But he said officials are also looking at cutting layers of upper and middle management, including in the military commands, and are weighing whether the department has the right mix of military and civilians, and the correct balance of officers and enlisted troops.
He also said he will ask Congress to look at ways to increase various fees, including those for health care and retirement programs.
"We need to be steely-eyed and clear-headed in our analysis, and explore the full range of options for implementing our national security strategy," he said.
But, despite the budget cuts, Hagel said the U.S. does not have the luxury of choosing to withdraw from the world.
"If we refuse to lead, something, someone will fill the vacuum. The next great power may not use its power as responsibly or judiciously as America has," he said. "America has helped make a better world for all people with its power. A world where America does not lead is not the world I wish my children to inherit."
Lolita C. Baldor can be followed on Twitter: https://twitter.com/lbaldor
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