Navy Secretary Phelan terminates IT contracts, grants amid DOGE drive

Secretary of the Navy John Phelan on Thursday ordered the termination of hundreds of millions of dollars in IT contracts and unrelated grants as part of a broader push at the Defense Department to slash spending that the Trump administration deems wasteful.

The moves — outlined in a pair of memos issued to the chief of naval operations, Marine Corps commandant, Navy assistant secretaries and general counsel — are pursuant to Defense Secretary Pete Hegseth’s “commitment to strategically rebuild our military, restore accountability to the Department of Defense, cut wasteful spending, and implement the President’s orders,” Phelan wrote.

The IT contracts axed by the SECNAV include those for the Naval Maintenance, Repair and Overhaul (NMRO) program.

The NMRO system was designed to provide mobile access for users, embedded job performance aids, lobby functions providing customizable work areas of interest, and 3D interactive renderings of ship systems enabling sailors to click on an object to access technical and logistics data, according to a news release last year from Fleet Force Command.

“The NMRO logistics program is critical software for the Navy. However, for 5 years systems integrators have over-engineered the software to the point where it is unusable. Upon the recommendation of Navy leadership, the current contracts under the NMRO program shall be terminated. This will allow the Program Office to apply the savings towards a new strategy to meet our needs,” Phelan wrote in a new memo obtained by DefenseScoop from a Navy official.

He also directed the Navy’s chief information officer to prepare a new acquisition strategy by July 31, along with management review of the program.

“Collectively, these contract terminations represent over $568 million in total contract value, which we estimate can allow the Navy to repurpose up to $200 million in taxpayer funds in a more effective manner,” Phelan wrote.

“I commend the Navy leaders who raised this opportunity that will result in a more effective fighting force. Moreover, I encourage leaders across the Department of the Navy to follow this example in identifying opportunities to eliminate wasteful spending which we can then re-invest into critical mission needs,” he added.

In a separate memo obtained by DefenseScoop, Phelan ordered the termination of 45 other contracts and grants. He said the cuts target “wasteful spending” on climate change, DEI, social science, and “other activities which are not aligned with DoD and DoN priorities.”

The cuts include grants for studies of “Persuasion, Identity, and Morality in Social-Cyber Environments” and “engendering and leveraging trust in longitudinal human-AI interactions,” among others, according to the memo.

“Collectively, these 45 terminations represent over $87 million in total award value, which we estimate can save up to $41 million in taxpayer funds the Navy can better apply to critical priorities,” Phelan wrote.

The cuts come as Pentagon leadership has been working with the Trump administration’s Department of Government Efficiency (DOGE) team, led by tech titan and presidential adviser Elon Musk, to review spending.

“I commend the DOGE team for finding these opportunities to help save the Navy and increase our readiness and warfighting capability,” Phelan said in a video posted on X, the social media platform owned by Musk. “Stay tuned — there’s more to come.”

Earlier this month at the Sea-Air-Space conference, Navy CIO Jane Rathbun noted that the Trump administration’s DOGE team was examining the Navy’s software enterprise and use of commercial software.

“It’s actually being led through the DOD CIO, and it is collaborative and they are asking for information from us. They are asking for information from the industry partners and really understanding how we buy, how we consume, and how we could do it more effectively,” she told DefenseScoop.

Hegseth has also been pushing to rein in Pentagon spending on IT services contracts. About two weeks ago, he issued a directive ordering the termination of several major contracts, with estimated savings of more than $4 billion. He also directed the Pentagon’s chief information officer to draw up plans for in-sourcing, among other measures.