Hegseth, who signed the memo on Friday while aboard a military plan, said the changes are required "to put the department on ready footing to deter our enemies and fight for peace," according to a Department of Defense news release.
The intent of the realignment, he said, is to "execute a top-to-bottom methodology that results in a force structure that is lean, mean and prepared to win."
There are 2.1 million people working for the Department of Defense, roughly 950,000 of whom are non-uniformed civilians, with the Pentagon in February announcing an expected 5% to 8% reduction in the civilian workforce that the memo announced on Saturday formalizes.
During the military flight on Friday, Hegseth recorded a short video where he explained and signed the memo. On Thursday, he visited troops in Guam after being in Honolulu.
The memo, called "Initiating the Workforce Acceleration and Recapitalization Initiative," was addressed to senior Pentagon leadership, combatant commanders, and defense agency and DOD field activity directors .
He said the DOD will "realign the size of our civilian workforce and strategically restructure it to supercharge our American warfighters consistent with interim National Defense Strategy guidance."
It is an effort to "reduce duplicative efforts and reject excessive bureaucracy through an honest analysis of the workforce" and that automation through technological solutions will be sought out, particularly at the headquarters level, he said.
"The net effect will be a reduction in the number of civilian full-time equivalent positions and increased resources in the areas where we need them most," the memo reads.
Two courses to implement the change were spelled out.
First, Hegseth wants the undersecretary of defense for personnel and readiness to "immediately implement DOD's Deferred Resignation Program and to also offer voluntary early retirement for all eligible DOD civilian employees."
On Jan. 28, 2025, most full-time federal employees were offered the limited opportunity to resign with full pay and benefits until Sept. 30, 2025, according to the DOD memo. The Office of Personnel Management also offered early retirement for eligible personnel across the rest of the federal government.
"Exemptions should be rare," Hegseth said in the memo. "My intent is to maximize participation so that we can minimize the number of involuntary actions that may be required to achieve the strategic objectives."
The Pentagon last week said some 21,000 civilian employees had already accepted deferred resignations.
"When DRP was offered broadly to the workforce, there was very good participation (with volunteer) civilian employees raising their hands and saying they would like to be considered to go on (administrative) leave and be paid throughout that time," a senior defense official in early March told the Fort Cavazos Sentinel, a military newspaper in Texas.
In the second step, Hegseth has directed senior DOD leadership to provide "a proposed future-state organizational chart" of those leaders' respective departments.
A summary is due to the defense secretary no later than April 11.
Other cost-cutting moves
A hiring freeze was ordered on Feb. 28 by Hegseth after President Donald Trump issued a broad civilian hiring freeze over most of the federal government in January as part of efforts to slash the size of the government.
Jules Hurst, the acting defense undersecretary for personnel readiness, spelled out the exemptions.
The 18 classes of jobs that the Pentagon has exempted from a department-wide hiring freeze are teaching positions at Department of Defense Education Activity schools and on-post day care workers.
Stars & Stripes, which operates from inside the Department of Defense but is editorially separate, obtained the memo.
Other exemptions include civilian workers at military depots, shipyards, arsenals, and maintenance locations and civilian positions throughout Military Entrance Processing Command. Also exempted are civilian mariners, positions at military medical facilities that treat patients or are essential to hospital operations, and jobs critical to "fire, life and safety" response on military installations.
Hurst also exempted civilian positions that directly support the U.S. president, those "essential to immigration enforcement, national security, public safety, recruiting and readiness."
Elon Musk, who heads the Department of Government Efficiency, met with Hegseth and other Pentagon leaders on March 21.
"We welcomed him today to the Pentagon to talk about DOGE, to talk about efficiencies, to talk about innovations," Hegseth told reporters at the Oval Office. "It was a great, informal conversation."
Musk's companies, including SpaceX, Starlink and Tesla, have contracts with the federal government, most notably with the Space Force and the Air Force.
Last week, Hegseth signed a memo to cancel over $580 million in contracts, including consulting services, that don't "match the priorities of President Donald J. Trump or the Defense Department.
"In other words, [the expenditures] are not a good use of taxpayer dollars; [and], ultimately, that's who funds us," he said at the time.
Along with other earlier announced cuts, there is a total of $800 million in wasteful spending, he said.
The top contract being cut was a software development program for the Defense Civilian Human Resources Management System. It started in 2018 and was supposed to take one year to develop at a cost of $36 million. Eight years later, it is behind schedule and $280 million over budget.
"So, that's 780% over budget; we're not doing that anymore," he added.
The DOD budget for Fiscal Year 2024 was $842 billion.
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