Pentagon axes $5.1 bn 'wasteful' IT deals with Accenture, Deloitte, others

US Defense Secretary Pete Hegseth estimates the Pentagon will save nearly $4 billion from the terminated IT and consulting contracts deemed non-essential

US Defense Secretary Pete Hegseth has announced the termination of IT service contracts worth $5.1 billion, affecting major firms including Accenture and Deloitte. The move is part of a broader initiative to eliminate what the Pentagon deems ‘wasteful spending’, the US Department of Defence said on Friday (IST).

 

Naming a few examples, Hegseth said, “... for consulting services from Accenture, Deloitte, Booz Allen, and other firms. They're going to save the department $1.8 billion.”

 

In a memorandum signed on April 10, Hegseth described the affected contracts as ‘non-essential spending on third-party consultants’ for services that Pentagon employees could perform internally. He emphasised that these terminations would result in nearly $4 billion in estimated savings.

 

Funding cut by US defence dept

Among the contracts being cut is a $1.8 billion consulting agreement managed by the Defense Health Agency, a $1.4 billion enterprise cloud IT services contract awarded to a software reseller, and a $500 million Navy contract for business process consulting.

 

Additionally, a $500 million contract for IT help desk services under the Defense Advanced Research Projects Agency (DARPA) will be terminated, as the Pentagon believes these services are already covered by the Defense Information Systems Agency (DISA).

 

The Pentagon will also halt over $500 million in funding to two universities accused of tolerating antisemitism and supporting diversity, equity, and inclusion (DEI) programmes, in addition to the $70 million already rescinded from three other institutions in recent weeks.

 

Where will the funds be redirected?

Hegseth justified the cuts by stating that the funds should be redirected towards improving healthcare services for military personnel and their families rather than paying ‘$500 an hour’ for business consultants. He also reiterated the Trump administration's commitment to reducing wasteful spending by targeting contracts linked to DEI initiatives, climate change programmes, and pandemic response efforts.

 

$6 bn cut from US defence department so far

This latest announcement follows a March 20 declaration from Hegseth, where he detailed $580 million in cuts to various programmes, contracts, and grants. The overall reduction now amounts to nearly $6 billion as part of the Department of Government Efficiency (DOGE) initiative, which aims to streamline Pentagon expenditures and focus resources on warfighting capabilities. 

“We’re excited to make these cuts on behalf of you, the taxpayer, and the warfighters here at the department,” Hegseth said.

 

Trump admin seeks $2 trillion govt spending cut

The US government under President Donald Trump has embarked on severe cost-cutting initiatives across all sectors of the government. This has primarily been done through the Department of Government Efficiency (DOGE), led by Elon Musk – who sought to cut $2 trillion from US government spending. Since Trump took office, nearly 60,000 federal employees have been laid off or put on leaves. Several federal agencies, such as the United States Agency for International Development and the Consumer Financial Protection Bureau, have been closed. Additionally, widespread funding cuts, from USAID to education have been implemented.

 

The administration claims that these initiatives will lead to significant government savings and increased efficiency. However, critics argue that the cuts disproportionately affect essential services and vulnerable populations. This has led to widespread protests in the US and several legal challenges as people move to stop certain policy measures.