"While daunting, this question provides us with a valuable prism through which Senator Hagel's nomination, now pending consideration by the Armed Services Committee, should be considered," McCain said. "In other words, cultural change needs leadership that not only rejects 'business-as-usual' but also challenges it. Where Senator Hagel is on this is not clear.

"Without leadership fundamentally and unalterably mindful of the Department's responsibility to the American people to use defense dollars wisely, this cultural change will forever remain elusive," he added. "For this reason, this body's consideration of the President’s nominee to serve as the next Secretary of Defense will be more important than it has been in recent memory."

McCain has not said whether he would oppose or support Hagel, although McCain and many other Republicans expressed disappointment with Hagel in last week's Senate confirmation hearing. But McCain did offer several guidelines that the incoming DOD secretary should follow in order to control spending at DOD.

Among other things McCain said the secretary needs to do a much better job judging the affordability and necessity of procurements, and cited several examples of waste at DOD.

"According to recent study, since 2004, programs cancelled by the Army alone consumed between $3.3 billion and $3.8 billion per year, that is, 35 to 45 percent of the Army's annual budget for development, testing and engineering over this period," he said. "Obviously this is simply unacceptable and unsustainable."

McCain said DOD needs to finally stop reprogramming billions of dollars in funds without any congressional oversight.

"I have been appalled that in fiscal year 2011 alone, the Department transferred nearly $27 billion among Defense accounts and that only $11 billion or 40 percent of these transfers received any type of congressional oversight," he said. "And, that oversight was limited to just eight Senators out of a hundred."

And, he said the next secretary needs to fully integrate the goal of saving throughout the entire defense community.

"Defense financial improvement must no longer be regarded as an activity important only to the Department's financial community," he said. "Field commanders have to be fully engaged and interested in driving change outside the Pentagon. If Senator Hagel is confirmed, his setting this tone from the top will be vitally important."