A major report from National Defence has identified ways to save the department $1 billion a year and calls for "dramatic changes" so the military can meet its future obligations.

Lt.-Gen. Andrew Leslie led a "transformation team" at the request of Defence Minister Peter MacKay that spent nearly a year studying ways to overhaul the Canadian Forces and Department of National Defence to find efficiencies.

The group's Report on Transformation 2011 was completed in July but not made public. A copy of the report was obtained by CBC News.

The report says that for the military to meet the demands upon it, while living within its means and with balanced books, it has to carefully reallocate its resources.

Leslie calls for cuts to the bureaucratic side of the military's operations, including the possible elimination of thousands of jobs so that the people on the front lines have the support and equipment they need.

"We are going to have to reduce overhead and invest in output; we have to become slimmer, to trim the top and middle while protecting and investing in the various systems that result in the people in the ships, battalions and squadrons of aircraft doing the tough and often dangerous work that Canadians are so proud of," he writes in the report's introduction.

"In short, we are going to have to reduce the tail of today while investing in the teeth of tomorrow."

To achieve the $1 billion in annual savings, the military needs to cut resources at its headquarters in Ottawa and its overhead, which could affect the jobs of 11,000 military and civilian personnel.

Reallocation proposed

The report doesn't necessarily call for all of those jobs to be cut, but talks a lot about reallocation of positions and consolidating operations.

The report indicates that between 2004 and 2010, the number of personnel at DND's headquarters rose 46 per cent, and that doesn't include the thousands of people hired as contractors and consultants.

Contractors and consultants are prime targets for cuts, according to the report. It recommends that existing organizations be blended together, and that DND "ruthlessly focus" on cutting some of the $2.7 billion it spends every year on consultants and contractors. It says the Canadian Forces and DND together use more than 5,000 people on an ongoing basis.

"If we are serious about the future — and we must be — the impact of reallocating thousands of people and billions of dollars from what they are doing now to what we want them to do to position us for tomorrow will require some dramatic changes," the report says.

Between 2004 and 2010 the combined workforce of DND and the Canadian Forces jumped 18 per cent, or by more than 20,000 people. By March 2010, the departments employed 144,744 people including 67,857 in the regular forces, 35,665 reservists and 29,348 civilians. The number of civilian personnel grew three times faster over that period than did personnel in the regular forces, the report found.

The report makes 43 recommendations, including these key ones.

• Reallocating about 3,500 regular forces personnel into areas identified for future growth or investing the funds elsewhere.
• Reducing by up to 30 per cent the $2.7 billion spent on contractors, consultants and private-sector providers.
• Moving about 3,500 civil servants into higher priority activities or investing the funds elsewhere.
• Cutting the number of full-time reservists to 4,500 and converting them into part-time positions.

Leslie scheduled to retire this fall

The extensive report, which Leslie said came after "an unprecedented level" of research, is one of his last major contributions to the Canadian Forces. National Defence told CBC News on Thursday that Leslie, who is former head of the army and has held a number of other high-profile positions, is retiring Sept. 5.

Leslie acknowledges in the report that previous studies on how to help DND and the Canadian Forces operate more efficiently have had little impact and that previous transformation efforts were met with "significant resistance." In blunt terms, he says some in the past have viewed themselves as people who may lose status, resources or power and "have delayed making the hard choices" and left unresolved issues in the laps of their successors.

"The key is leadership. Leaders at all levels must have their say, and compromises and common sense alterations must be adopted, but eventually people have to be told what to do," he writes.

He says the recommendations in his report would not be popular or easy to implement and that they require further study, so input can be gathered from stakeholders and details can be fleshed out.

Report could draw support

Given the federal government's plan to cut spending in every department by at least five per cent in order to eliminate the deficit, the report might carry more weight than others in the past.

A spokesman for Defence Minister Peter MacKay said on Thursday that the mission in Afghanistan led to the hiring of many civilians and the contracting of services.

Now that the combat mission has ended, the department is "managing DND's workforce" so that it complies with the priorities set out in the government's Canada First Defence Strategy.

The Canada First Defence Strategy is the government's road map on modernizing the Canadian Forces, and it includes outlining future personnel, equipment and funding requirements. The framework for funding in the strategy states that by 2027-28, the budget for DND is set to reach $30 billion.

"Our government will be taking a close look at spending right across government to identify the savings needed to eliminate the deficit," said Jay Paxton. "This includes the Department of National Defence. DND will use this report and other tools to better focus resources in order to deliver on commitments made in the Canada First Defence Strategy and to establish the most capable and sustainable defence organization possible."

The government, however, has not committed to implementing Leslie's report. Speaking on CBC's Power & Politics on Friday, Conservative MP Laurie Hawn said the government will take its time reviewing the recommendations.

"We're not going to rush into making any changes until we've looked at it in some detail," he said.

Opposition MPs on the program criticized the government for not issuing the report publicly, and said that it should be studied by the House of Commons defence committee in the fall.

NDP defence critic Jack Harris said Leslie should be called as a witness to explain the report's findings and recommendations. Liberal MP John McKay agreed and added that the defence minister should also be called.