WASHINGTON – The Defense Department must get its acquisition, personnel and overhead spending under control, Defense Secretary Chuck Hagel said Wednesday in his first major policy speech in the job.

“Since 9/11, the military has grown more deployable, more expeditionary, more flexible, more lethal and certainly more professional. It has also grown significantly older – as measured by the age of major platforms. And it has grown enormously more expensive in just about every way,” Hagel told faculty and students at National Defense University at Ft. McNair.

The biggest long-term fiscal challenge the DOD faces, he said, is not the declining budget, but rather the way the Pentagon is spending the money.

For example, he said in response to a question after the speech, retirement benefits, health care and other personnel costs are unsustainable.

“This country makes commitments to people. We’ll honor those,” he said, and no immediate cuts to health care or other benefits are expected. But, he said, “I think we’ve got to look at everything. ... The longer we defer these things, the worse it’s going to be for all of us.”

While the military remains “an essential tool of American power,” Hagel said, conventional military strength is not the answer to many of today’s security challenges and conflicts. And despite past efforts to trim procurement, “the military’s modernization strategy still depends on systems that are vastly more expensive and technologically risky than what was promised or budgeted for.”

Hagel said sequester cuts are “already having a disruptive and potentially damaging impact on the readiness of the force.” The department has not assumed or accepted that the deep cuts will continue, he said, but “we cannot simply wish or hope our way to carrying out a responsible national security strategy or its implementation.”

Moving forward, Hagel said, the DOD must develop priorities and options to be better prepared for possible future cuts. The department also needs to change the acquisition process from one that results in systems that cost more and do less to one that rewards efficiency and cost-effectiveness, he said.

The Pentagon must examine the mix of civilian and military personnel, the balance of officers and enlisted within the force, and the best distribution of combat, support and administrative troops, Hagel said.

After the speech, a civilian employee asked why the DOD is still moving forward with furloughs, and assured Hagel that the threat is definitely affecting morale.

“I wish we had other options,” Hagel said. “The tough decisions ... are done on the basis of what we think is the most fair way to do this. But our readiness and our capabilities have to come first.”

In his speech, Hagel also said the DOD must look at the number of three- and four-star commands and support structures in place, particularly since those have remained or grown even as operational forces have shrunk.

While hinting at force structure changes, Hagel said today’s senior leadership will aim “to learn from the miscalculations and mistakes of the past draw downs” to maintain military strength and national security.

Still, he said, to make the necessary changes for long-term savings, the Pentagon needs “long-term budget certainty” – something top military leaders have long been asking for but that Congress seems unlikely to deliver anytime soon.

“If we get time and flexibility to implement savings, we could limit the impact of spending reductions on force structure and modernization while still making a significant contribution to deficit reduction,” Hagel said.

Sequester cuts, on the other hand, “would almost certainly require reductions in what have long been considered core military capabilities and changes in the traditional roles and missions among the uniformed services,” he said.

hlad.jennifer@stripes.com Twitter: @jhlad

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