Hegseth’s memo to slash IT contracts at odds with outsourcing push

Defense Secretary Pete Hegseth’s 10 April 2025 directive to terminate several high-dollar IT and consulting contracts across DOD has sparked concern and confusion, with critics citing vague implementation plans and contradictions with broader Pentagon workforce downsizing efforts.

The memo obtained and reviewed by Federal News Network calls for the immediate termination of four IT service contracts—including a $1.8 billion Defense Health Agency contract and a $1.4 billion Air Force cloud services deal with Accenture—and directs the department to in-source those services using its civilian workforce. Hegseth described the contracts as “nonessential spending on third party consultants” and claimed the work could be performed “more efficiently” by existing Pentagon personnel.

However, the move directly conflicts with Deputy Secretary Stephen Feinberg’s 7 April 2025 order for agencies to reclassify, outsource, or eliminate civilian roles not directly tied to combat readiness. As Greg Williams of the Project on Government Oversight noted, “One of them wants to in-source, the other one wants to outsource,” undermining credibility on both fronts.

The memo also lacks detailed criteria for the contract terminations and gives the DOD CIO just thirty days to create a plan to transition consultant work to federal employees and complete a full software license audit by 18 April 2025. Williams called the timeline “absurd,” citing years-long delays in similar efforts at smaller agencies.

Additionally, Hegseth paused more than $500 million in research grants to universities such as Northwestern and Cornell and canceled eleven contracts supporting DEI, climate, and COVID-19 response initiatives. The Pentagon claims the changes will save $5.1 billion, or roughly 0.6 percnet of its total budget.