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Summary: The Department of Defense, overseeing an $850 billion annual budget and employing two million people, stands as the largest federal agency and has historically been criticized for wasteful spending and opaque budget practices. A newly proposed plan aims to decrease reliance on external contractors and redirect resources towards internal operations.
U.S. Defense Secretary Pete Hegseth has eliminated $5.1 billion worth of defense contracts related to consulting services and nonessential tasks. This initiative targets unnecessary agreements, with intentions to transition much of the work to in-house staff.
The reductions include a variety of consulting contracts with prominent firms such as Accenture, Booz Allen Hamilton, and Deloitte, which have been assisting the Defense Health Agency. Hegseth mentioned in a video shared on X that these cancellations alone are expected to save $1.8 billion. Other significant cuts comprise a $500 million contract from the U.S. Navy for business process consulting, as well as a $1.4 billion agreement for cloud software reselling.
New @DOGE findings, this time it’s $5.1 billion. pic.twitter.com/vHRnDHZSUS
– Secretary of Defense Pete Hegseth (@SecDef) April 10, 2025
Hegseth also eliminated a $500 million DARPA contract for IT help-desk services, deeming it “entirely redundant.” Additional cuts affect contracts linked to diversity, equity, and inclusion initiatives, climate action programs, and responses to the coronavirus pandemic, which Hegseth classified as non-essential to primary defense functions.
In a memo circulated within the Pentagon, Hegseth stated that the Department of Defense’s civilian workforce is capable of taking over numerous consulting tasks currently subcontracted to private firms. For instance, he pointed out that the Air Force’s contract with Accenture for reselling enterprise cloud IT services is a demand that could be met through existing government procurement resources.
Beyond eliminating contracts, Hegseth instructed the Pentagon’s chief information officer to collaborate with Musk’s task force over the next month to formulate a strategy for insourcing IT consulting and management services throughout the department. The memo also emphasized negotiating better rates for cloud computing services.
The Defense Department plans to allocate the funds saved from these contract cancellations to bolster military preparedness, support innovative technologies, and enhance national security infrastructure. Essential areas earmarked for increased funding include missile defense systems, hypersonic weaponry, artificial intelligence, and cybersecurity initiatives.
