The Pentagon took initial steps Friday to set up a new agency that will direct the troubled effort to search for America's missing war dead, two years after an internal report found the current program was mismanaged and wasteful.

Defense officials said that in the coming months they will merge two existing agencies into one POW-MIA office that will be more streamlined and effective. The consolidation will be directed by Rear Adm. Mike Franken, a senior Navy officer, until a permanent civilian leader is named. The new organization will be up and running early next year.

The decision comes in Defense Secretary Chuck Hagel's final weeks on the job. Last March, after a long study, Hagel announced he would create a new office to deal with POW-MIA issues that would have more focused authority and innovative approaches.

Hagel's plan combines the functions of the two leading agencies in this field -- the Joint POW-MIA Accounting Command, based in Hawaii, and the Defense POW-MIA Office, based in the Pentagon. Those two organizations will disappear, and the new agency will be based in Washington for now.

"Finding, recovering and identifying the remains of these individuals is one of our highest responsibilities, and I believed that DoD could more effectively and transparently account for our missing personnel while ensuring their families receive timely and accurate information," said Hagel, who has two Purple Hearts for wounds suffered in the Vietnam war.

The Pentagon has been under congressional pressure to improve the POW-MIA accounting effort. Its failings were highlighted in 2013 when The Associated Press disclosed an internal Pentagon report that said the search for remains of missing soldiers on foreign battlefields was acutely dysfunctional. Soon after that, the Government Accountability Office issued a report saying the Pentagon's effort was hampered by weak leadership, infighting and a fragmented approach to planning. The report recommended a more streamlined chain of command and other organizational changes.

Officials Friday had no details on what changes they may make, although they expect there will be a greater effort to reach out to private groups and universities to help with the search for and identification of American war remains that are scattered around the world. Combining the offices and staff will likely bring cost savings and other efficiencies, but it was not clear whether staff would be cut.

The Pentagon also has not yet named the new agency, preferring to let families and veterans groups participate in that decision.

Congress in 2009 set a requirement that the Pentagon identify at least 200 sets of remains a year by 2015 -- a number it has not come close to achieving in recent years. Officials have said that the 200 figure is attainable with a budget of about $100 million a year, which is about the current level.

In 2013, there were 60 sets of remains identified. The head of the Joint POW-MIA Accounting Command, Maj. Gen. Kelly McKeague, told Congress that a realistic goal would be to identify 125 remains per year by 2018.

The Pentagon works MIA cases year-round. It lists 83,000 as unaccounted for from World War II, the Korean War and from Vietnam, although a large percentage of those -- including remains lost at sea --are believed not to be recoverable.

One of the biggest complaints about the current system is from families who feel their interests have been neglected or their questions not adequately answered. Families in some cases wait decades to learn details about the circumstances of their loved one's loss, even if remains are never identified.

Among other changes announced by Hagel last year, the Pentagon will establish a centralized database and case management system containing information about all missing service members, and it will partner more with private organizations that have expertise in the identification of human remains.

The Pentagon also will put a single military medical examiner in charge of remains identifications. Until now that has been the responsibility of the Central Identification Laboratory in Hawaii. That office will cease to exist in its current form. The lab's scientific operations will be overseen by the medical examiner.