The new Pentagon concept of “reversibility” will lean heavily on members of the National Guard and Reserve, the Defense Department’s outgoing chief of policy said Monday, though Defense leaders are still trying to determine the best way to use the capabilities the Guard and Reserve have built up after 10 years of war.

Addressing the Reserve Officers Association’s national symposium, Michèle Flournoy, the undersecretary of defense for policy who will depart the post on Friday, tried to delineate what reversibility is and is not. She took aim at Pentagon critics who she said have cast the term as a certain kind of Pentagon uncertainty over the drawdown decisions that leaders have already made.

“In fact, reversibility means something completely different,” she said. “It’s about making course corrections in response to strategic, economic or technological change. For example, even as we reduce the overall size of our ground forces, we will keep a relatively high proportion of midgrade officers who would be at a particular premium if we needed to build up those forces quickly. In that context, the Guard and Reserve will play an extremely important role.”

Under the 2013 budget the Pentagon began to preview last week, the active Army would decrease its numbers by about 80,000 soldiers. The Marines Corps would shrink by about 20,000.

Flournoy said DoD wants to make sure the nation’s Guard and Reserve keep their status as an operational reserve rather than just a strategic one. But exactly what role they’ll play in the reversibility strategy is a work in progress. For example, she said the Pentagon is still making decisions about where to emphasize its re-equipping and retraining dollars for reserve forces coming back from Afghanistan and Iraq.

“We can’t afford to place equal emphasis on all scenarios and mission sets,” she said. “What types of skill sets and units should be considered as candidates for the operational reserve that we would expect to deploy more frequently? What kinds of units, if any, can be held at lower levels of readiness and mobilized only in times of protracted conflict? And how can we, as a department, do a better job of ensuring that our Guard and Reserve members are not unfairly penalized by current or potential employers in what is already a very difficult economy?”

Flournoy said the DoD budget documents released in mid-February will also reflect the fact that the concept of reversibility has been extended to the Defense industrial base. In some cases, she said, it’s the only thing that saved programs that the Pentagon otherwise might have cancelled.

“In some particular areas, where if you lost a particular part of the industrial base and it would take you years and years to recapture it, that fact has been factored into some of our program and budget decisions,” she said. “Even if a particular program might have been weak or something we might have thought about doing away with, if in doing that we would completely lose the ability to have that capability in the future in a timely or responsive basis, that influenced the decision about what to do. It’s a complex calculus, but we are quite serious about this notion of reversibility because of the experience we’ve had that it’s very hard to predict the future. And it’s too important to keep this institution’s ability to be responsive to the unforeseen.”

Flournoy said just like the active component of the military, the reserve component should expect to see its overall numbers decline over the next few years. That’s largely because they’ll be in less demand as the U.S. brings its wars to a close, she said.

Michael O’Hanlon, a defense expert and senior fellow at the Brookings Institution, agreed the Guard and Reserve will be key to reversibility and to the Pentagon strategy of being able to fight a major war while dealing with smaller engagements at the same time. He said the next time the U.S. enters a major conflict, it will need to immediately start increasing its number of active forces.

“What that means is you mobilize part of the National Guard’s combat brigade capability,” he said. “Other aspects of the reserve component might be quickly mobilized, really on a prophylactic, preventive basis. Not because there’s not any acute concern at the moment, but because you want to send a message (to other potential adversaries). And then you start increasing the size of the active Army and Marine Corps at that moment. If you do those things, I think we actually can go to a smaller active Army and Marine Corps than the Obama administration is currently intending. They’re higher than they really need to be if we make proper use of the reserve component.”

Flournoy said DoD now has some more tools that will let it make more creative uses of the reserve component. This year’s defense authorization bill gives the department some authorities to call up the reserves outside of war or emergency situations. For example, each of the three service secretaries now has the authority to activate up to 60,000 reservists for up to a year. Another provision lets the Secretary of Defense, on the request of a state governor, call up the National Guard for up to 120 days.

“Before, this wasn’t possible,” she said. “This deprived us all of greater access to the expertise that reservists can bring to bear. These decisions reflect and awareness on the part of leaders in the administration and on the Hill of just how important the reserve can be to our security across the range of potential situations.”

With regard to pay and benefits, Flournoy said no one in the Pentagon is looking to cut compensation for the time being, either for the reserve or the active component. But DoD does need to slow down the rate of growth in its personnel costs, she said. And she signaled the Pentagon will ask for further increases to the health care premiums paid by working-age military retirees.

“We have to look at areas like health care, where we still have some pretty perverse incentives in place,” she said. “If you’re a working-age retiree, even if you have the ability to get health care with your private sector employer, you can still stay on TRICARE and not take the employer coverage. That means the Department of Defense is carrying a lot of health care costs that would otherwise be borne by private sector employers. In principle, you can make an argument for that, but in reality that’s money that’s not being spent on capabilities, on equipment, on training, on readiness, on other programs for our personnel. We really need to look at this in a holistic way.”

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