Narayan AmmachchiIn a sweeping move to rein in federal spending, the Trump administration has canceled information technology contracts valued at $5.1 billion, branding them as “non-essential expenditures” on external consultants.
According to a memo issued by U.S. Defense Secretary Pete Hegseth, the Pentagon has determined that internal staff can handle the services previously outsourced, eliminating the need for costly third-party providers.
“These cancelled contracts represent $5.1 billion in unnecessary spending,” Hegseth stated, noting that the decision could yield close to $4 billion in savings for the Department of Defense.
The terminated contracts involved major consulting firms such as Accenture, Booz Allen Hamilton, and Deloitte. They spanned various defense agencies, including the Navy, Air Force, the Defense Advanced Research Projects Agency (DARPA), and the Defense Health Agency.
In a video posted on X (formerly Twitter), Hegseth described the affected services as “ancillary,” encompassing advisory and other non-critical support functions.
As part of the shift, Hegseth instructed the Pentagon’s Chief Information Officer to collaborate over the next 30 days with Elon Musk’s Department of Government Efficiency. Their goal: to design a comprehensive strategy to reduce reliance on external IT consultants and transition those capabilities in-house.
The memo also indicated that the Department of Defense would pursue aggressive negotiations to secure more competitive pricing on cloud computing services.
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