By Mike Stone and Ismail Shakil
(Reuters) – U.S. Defense Secretary Pete Hegseth has ordered the termination of several information technology services contracts valued at $5.1 billion, including companies such as Accenture, Booz Allen Hamilton and Deloitte, according to a Pentagon memo.
The contracts “represent non-essential spending on third party consultants” for services Pentagon employees can perform, Hegseth said in the memo released late on Thursday.
“These terminations represent $5.1 billion in wasteful spending,” Hegseth said, adding that their termination would result in “nearly $4 billion in estimated savings.”
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.
In the memo Hegseth said he was directing the Pentagon’s chief information officer to work over the next 30 days with tech billionaire Elon Musk’s Department of Government Efficiency to prepare a plan to cut and in-source the Defense Department’s information technology consulting and management services.
Additionally, the memo said the Pentagon would negotiate the “most favorable rates” for cloud computing services.
(Reporting by Mike Stone in Washington and Ismail Shakil in Ottawa; Editing by Clarence Fernandez, Howard Goller and Frances Kerry)
