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Pete Hegseth is cutting back on cloud services and IT consulting. Industry giants such as Accenture and Deloitte are affected. The money would be better invested with veterans, for example, said the minister.
San Francisco. Large IT consultancies such as Accenture and Deloitte are facing a significant drop in turnover in the USA: according to several US media outlets, Defense Secretary Pete Hegseth has ordered the termination of several IT service contracts with a total volume of 5.1 billion dollars.
In addition to Accenture and Deloitte, contracts with the consultancy Booz Allen Hamilton are also affected. This emerges from a Pentagon memo issued on Thursday evening. The Trump administration wants to save more than four billion dollars. Hegseth subsequently confirmed the process in a video published on the X platform.
"This is a great day. We are signing a memorandum that orders the termination of $5.1 billion worth of Department of Defense contracts. [...] For ancillary services such as consulting and other non-essential services," Hegseth said in the video message.
He plans to cut four IT-related contracts, all of which, according to the memorandum, "could be performed more efficiently by the highly skilled members of our Defense Department workforce with existing resources."
According to the document, one example is an Air Force contract with Accenture for the resale of third-party cloud services. According to Hegseth, the Department will save 1.4 billion dollars by terminating this contract.
In the memo, the Secretary also calls for the termination of eleven other contracts across the Pentagon that include consulting services that "support diversity, equity and inclusion (DEI), climate, Covid-19 response, and non-essential activities." The department wants to reallocate the freed-up funds to "revitalize the warrior ethos, rebuild the military and restore deterrence".
"By the way, we need that money to spend on better health care for our warfighters and their families instead of business litigation consultants that cost $500 an hour," Hegseth said in his video.
Elsewhere, the memo instructs the Pentagon's chief information officer (CIO), in "coordination" with Elon Musk's Doge savings initiative, to prepare a plan within 30 days to "in-source" IT consulting and management services for the department's civilian workforce - that is, to bring them back in-house at the Pentagon.
Also within 30 days, the CIO is to draw up a plan to negotiate "the most favorable terms" for cloud services and software so that the Pentagon "pays no more for IT services than any other company in America".
It was noticeable that the IT company Palantir, which has particularly good relations with the new Trump administration, was not mentioned. The Pentagon and several US intelligence agencies are among Palantir's most important customers. The company also works with Musk's Doge initiative.
https://www.handelsblatt.com/technik/it-internet/pentagon-us-verteidigungsminister-hegseth-kuendigt-it-vertraege-im-wert-von-51-milliarden-dollar/100121024.html
