US 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 favourable rates" for cloud computing services.
