US secretary of defense Peter Hegseth put a bullet through over $5.1bn of contracts yesterday, with big tech consultants bearing the brunt of the damage a memo released yesterday showed.
The Trump administration has been on a drive to eliminate waste and inefficiency, and had already told the top ten consulting firms, and top five software suppliers, that they were in its cross hairs.
Yesterday, Hegseth terminated “A Defense Health Agency contract for consulting services from Accenture, Deloitte, Booz Allen, and other firms that can be performed by our civilian workforce”.
He also axed an air force contract with Accenture “to re-sell third party Enterprise Cloud IT Services which we can already fulfill directly with existing procurement resources”
Alongside them on the chopping block were a Navy contract for business process consulting, and a DARPA contract for IT Helpdesk Services.
Hegseth, in a DoD video highlighting the cuts, said the DHA contract was worth $1.8bn, while the enterprise cloud contract was worth $1.4bn. The Navy and DARPA contracts each had a $500m price tag.
"We need this money to spend on better health care for our warfighters and their families, instead of $500 an hour business process consultant," Hegseth said. "That's a lot of consulting."
Hegseth didn’t stop there, with cut to “11 contracts related to diversity, equity and inclusion, climate change, the department's response to the COVID-19 pandemic and related nonessential activities”. And he hit pause on $500m of funding for two universities accused of tolerating “antisemitism and support divisive DEI programs."
The Elon Musk piloted DOGE appears to have been the prime mover behind the cuts, and Hegseth said, “Today's cuts bring our running total to nearly $6 billion in wasteful spending over the first six weeks of the Department of Government Efficiency effort here at the Defense Department.”
That $6 billion represents just under half a percent of the DoD’s $1.39 trillion budget. Which might not sound a lot in percentage terms. But for slim margin business, such as supermarkets and other retailers, it could be the different between profit and loss.
Consultancy firms tend not to be low margin, but the contract losses are still likely to be meaningful for the consultants involved. Accenture’s second quarter income came in at $1.8 billion, while Booze Allen’s most recent results showed revenue of $2.9 billion and net income of $187 million.
The link has been copied!
