Pentagon cuts over $5 billion in IT, consulting contracts to reallocate funds to military priorities

US Defence Secretary Pete Hegseth has ordered the termination of multiple IT and consulting contracts worth over $5 billion, calling them "wasteful spending" and pledging to reallocate the savings to key military priorities.

In a memo sent to the Department of Defense (DoD), Hegseth outlined a sweeping reduction of several contracts for consulting services from major firms such as Accenture, Deloitte, and Booz Allen, including the termination of a Defence Health Agency contract, Caliber.Az reports per US media.

Hegseth noted that these services, which were previously outsourced, could be managed more effectively by the DoD's civilian workforce.

Additionally, he revealed that the Air Force's contract with Accenture, aimed at reselling third-party Enterprise Cloud IT Services, would be cut, with Hegseth asserting that the government could "already fulfil this directly with existing procurement resources."

Also on the list for termination are 11 other contracts supporting "non-essential" activities, including Diversity, Equity and Inclusion (DEI) programs, climate-related projects, and COVID-19 response efforts.

The decision, which Hegseth says represents $5.1 billion in wasteful spending, is expected to result in savings of nearly $4 billion. The funds will be reallocated to "critical priorities to Revive the Warrior Ethos, Rebuild the Military, and Reestablish Deterrence," although specifics on the projects benefiting from this reallocation were not disclosed.

In an X video, Hegseth explained the rationale behind the cuts. "We need this money to spend on better healthcare for our warfighters and their families, instead of $500 an hour business process consultants," he said. The secretary also thanked Elon Musk's cost-cutting initiative, the Department of Government of Efficiency (DOGE), for assisting in identifying wasteful expenditures. DOGE has been instrumental in slashing federal spending, from reducing the workforce to cutting foreign aid programs.

Hegseth’s recent cuts follow a string of similar moves to address inefficiencies within the DoD, including the termination of over $580 million in programs, contracts, and grants identified by DOGE as wasteful. These actions come amidst ongoing concerns about the Pentagon's handling of its $841 billion budget, which has been scrutinised for failing its seventh consecutive audit.

By Aghakazim Guliyev