Pentagon celebrates snipping 0.58% from defense budget in IT, DEI cuts

$5.1B cancellations pitched as efficiency move, though costly Trump birthday parade mulled

The US Department of Defense (DOD) has canceled contracts for "consulting and other non-essential services" in the latest round of cuts conceived by Elon Musk's DOGE unit.

Defense Secretary Pete Hegseth on Thursday announced the signing of a memorandum that terminates $5.1 billion in DOD contracts, emphasizing the "B" in "billion" – an accommodation for the impaired or perhaps just as a victory lap.

"Here's a few examples," he said. "DHA [Defense Health Agency] contracts for consulting services for Accenture, Deloitte, Booz Allen, and other firms. They're going to save the department $1.8 billion. How about a software reseller contract for enterprise cloud IT services, saving the department $1.4 billion. A $500 million Navy contract for business process consulting."

The US defense FY2024 budget [PDF] was $883.7 billion. So the DOGE-directed DOD savings of $5.1 billion represents about 0.58 percent of the defense budget. It's a modest trim, and one the Pentagon is already celebrating. According to Hegseth, that figure brings the running total of "wasteful spending" slashed under DOGE to nearly $6 billion in just six weeks.

Hegseth said the funds saved through contract cuts would be better used to improve healthcare for US warfighters, rather than being burned on $500-an-hour consultants.

According to the Military Times, though, DHA officials are weighing the potential closure of military treatment facilities around the country.

"We're also terminating, on the DEI [diversity, equity, and inclusion] front, 11 more contracts for DEI, climate, COVID-19 response, and related non-essential activities across the department," Hegseth said.

Despite the mild belt-tightening, talk of a Trump birthday military parade has reportedly returned - this time penciled in for June 14, 2025, which doubles as his 79th birthday and Flag Day. The last time this idea rolled out, back in 2018, Trump scrapped the plan after Pentagon brass slapped a $92 million price tag on it and DC officials warned it'd cost another $21 million just to patch up the roads and cover public safety after the tanks and flyovers had their fun.

Consulting cuts are just the start, say critics

The companies on the chopping block aren't saying much. Accenture, which warned of a revenue hit in February, did not respond to a request for comment. Nor did Deloitte nor Booz Allen Hamilton.

John Weiler, who helms the IT Acquisition Advisory Council, a congressionally chartered non-profit IT consultancy for the government, welcomed the cuts, in keeping with years of work opposing government waste.

"We've been reminding everybody that these processes don't work," Weiler told The Register. "Congress has been agreeing with us. They produced reports saying we're only successful 16 percent of the time. So with an 84 percent failure rate, why is no one fired? There's no accountability.

With an 84 percent failure rate, why is no one fired? There's no accountability

"In fact, the contractors behind the failure, they blamed the government, even though the government outsourced all their critical thinking to the contractors. And what's worse is that a lot of these contracts were awarded because of a revolving door or conflicts of interest where the contractors advised the government, helping write the requirements and then bidding on the solution. And that's Booz Allen's standard operating procedure. Same thing with Deloitte."

Weiler said he expects the contract cancellations will change how the Defense Department engages with the private sector.

"It definitely has to because today it's throwing billions over the wall and praying for an outcome. There are no performance metrics," he said. "There's no accountability. The process is designed to fail."

The way forward, Weiler argues, is for the government to write better requirements into its contracts and to develop performance metrics that give the government the right to cancel contracts for non-performance.

"We don't have that," Weiler said, though he sees that changing. "Performance based contracting is key. And also in the technology world, as we move through the cloud and everything as a service, then you're buying measured outcomes. It's a great shift for the entire software industry to buy as a service versus having a billion dollars with a license no one uses on your shelf, which is what DOGE is exposing.

"So I think a more rapid embrace of cloud, removing some of the cloud barriers like FedRAMP, can move more capabilities into the cloud as a service and get rid of some of this licensing nonsense." ®