force Congress to lift sequester and get back to regular budgeting.  But the defense official said the SCMR [pronounced “skimmer”] was a serious assessment by the nation’s highest defense and military leadership. Deputy Defense Secretary Ashton Carter, who along with Joint Chiefs Chairman Gen. Martin Dempsey led the review, held nearly twenty 90-minute meetings with senior-level staff, including a mix of military commanders, policy makers, budget experts and legislative experts. Those meetings led to 33 subject areas, or “what the team called ‘building blocks’ that guided the options for the cuts,” the official said.

“Many of these guys who were part of this effort were part of [Defense Secretary Robert] Gates’ effort. They dove deeper than ever before. This was kind of new ground for a lot of them.”

One scenario Hagel will present will offer direction on how to fulfill President Obama’s 2012 Strategic Guidance Review -- the Pentagon’s strategy announced by the president at the Pentagon podium early last year. It is an option that clearly hopes that sequester doesn’t continue into fiscal 2014, something that looks less likely as the days pass. Another scenario will help dictate how the department will cope if sequestration -- which mandates $500 billion in cuts over the next 10 years -- continues after Oct. 1. The third scenario, which the defense official would not yet divulge, offers another way forward under this new fiscal climate, which after more than a decade of war is clearly here to stay.

“One of the things that [Hagel] knew coming into this job was that he would have to oversee a once-in-a-generation defense cut,” the DOD official said. “Secretary Gates foresaw the end of the defense growth even before the war in Iraq ended. He started seeing the process. Leon Panetta developed this path to absorb $485 billion in cuts under sequestration, while loudly railing against the consequences of the cuts.”

“Ultimately, Secretary Hagel knew that it would be his responsibility to actually implement [sequestration] which happened literally 72 hours after he took office,” the official said. “When he came to the Pentagon, he saw a Pentagon that was in reaction mode. For him, it’s always been about, ‘We’ve got to think ahead.’”

The SCMR isn’t expected to break much new ground. “It’s not like a budget briefing: Here’s what we’re investing, here’s what we’re spending. It’s: Here are multiple future outcomes and here are the consequences of those outcomes.”

But the SCMR does offer a glimpse into where the Pentagon is headed after winding down two major ground wars in Iraq and Afghanistan where “blank check” spending was the norm. “[The defense budget] took 10 years to come up, it’s going to take some time to come down,” the official said.

There has been much speculation about how helpful the review would be, but Hagel said, “I’m going to get the hard data on my own terms,” according to the defense official. “He wanted to do a process that ultimately leaned forward, in the sense that it would take into account the fiscal realities that brought everyone together on the same page. It was ‘one team, one fight,’ everyone on the same page, everyone working off the same set of numbers.” Since then, there have been constant meetings at the Pentagon to find a way to deal with this new reality. “Hagel has been pretty hands-on with the process.” Hagel received the SCMR as he wrapped up a trip to the Shangri-la Dialogue, a conference of defense officials in Singapore in early June. After briefing the combatant commanders, Hagel took his plan to the White House three weeks ago, on July 9. “It was a thorough briefing to the president. The president was very engaged in that briefing, very focused on the consequences of sequestration on the military -- on the personal side and on the national security side,” the defense official said.

It also signals a change in a Pentagon that adamantly refused to plan for sequestration, even in the weeks leading up to it. Now there seems to be a sober realism that the Defense Department has to reinvent itself in a new age where the focus is on a leaner military, one that can respond to threats without a large footprint. Still, that doesn’t mean that Hagel has surrendered to the across-the-board cuts that sequester put into effect. “Remember, we didn’t plan for sequestration for a very long time. Certainly sequestration is having a significant impact on the department and as it continues, it has the likelihood of damaging our national security as it goes on.”

Hagel understands that the department is transforming itself under a strained economy, but he will reiterate strongly that point during his briefing: sequestration is not the answer.

“If you’re an average person and you’ve gone through difficult economic times,  you know what your choices are. If you’re a business and you’re facing a major downturn, you know what your options are. When you’re the largest government agency, your options are different. We can't just stop doing things and get the savings right away. For us, this was a process of developing those options,” the official said. “Everyone knows that sequestration is bad, we’ve been saying that loud and clear. Congress, through inaction, has made this a reality. The consequences only get worse.”

The Pentagon has asked for a round of base closures and a lower pay raise, to no avail. The SCMR, the official said, “will provide more clarity in terms of sequestration, but the uncertainty won’t go away until sequestration is fixed.”

Carter and Joint Chiefs Vice Chiarman Adm. James Winnefeld are scheduled to brief members of Congress on Thursday. “Then,” the official said, “we anticipate that this will be a source of major conversation when Congress comes back from recess in September.”