Pentagon Cancels $5.1 Billion Contracts with Major Firms
(Reuters) -U.S. Defense Secretary Pete Hegseth has ordered the termination of several information technology services contracts valued at $5.1 billion, including companies such as Accenture and Deloitte, according to a Pentagon memo.
The pacts "represent non-essential spending on third party consultants" for services Pentagon employees can perform, Hegseth said in the memo released late on Thursday.
"These terminations represent $5.1 billion in wasteful spending" Hegseth said, adding that their termination would result in "nearly $4 billion in estimated savings."
Representatives for Accenture and Deloitte and Booz Allen Hamilton, also among those with contracts, did not immediately respond to requests for comment.
The contracts appeared to be wide-ranging cuts to consulting services for the Navy, the Air Force, the Defense Advanced Research Projects Agency (DARPA) and the Defense Health Agency.
In a video posted on X, Hegseth said the contracts were for "ancillary things like consulting and other non-essential services." He said the services would be brought in-house.
In the memo Hegseth said he was directing the Pentagon's chief information officer to work over the next 30 days with tech billionaire Elon Musk's Department of Government Efficiency to prepare a plan to cut and in-source the Defense Department's information technology consulting and management services.
Additionally, the memo said the Pentagon would negotiate the "most favorable rates" for cloud computing services.
(Reporting by Ismail Shakil in Ottawa; Editing by Clarence Fernandez and Howard Goller)
