US Federal Government takes aim at big consulting with cost-cutting

In advance of the transition of US administrative power, there were promises of improving government efficiencies and reducing waste. 

However, the sheer speed at which the new executive branch began its slash and burn process of reducing staff and addressing cost over-runs in contracting has been stunning. Big IT sat up and took notice as executive orders and memos address the IT procurement process 

In February 2025, the General Services Administration (GSA), the agency that supervises government procurement, issued a memo directed to top procurement officials in all federal agencies requiring them to “defend the spend’ on contracts with the ten consulting companies that represent the biggest projects from a financial perspective.

Government puts consulting companies under pressure

The GSA is putting the onus on agencies to demonstrate how these engagements are essential to helping the federal government deliver on its mission. The companies include Accenture; Booz Allen Hamilton; CGI; Deloitte; General Dynamics; Guidehouse; Hill Mission Technologies; IBM; Leidos; and Science Applications International Corp.

The Wall Street Journal reported the administration drafted a new letter to the consulting companies outline pricing and offer up areas where costs can be reduced in their current engagements with federal agencies. Responses to the letter are due by 31 March 2025. 

Consulting companies are already feeling the pain. In an earnings call with Wall Street analysts, Accenture Chairman and CEO Julie Sweet noted that during the administration process to improve government efficiencies, “many new procurement actions have slowed, which is negatively impacting our sales and revenue.” 

Public sector sales count for approximately 8% of Accenture’s global revenues.

Sweet added, “the GSA’s guidance is “to terminate contracts that are not deemed mission critical by the relevant federal agencies. While we continue to believe our work for federal clients is mission critical, we anticipate ongoing uncertainty as the government’s priorities evolve and these assessments unfold.” 

GSA heads procurement

President Donald Trump signed an executive order on 20 March consolidating the IT procurement process under the GSA. 

The GSA will take over as the executive agent of all government-wide acquisition contracts (GWACs) for IT.  The aim is to have one agency that is already set up to manage the procurement process oversee most IT contracts because it “will eliminate waste and duplication, while enabling agencies to focus on their core mission of delivering the best possible services for the American people.”

The executive order gives allows the GSA the option of deferring or declining its role as executive administrator for GWAC contracts when it is not in the best interest of the individual project. The Office of Management and Budget will advise agencies in the next two weeks as to how to move forward.

Cost cuts mean job cuts

All this comes at a time of turbulence in the US in the midst of tens of thousands of federal probationary employees losing their positions. 

Specific departments are taking the proverbial, or if you are Senior Advisor to the President Elon Musk literal, chainsaw to their staffing rolls. 

The Department of Veterans Affairs has plans to cut its workforce by 80,000.  The Department of Education let go approximately half of staff of  4,133.

Time will tell what the net effect of these actions will be. In the interim, the rollercoaster of change will have a lot of federal workers and IT companies hanging tight onto the rail.