Reductions include a 20 percent cut to the operating budget for his office and an 8 percent cut to his office's total workforce, Stars and Stripes reported Wednesday.
Citing "historically deep and steep and abrupt spending reductions" caused by congressionally mandated, across-the-board budget sequestration, Hagel said at a press conference there was a "clear need" to pare overheard and streamline headquarters.
In a memo to senior department leaders, Hagel said much of the savings would be made by "significant reductions" in civilian staff and the use of fewer contractors.
Most of the staff reductions are expected to be made through attrition rather than layoffs.
Changes recommended by Hagel include eliminating a deputy undersecretary position and four deputy assistant secretary positions in the policy undersecretary's office, merging other departments and eliminating five deputy undersecretary positions not appointed by the president.
The changes are to begin immediately and to be fully in place by Jan. 1, 2015.
Hagel did not mention how the changes might affect military personnel.