Hegseth slashes $5.1B in Pentagon contracts for IT consulting, ‘non-essential’ activities

Secretary of Defense Pete Hegseth holds a town hall meeting for Department of Defense personnel at the Pentagon, Washington, D.C., Feb. 7, 2025. (DoD photo by U.S. Air Force Senior Airman Madelyn Keech)

WASHINGTON — Secretary of Defense Pete Hegseth released a memo late Thursday night directing the termination of a slew of Defense consulting contracts related to information technology and other “non-essential activities.”

“This is a big day. We’re signing a memo right now directing the termination of $5.1 billion in DoD contracts, not million. That’s with a B, $5.1 billion in DoD contracts for ancillary things like consulting and other non-essential services,” Hegseth said in a video statement posted to social media platform X, Thursday evening. 

Hegseth said he plans to cut four IT-related contracts, all which he said could be “more efficiently performed by the highly skilled members of our DoD workforce using existing resources,” per the memo. 

The cancelled IT contracts are as follows: 

• A Defense Health Agency contract for consulting services from Accenture, Deloitte, Booz Allen, and other firms, which the Defense Secretary said will save the Pentagon $1.8 billion 
• An Air Force contract with Accenture to re-sell third party Enterprise Cloud IT Services, saving the department $1.4 billion Hegseth said 
• A Navy contract for business process consulting services for administrative offices worth $500 million 
• A DARPA contract for IT Helpdesk Services, worth another $500 million, according to Hegseth 

At the end of the memo, Hegseth calls for the termination of 11 additional contracts across the Pentagon related to consulting services that “support Diversity, Equity and Inclusion (DEI), Climate, Covid-19 response, and non-essential activities.”

Taken together, the memo states that the cancellation of these contracts represent over $5 billion in “wasteful spending” across the department and this move will save nearly $4 million which the department can “re-allocate to our mission critical priorities to Revive the Warrior Ethos, Rebuild the Military, and Reestablish Deterrence.”

Elsewhere the memo orders the Pentagon’s Chief Information Officer, in “coordination” with Elon Musk’s Department of Government Efficiency, to prepare a plan within 30 days to “in-source” IT consulting and management services to the department’s civilian workforce. 

Also within 30 days, the CIO must prepare a plan to “negotiate most favorable rates” on cloud services and software so the Pentagon “pays no more for IT services than any other enterprise in America.” Further, the CIO must create an audit of DoD software licensing by April 18 to ensure the department is only paying for what it “actually” uses and needs “at the most favorable rates.”