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Canada's Defence Minister Peter MacKay speaks during Question Period in the House of Commons on Parliament Hill in Ottawa May 3, 2012.

The Canadian Forces will merge the separate military commands that direct missions overseas and operations at home in a bid to cut headquarters overhead now that the military is refocusing after wars in Afghanistan and Libya.

In a major restructuring of the forces' command, Defence Minister Peter MacKay has ordered that the headquarters of two senior generals be trimmed, as field operations at home and abroad are merged under one Canadian Joint Operations Command, according to a Defence Department source.

The shakeup will undo a pet project of former forces chief General Rick Hillier, who created a series of new operational commands in an effort to focus the forces on their missions, rather than on the institutions of army, navy and air force. But it also created a new layer of three-star generals' headquarters in Ottawa.

"Hillier's baby made sense when there was Afghanistan and this high operational tempo," said one defence official familiar with the plans.

Now that major combat operations have ended and the troops' activities are largely in Canada, the Defence Department faces a new peacetime challenge: to restructure in a time of belt-tightening. Mr. MacKay has ordered consolidation, the official said: "It's going to be phased in over the coming months."

Three existing commands will be merged: CEFCOM, the expeditionary command which directs overseas operations like the Afghanistan mission or the Libya air strikes; Canada Command, in charge of domestic defence and all North American operations such as navy drug interdiction patrols; and CANOSCOM, the logistics command responsible for getting ammunition and supplies to troops in the field.

Each of those three commands not only has a senior general in charge, but a separate headquarters in Ottawa to run it. The merger is aimed at slicing about 25 per cent of the "overhead" for each command, although it is not yet clear how many staff jobs, military or civilian, will be cut.

The command that oversees the special forces, CANSOFCOM, which reports directly to the Chief of the Defence Staff, General Walt Natynczyk, will remain outside the newly merged Joint Operations Command, a source indicated.

The restructuring of major operational commands, called "force employers" in military parlance, does not directly affect the service branches – the Army, the Royal Canadian Navy, and the Royal Canadian Air Force – whose job is to train and equip forces. It's when they are put into active missions that troops and units come under the purview of the operations commands.

In a sense, Mr. MacKay's new model will streamline a doubling-up of command headquarters that Gen. Hillier created in his 2006 effort to crack the military's institutional mentality and make it focus on missions. He created three new major operational commands under two- or three-star generals, but did not reduce the existing three-star headquarters for the army, navy and air force.

Last year, the high-ranking general tasked with recommending ways for the military to "transform," Lieutenant-General Andrew Leslie, recommended a consolidation of those operational staffs in a wide-ranging report that called for the Defence Department to cut deeply into its administrative costs and staffs in Ottawa.

But Mr. MacKay's decision to move ahead with a major restructuring of operations commands could face resistance among some in the military, with many now accustomed to a command structure that has taken them through two wars and a high tempo of domestic operations for things such as the 2010 Olympics.

When Gen. Hillier created the new commands, they were in effect a scaled-down match of the way the U.S. military carved up the world into various commands. Canada Command had the same turf in North America as the U.S. Northern Command, making it easy for the commands to co-ordinate operations. But with overseas operations now pared down – the biggest is the 950-strong training mission in Afghanistan – that match-up has been deemed less essential.

The Defence Department faces more reorganization in the coming year, with 1,000 employees already told their jobs are being reorganized or eliminated. Mr. MacKay's move to shake up operational commands is the first major indication of reorganization of the forces' structure to meet the squeeze.