Initially skeptical of George W. Bush's surge in Iraq, Gates did much to ensure its success. Not always in agreement with decisions of Barack Obama, he carried them out and defended them ably. Whether you agree or disagree with his decisions, it's hard not to admire his intellectual honesty and candor.

All of which makes some observations in his valedictory speech at the American Enterprise Institute last week disturbing.

Gates spoke of "institutional obstacles in the Pentagon -- cultural, procedural, ideological -- to getting done what needed to get done" and the need for "fundamentally reshaping the priorities of the Pentagon."

He insisted that the defense budget "is not the cause of this country's fiscal woes," but conceded that "as a matter of simple arithmetic and political reality," defense cuts "must be at least part of the solution."

He did not lament, as he might have, that Obama declined to put money into shovel-ready defense procurement in his stimulus package. Rather, Gates defended projected reductions in the future as being much less in percentage terms than the one-third decline in defense spending between 1985 and 1998, when the Pentagon went on "a procurement holiday."

He noted that he cut or cancelled 30 procurement programs that would have cost $300 billion. But "the proverbial low-hanging fruit," he said, "have not only been plucked, they have been stomped on and crushed."

Moreover, he conceded that $700 billion in new procurement and R&D since 9/11 "has resulted in relatively modest gains in actual military capability." The Pentagon's "buying culture" has put us on "an unsustainable course, where more and more money is consumed by fewer and fewer platforms that take longer and longer to build."

That sounds like we are headed to the future famously predicted by former Lockheed Martin CEO Norman Augustine that "in the year 2054, the entire defense budget will purchase just one aircraft," to be shared by the Air Force and Navy, with the Marines getting it one day during leap year.

Gates also noted that his efforts to reduce "massive administrative and support bureaucracies" was "something akin to an Easter egg hunt. My staff and I learned that it was nearly impossible to get accurate information and answers to questions such as 'how much money do you spend' and 'how many people do you have?'"

Gates recommended sweeping changes in military retirement rules and increases in co-payments and premiums in the Tricare health care system for military retirees -- changes that he admitted will encounter fierce institutional and political resistance. Otherwise, increasingly large chunks of defense spending will go to things that don't improve military capabilities.

All of which is dismaying to hear from an experienced and knowledgeable defense secretary in his fifth years in office. One of the problems of any successful military establishment -- or, really, of any longstanding bureaucracy -- is that it becomes encrusted by enormous dysfunctional barnacles which make it increasingly difficult to cruise ahead on its appointed missions. Pretty enormous barnacles, to hear Gates tell it, and really hard to scrape off.

In his memoir "From the Shadows," written after he left the CIA directorship in 1993, Gates likened the U.S. national security apparatus to a giant ship that changes course only with great difficulty and much less sharply from one administration to another than suggested by political rhetoric.

In that context, his speech last week sounded almost like a throwing up of hands. He accepted without demur the current president's top-line limits on defense spending, and he acknowledged that he is leaving hugely difficult challenges for his successors. He noted that over the last 30 years we have never once predicted in advance where our military forces will be engaged -- there will always be plenty of what his predecessor Donald Rumsfeld called unknown unknowns.

"The American military will remain the greatest deterrent against aggression and the most effective means of preserving peace," he insisted. But at best it will be "a smaller, superbly capable military" that "will be able to go to fewer places and be able to do fewer things."

An optimistic vision of the future, but a scarily modest one.