Hegseth orders restrictions on DOD contracting for IT consulting and management services

Secretary of Defense Pete Hegseth has issued a new directive aimed at limiting the Defense Department’s hiring of IT consultants.

The edict came in a memo sent Tuesday to Pentagon leadership, combatant commanders, and DOD agency and field activity directors regarding implementation of the Trump administration’s Department of Government Efficiency (DOGE) cost-saving initiatives.

“While we rely on our vital industrial base to deliver cutting-edge technology and support, we must in-source more expertise and harness the unparalleled talent of our existing experts to drive financial efficiency and operational strength,” Hegseth wrote.

Going forward, DOD components “may not execute new IT consulting or management services contracts or task orders with integrators or consultants -defined as entities providing system IT integration, implementation, or advisory services (e.g., designing, deploying, or managing IT systems, or offering strategic or technical IT expertise) – without first justifying that no element of the contracted effort can be: (1) accomplished by existing DoD agencies or personnel; or (2) acquired from the direct service provider, whereby the prime contractor is not an integrator or consultant,” he wrote.

Prior to execution of a new IT consulting or management services contract or task order with an integrator or consultant, DOD components must obtain approval from Deputy Secretary of Defense Stephen Feinberg or his designee. Approvals or denials will be based on submission of a cost-benefit analysis, evidence of evaluation of alternatives, and justification that the efforts to be covered by the contract cannot be in-sourced anywhere within the department or acquired from a direct service provider.

“Merely reclassifying integrator or consultant contracts to avoid the requirement to evade review is prohibited,” Hegseth wrote, noting that the undersecretary of defense for acquisition and sustainment will monitor compliance with his directive.

Contracts “in direct support to defense weapon system programs and directly associated program sustainment activities” are excluded from the requirement, as are contracts and task orders with a total value under $10 million.

The A&S directorate will also review existing IT consulting or management services contracts and task orders “for viability and alternatives under the above guidance,” according to the memo.

The memo also imposes similar restrictions on “advisory and assistance services” contracts, including those that entail providing expert advice, recommendations, studies, analyses, or support for management, strategic planning, policy development, organizational assessments, technical expertise, or operational decision-making.

Additionally, Hegseth directed DOD components to maximize utilization of the department’s employees for “broad functions” — including IT, among others — when such functions are being performed by a mix of DOD employees and contractors.

The new edict is the latest move by Hegseth to rein in the Pentagon’s IT spending.

Last month, he signed a directive ordering the termination of several IT services contracts and directed the Pentagon’s chief information officer to draw up plans for in-sourcing, among other measures.