The US Department of Defense (DoD) has announced the immediate termination of $5.1bn worth of defence consulting and information technology (IT) contracts to reduce wasteful spending and redirect resources to core defence priorities.
In a memo, US Secretary of Defence Pete Hegseth Secretary Hegseth outlined the decision as a strategic measure to “rebuild our military, restore accountability to the department, cut wasteful spending, and implement the President’s orders.”
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In a video statement posted to the social media platform X, he emphasised the significance of the move, stating, “This is a big day. We’re signing a memo right now directing the termination of $5.1bn in DoD contracts, not million. That’s with a B.”
The contracts being cancelled span multiple military branches and agencies.
Among them is a Defense Health Agency contract involving consulting services from major firms including Accenture, Deloitte, and Booz Allen Hamilton, which Hegseth said will save $1.8bn.
An Air Force agreement with Accenture to resell third-party enterprise cloud IT services is expected to save another $1.4bn.
Additional terminated contracts include a $500m Navy business process consulting engagement for administrative offices, and a $500m DARPA contract for IT helpdesk support services.
In the memo, Hegseth characterised these agreements as examples of “non-essential spending on third-party consultants to perform services more efficiently performed by the highly skilled members of our DoD workforce using existing resources.”
He also called for the termination of 11 additional contracts across the Pentagon that he said are linked to non-core activities, including those supporting Diversity, Equity and Inclusion, climate policy, Covid-19 response, and other ancillary initiatives.
To streamline and strengthen the department’s IT infrastructure, the memo instructed the DoD chief information officer, in coordination with Hegseth’s DOGE team, to submit within 30 days a plan for transitioning IT consulting and management services in-house to the civilian workforce.
The directive also requires the department to negotiate the most favourable rates for software and cloud services to ensure parity with commercial enterprise pricing, and to complete an audit of software licensing by 18 April 2025, to eliminate unnecessary costs.
Taken together, the cancellations and reforms are projected to reallocate nearly $4bn from what Hegseth described as “wasteful spending” to mission-critical defence activities.
“These savings will be redirected to revive the Warrior Ethos, rebuild the military, and reestablish deterrence,” the memo said.
