No More £500/Hr Consultants: Pentagon Pulls Plug on £3.87b in Contracts to Fund Soldiers' Healthcare

Continuing its campaign to eliminate what it calls 'unnecessary spending', the Pentagon has terminated contracts worth a staggering £3.87 billion ($5.1 billion), redirecting funds towards healthcare for military personnel and their families.

A statement from the Department of Defense outlined the major contracts being eliminated as part of the cost-saving overhaul:

• A Defense Health Agency contract for consulting services from Accenture, Deloitte, Booz Allen and others — services the DoD claims can be performed in-house;
• An Air Force contract with Accenture to resell third-party Enterprise Cloud IT services, which the DoD can already procure directly;
• A Navy contract for business process consulting in administrative departments;
• A DARPA contract for IT helpdesk services deemed redundant due to existing internal capabilities at the Defense Information Systems Agency (DISA).

'We need this money to spend on better healthcare for our warfighters and their families, instead of $500 an hour business process consultants. That's a lot of consulting,' said Defense Secretary Pete Hegseth.

DEI and University Funding Also Axed

In a sweeping move, Hegseth also announced the cancellation of 11 contracts connected to diversity, equity, and inclusion (DEI) programmes, climate change initiatives, and lingering COVID-19 response efforts.

Additionally, the Pentagon has halted over £379.52 million ($500 million) in academic funding for two unnamed universities accused of promoting divisive DEI programmes and tolerating antisemitism. This follows a similar withdrawal of £53.13 million ($70 million) from three other institutions in recent weeks.

'We are committed to rooting out DEI — root and branch — throughout this department ... [And] I'm going to keep looking,' Hegseth said.

Strategic Shifts: New Contracts, New Priorities

Amid the cuts, the DoD has announced a slate of new military contracts, reflecting a renewed focus on core defence operations:

• The Army awarded 13 firms a £189 million ($249 million) contract for architect and engineering services through 2030.
• Weeks Marine secured a £15.18 million ($20 million) contract for maintenance dredging in Mobile, Alabama.
• The Defense Logistics Agency granted:
  • £51.54 million ($67.9 million) to National Industries for the Blind for uniform supply;
  • £11.39 million ($15 million) to Thermocontrol for aircraft thermocouple harnesses;
  • An extended £11.08 million ($14.6 million) contract to Bell Textron for aircraft support.

The Navy awarded:

• £40.99 million ($54 million) to General Dynamics for submarine maintenance;
• £37.57 million ($49.5 million) for weapons containers;
• £19.43 million ($25.6 million) for ship support services in Virginia;
• £12.4 million to Alabama Shipyard for shipyard availability;
• £8.05 million ($10.6 million) to Austal USA for ship maintenance.

Meanwhile, the Air Force granted a £14.04 million ($18.5 million) logistics support contract modification to Newbegin Enterprises. DARPA also exercised an £6.07 million ($8 million) contract option with Northrop Grumman for laser technology development.

Why It Matters

The Pentagon's recent spending cuts highlight a sharp pivot towards strengthening frontline defence capabilities. By slashing spending on DEI, climate response, and other programmes deemed non-essential, defence leaders are making clear that military readiness and modernisation are now top priorities.

For contractors and institutions reliant on the now-cancelled programmes, the impact could be significant — ranging from financial losses to long-term reductions in influence within the defence sector.

This strategic redirection marks a turning point in how the Department of Defense approaches budgeting, accountability, and what it considers mission-critical in a rapidly evolving global threat landscape.