Defense Secretary Pete Hegseth said the Pentagon is terminating several IT services contracts worth a total of $4.2 billion as part of a broader directive to curb the Defense Department’s (DoD) spending on IT services.
In an April 10 memo, Hegseth ordered the cancellation of contracts spanning multiple DoD components and instructed the department’s chief information officer (CIO) to collaborate with the Department of Government Efficiency (DOGE) to develop a plan for in-sourcing IT services using the department’s existing civilian workforce.
The cuts are part of the Trump administration’s broader push to implement DOGE initiatives across Federal agencies.
In a social media video promoting the DOGE initiative, Hegseth detailed the terminated contracts, including IT consulting for the Defense Health Agency ($1.8 billion), enterprise cloud services resale for the Air Force ($1.4 billion), business process consulting for the Navy ($500 million), and helpdesk support for DARPA ($500 million).
Together, the contracts represent $4.2 billion in spending on IT services that are now halted as the Pentagon shifts toward in-house solutions for these IT services.
“These contracts represent non-essential spending on third party consultants to perform services more efficiently performed by the highly skilled members of our DoD workforce using existing resources,” Hegseth wrote in the memo.
These cuts mark the third round of DOGE-driven reductions at the Pentagon, bringing the total cuts to approximately $5.86 billion. The initial round cut $80 million, largely targeting social programs such as $1.9 million allocated to the U.S. Air Force for diversity, equity, and inclusion training.
A subsequent $580 million round of cuts focused on program inefficiencies, including a long-delayed human resources software project that was six years behind schedule and over $280 million over budget.
Additionally, Hegseth has tasked the DoD CIO with working alongside DOGE to deliver a plan by next month that outlines how the department will in-source IT consulting and management services, and negotiate more favorable rates on software and cloud contracts.
He also directed the DoD CIO to complete a comprehensive audit of software licensing by April 18 to ensure the Pentagon only pays for licenses it actively uses.
Feinberg Issues new Guidance on Recruitment
In other DoD news, Deputy Defense Secretary Steve Feinberg issued a new directive this week instructing commanders to identify and implement effective incentives to attract and retain top civilian talent across the department.
The guidance was released alongside a separate memo advancing the Pentagon’s plans to restructure, consolidate, and reduce its nearly 900,000-member civilian workforce under the Workforce Acceleration and Recapitalization Initiative.
“Structural adjustments alone, however, cannot fully realize that vision. We will also need to employ the right incentives to attract and retain top civilian talent,” Feinberg wrote.
Feinberg directed DoD component heads to identify and reserve funding for civilian awards and bonus pools to recognize exceptional performance. He emphasized broader use of bonuses as a key tool to recruit and retain high-performing civilian employees whose contributions are vital to the department’s national security mission.
“I expect supervisors and leaders at all levels to make the right decisions to ensure we make meaningful distinctions in the ratings of employees and appropriately incentivize and reward high performance,” Feinberg wrote.
Feinberg further directed the Under Secretary of Defense for Personnel and Readiness to deliver recommendations within 60 days for changes to the department’s civilian personnel performance management and promotion systems. The goal is to better identify and incentivize top performers, along with proposing additional merit-based incentives to help “supercharge” the DoD civilian workforce.