US Defense Secretary Pete Hegseth has terminated a series of information technology services contracts worth $5.1 billion, affecting major companies such as Accenture, Booz Allen Hamilton, and Deloitte. The action was described in a Pentagon memo released late on Thursday.
Hegseth pointed out that the contracts represented “non-essential spending on third-party consultants” for work that Pentagon personnel can perform internally. He stated, “These terminations represent $5.1 billion in wasteful spending,” and approximated that the move could save nearly $4 billion in estimated savings.
Following the news, shares of Booz Allen Hamilton dropped 2.4% to $106.30, and Accenture’s shares declined 2% to $279.52 in morning New York trading. Representatives of Accenture, Deloitte, and Booz Allen Hamilton have not commented on the situation after being asked for comment.
The cuts appear to target a broad range of consulting services utilized by the Navy, the Air Force, the Defense Advanced Research Projects Agency (DARPA), and the Defense Health Agency. In a video on X, Hegseth described the contracts as paying for “ancillary things like consulting and other non-essential services,” indicating it plans to bring these services in-house.
In addition, Hegseth directed the Pentagon’s chief information officer to collaborate with Elon Musk’s Department of Government Efficiency within 30 days to develop a strategy to reduce and in-source the Defense Department’s IT consulting and management services. The memo also stated that the Pentagon would try to negotiate the “most favorable rates” for cloud computing services going forward.
