The Pentagon has scrapped $5.1 billion contracts with Accenture and Deloitte due to wasteful spending.
The contracts looked to be broad cuts in consulting services for the Navy, the Air Force, the Defense Advanced Research Projects Agency (DARPA), and the Defense Health Agency.
In a statement issued by the Pentagon, Defense Secretary Peter Hegseth has instituted the cancellation of numerous information technology service contracts, which collectively amount to $5.1 billion.
This action affects companies such as Accenture, Booz Allen Hamilton, and Deloitte. As per the Pentagon memo, these contracts are considered extraneous expenditures on external consultants, a role that Pentagon employees are capable of fulfilling.
Hegseth noted in the released document that the termination of these contracts amounts to $5.1 billion in unnecessary spending. He further stated that this decision would lead to an estimated savings of approximately $4 billion.
During morning trading in New York shares of Booz Allen Hamilton were down 2.4% to $106.30 and Accenture shares were down 2% to $279.52.
Representatives for Accenture, Deloitte and Booz Allen Hamilton 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.
Additionally, the memo said the Pentagon would negotiate the "most favourable rates" for cloud computing services.
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This decision signals a shift in how the Pentagon values internal expertise over outsourced support—a move that may please budget hawks but could also strain in-house resources. While cost savings are crucial, the cancellation of contracts with firms deeply embedded in advanced defense consulting raises questions about whether internal teams can fill those gaps without loss in quality, speed, or innovation. As global threats grow increasingly complex and tech-driven, relying solely on in-house personnel could prove both ambitious and risky. The coming months will reveal whether this is a savvy cutback—or an overcorrection.