The Pentagon is taking the first steps 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 prisoner of war program was mismanaged and wasteful.

Defense officials say they will begin merging two existing agencies into one POW-MIA office that will be more streamlined and effective. The new organization will be running next year.

The decision comes as Defense Secretary Chuck Hagel prepares to leave the Pentagon. Last March Hagel announced he would create a new office to deal with POW-MIA issues that would be more focused and innovative.

The failings of the POW-MIA program were highlighted in 2013 when The Associated Press disclosed a report that called the program acutely dysfunctional.