Consulting giants offer billions to preserve federal contracts

Some of the nation’s largest consulting firms are offering up to $20 billion in concessions to preserve their federal contracts amid a sweeping cost-cutting campaign by the Trump administration, reports the Wall Street Journal. In a high-stakes response to pressure from the Trump administration, firms such as Booz Allen Hamilton, Deloitte, and Accenture have proposed measures ranging from contract terminations to deep discounts and credits for free artificial intelligence services for agencies.

GSA had previously criticized initial proposals as lacking substance, threatening contract cancellations if firms failed to deliver “meaningful” savings. In a letter obtained by the Financial Times, procurement chief Josh Gruenbaum accused firms of “faulty reasoning” and “gamesmanship” in their earlier responses.

Facing mounting pressure, several firms have since returned with more aggressive offers. Booz Allen, which earns nearly all of its $11 billion in revenue from government contracts, proposed over $1 billion in cuts. Others floated labor cost reductions of up to 10 percent, $100 million in service credits, and free AI deployments to enhance agency interoperability.

DOD added fuel to the fire this month, announcing $5.1 billion in planned cuts to its consulting contracts. In an April 10 memo, Defense Secretary Pete Hegseth described many consulting engagements as “non-essential,” stating that federal employees could perform the work more efficiently with existing resources.

While some firms—like Guidehouse—remain silent, others are navigating the storm publicly. Booz Allen affirmed its intent to “accelerate outcomes-based contracting,” and Deloitte acknowledged plans to lay off US consultants in response to federal belt-tightening.

GSA negotiations with consulting firms are ongoing, with further meetings scheduled this week. As Gruenbaum emphasized, “we must change how we do business—and we will do it in partnership with the private sector.”