The German Defence Ministry has received recommendations to cut its staff by half, close several army bases and reduce the armed forces from 250,000 to 180,000.
The ministry will have to contribute €9.3bn over the next three years compared to the current spending of about €30bn a year to reach the goal of saving €80bn by 2013.
Germany is also considering reducing the number of A400M military transport aircraft, a joint enterprise with other European countries, according to the New York Times.
German Defence Minister Karl-Theodor zu Guttenberg plans to procure craft such as the Tiger helicopter, manufactured by EADS, and the NH90 transport helicopter to save on military equipment.
Frank-Jürgen Weise, the head of a commission charged with restructuring Germany's military, has suggested that the defence staff should be reduced to 1,600 from 3,300.
The minister has been proposing radical cutbacks in the armed forces to turn them into highly professional and better-trained units.