McHugh, who announced the commission on Monday, said the Institutional Army Transformation Commission will build on the work of a short-term task force he created earlier this year to cut unnecessary overhead from the Army's accounts.
"To date, that task force has launched efforts to root out overlap and redundancies in research and development, review temporary organizations and task forces to see if they are still needed, consolidate and streamline the requirements process, reform installations management, optimize Army acquisitions, and make changes in human capital management," McHugh told an audience of the department's most senior civilians.
But the former New York congressman acknowledged that large-scale institutional change can take years. The commission, which will be in place for three years, will implement changes already identified by the task force and identify new opportunities for cost savings.
"This longer-term, more enduring approach is historically and practically necessary and will help make continuous transformation a part of Army culture," said McHugh, who served as the top Republican on the House Armed Services Committee before becoming Army secretary in 2009.
While the fighting force has transformed during the last decade of war, the institutional Army -- the offices and commands that prepare, educate and support troops-has changed little since the 1970s.
"We're not just asking people to change the way they budget," McHugh said. "We're asking them to change the way they think."
The creation of the commission comes as the Pentagon seeks to cut roughly $350 billion from its base budget over the next 10 years. A so-called super committee of 12 Democratic and Republican lawmakers could also target the military's budgets for additional cuts later this year as it works to cut at least $1.2 trillion from the nation's deficit.
If the committee fails to find the requisite savings, the Defense Department would be targeted for an additional $500 billion across-the-board cut between 2013 and 2021-a scenario that senior defense officials have called dangerous.
The cuts come after a decade of historical growth to the Defense Department's base budget, which has more than doubled since 2001. The Pentagon's base-budget request for next year is $553 billion, with another $118 billion requested for the wars.