Hegseth issues new directive to rein in Pentagon spending on IT services contracts
Secretary of Defense Pete Hegseth signed a memo Thursday ordering the termination of several IT services contracts and directing the Pentagon’s chief information officer to draw up plans for in-sourcing, among other measures.
The aim is to “cut wasteful spending” and “support the continued rationalization” of the Defense Department’s IT enterprise, Hegseth wrote.
The move comes amid a broader push by the Trump administration to implement Department of Government Efficiency (DOGE) initiatives across federal agencies.
Hegseth’s new memo to senior Pentagon leadership ordered the termination of contracts affecting a variety of DOD components, including a Defense Health Agency contract for consulting services; an Air Force contract to re-sell third party enterprise cloud IT services; a Navy contract for business process consulting services; and a Defense Advanced Research Projects Agency (DARPA) contract for IT helpdesk services.
In a video released on social media touting these DOGE-related efforts, Hegseth estimated that those contract terminations would save the Pentagon approximately $1.8 billion, $1.4 billion, $500 million and $500 million, respectively.
“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,” he wrote in the memo.
Hegseth also tasked the Pentagon CIO to work with the DOGE team to produce a plan within 30 days for how DOD will in-source IT consulting and management services to the department’s civilian workforce.
The new call for in-sourcing comes as Pentagon leaders are advancing efforts to make major cuts to the civilian workforce. Hegseth has said he wants to reinvest savings from employee reductions into higher-priority warfighting capabilities.
The plan from the CIO that Hegseth ordered in Thursday’s memo must also address how the Defense Department will negotiate “most favorable rates on software and cloud services, so the DoD pays no more for IT services than any other enterprise in America,” the SecDef wrote.
The memo also tasks the chief information officer to complete an audit of Pentagon software licensing by April 18. The purpose of the audit is “to ensure we are only paying for the licenses we actually use, the features we actually need, at the most favorable rates,” according to Hegseth.
Katie Arrington is currently performing the duties of DOD CIO.
Earlier this week at the Sea-Air-Space conference, Navy Chief Information Officer Jane Rathbun said DOGE and the DOD CIO were reviewing the service’s software enterprise.
“It’s all about making the right investments in modernizing, but modernizing with an eye towards effectiveness and efficiency. We’ve got this new administration. We’ve got the DOGE in working with us, and they’re focused on effective consumption of commercial software. Are we doing the best job we can deliver in buying and utilizing the software that we have?” she said.
The Navy is a huge purchaser of software licenses, Rathbun noted.
“It’s a big number. And so are we buying effectively? Are we utilizing the things that we’re buying effectively? There’s always opportunity for improvement. And I would say that’s an area in my portfolio that I want to focus on but have not a lot of people to do that, which is something that has always bothered me and I want to be doing better at is really this optimization concept. I’ve got to continuously modernize but I have to do it in an optimal way,” she said.
