The cancellations primarily affect contracts within the Defense Health Agency and the Air Force, encompassing services that Hegseth believes can be managed by existing Pentagon personnel. He emphasized that funds should be redirected to improve healthcare for military personnel rather than high-cost external consultants. Hegseth credited the Department of Government Efficiency , led by Elon Musk, for aiding in the review and identification of these expenditures.
This decision is part of a larger effort by the Trump administration to scrutinize federal spending on consultants. The Department of Government Efficiency has been instrumental in evaluating and recommending cuts to contracts that do not provide a clear return on investment for taxpayers. Over the past six weeks, more than 30 contracts have been canceled across various federal entities, including the Department of Defense and the Social Security Administration.
Accenture has acknowledged the impact of these federal spending cuts, noting delays and cancellations of new contracts. The company's federal services unit, which accounted for about 8% of its total revenue in 2024, is experiencing a slowdown as federal agencies review and cancel non-essential contracts. Accenture reported a 3% decline in new bookings in the second quarter, attributing the downturn to the administration's cost-cutting measures.
The administration's focus on reducing reliance on external consultants extends to various initiatives, including Diversity, Equity, Inclusion, and Accessibility programs, renewable energy projects, and digital services. The Department of Defense has already cut over $580 million in programs, contracts, and grants that were deemed inconsistent with its priorities. These cuts include a software development program significantly over budget and behind schedule, as well as contracts with consulting firms for non-mission-critical analysis products.