Pentagon Ends $5.1 Billion in Contracts with Major Firms, Citing Waste
WASHINGTON, D.C. — U.S. Defense Secretary Pete Hegseth announced the termination of $5.1 billion worth of IT and consulting contracts on Thursday, targeting agreements with companies such as Accenture, Deloitte, and Booz Allen. The decision, according to Hegseth, is aimed at reducing wasteful spending and reallocating funds to critical defense priorities.
Defense Cuts Target Non-Essential Services
In a Department of Defense (DoD) memo, Hegseth said the terminated contracts include those for consulting and IT services that could be handled internally by civilian personnel. Specifically, the Defense Health Agency’s consulting deals and an Air Force contract for reselling third-party cloud services are among those being canceled.
“These contracts represent $5.1 billion in wasteful spending,” Hegseth stated, estimating that the move would result in nearly $4 billion in savings.
Additional contracts cut involve consulting services related to diversity, equity and inclusion, climate initiatives, and pandemic response programs, which Hegseth labeled as “non-essential.”
Funds to Be Redirected Toward Military Readiness
The cost savings will be redirected to initiatives intended to “revive the warrior ethos,” enhance military strength, and reinforce national deterrence strategies. Specific programs that will benefit from the reallocated funds have not yet been disclosed.
In a video shared on X (formerly Twitter), Hegseth emphasized the need to shift resources toward military personnel and essential services.
“We need this money for better healthcare for our warfighters and their families, instead of $500-an-hour business consultants,” he said.
DOGE Collaboration and Broader Cost-Cutting Strategy
Hegseth credited the Department of Government Efficiency (DOGE), a cost-cutting group formerly co-led by entrepreneur Elon Musk and businessman Vivek Ramaswamy, with identifying areas of waste. DOGE has been involved in reducing federal expenditures, including the elimination of certain foreign aid programs and federal workforce downsizing.
“Thanks to our friends at DOGE for helping us unpack this,” Hegseth said.
DOGE previously reported over $580 million in programs and contracts deemed wasteful, leading to additional cuts across the Department of Defense.
Audit Failures Highlight Budget Oversight Concerns
Musk and Ramaswamy, in a prior op-ed for The Wall Street Journal, pointed out that the Pentagon has failed its annual audit for seven consecutive years, calling into question how its $841 billion budget is being managed.
The canceled contracts mark one of the most significant recent efforts to reduce defense spending on external consulting and administrative services.
No Immediate Response from Contractors
As of Thursday, representatives from Accenture, Deloitte, and Booz Allen had not issued public comments regarding the terminated contracts.
For more updates on government spending and defense policy, visit our U.S. Politics section.
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