Pentagon to end $5.1 billion in contracts with Accenture, Deloitte, others

By Mike Stone and Ismail Shakil

April 11 (Reuters) - U.S. Defense Secretary Pete Hegseth has ordered the termination of several information technology services contracts valued at $5.1 billion, including companies such as Accenture, Booz Allen Hamilton and Deloitte, according to a Pentagon memo.

The contracts "represent non-essential spending on third party consultants" for services Pentagon employees can perform, Hegseth said in the memo released late on Thursday.

"These terminations represent $5.1 billion in wasteful spending," Hegseth said, adding that their termination would result in "nearly $4 billion in estimated savings."

During morning trading in New York shares of Booz Allen Hamilton BAH.N were down 2.4% to $106.30 and Accenture ACN.N shares were down 2% to $279.52.

Representatives for Accenture ACN.N, Deloitte DLTE.UL and Booz Allen Hamilton BAH.N did not immediately respond to requests for comment.

The contracts appeared to be wide-ranging cuts to consulting services for the Navy, the Air Force, the Defense Advanced Research Projects Agency (DARPA) and the Defense Health Agency.

In a video posted on X, Hegseth said the contracts were for "ancillary things like consulting and other non-essential services." He said the services would be brought in-house.

In the memo Hegseth said he was directing the Pentagon's chief information officer to work over the next 30 days with tech billionaire Elon Musk's Department of Government Efficiency to prepare a plan to cut and in-source the Defense Department's information technology consulting and management services.

Additionally, the memo said the Pentagon would negotiate the "most favorable rates" for cloud computing services.