The Defense Department is under a new edict to lower the number of IT consulting and management services contracts as part of a larger push to take on more of that work in-house.
In a memo sent Tuesday, Defense Secretary Pete Hegseth directed DOD leaders and components not to execute new contracts or task orders for IT consulting or management services without a written justification first.
That justification must lay out why the work cannot be performed by DOD personnel or be “acquired from the direct service provider, whereby the prime contractor is not an integrator or consultant.”
DOD components also must get approval from the deputy defense secretary before carrying out these contracts. The components must provide a cost-benefit analysis, evidence that alternatives were evaluated, and the justification for going outside both DOD and direct service providers.
Consulting, IT and management services contracts have been the subject of heightened scrutiny and skepticism at DOD since Hegseth became defense secretary in January following President Trump’s inauguration.
In April, the Pentagon canceled several contracts that had a total combined value of $5.1 billion. The Department of Government Efficiency participated in those reviews at DOD.
Hegseth also said in a video posted to X Wednesday that the Air Force and DOGE also ended the service branch’s largest management consulting program. Hegseth claims the Air Force is saving $1 billion from that move.
The service branch is not going ahead with awards for the recompete of a contract for that line of work. The Department of the Air Force Strategic Transformation Support II vehicle would have had a $3.7 billion ceiling over five years.
DOGE will also ramp up more of its involvement at DOD and get access to all of the department’s unclassified contracts, according to a second memo Hegseth signed and sent Wednesday.
Hegseth’s memo specific to integrators and consultants defines them as “providing system IT integration, implementation, or advisory services (e.g., designing, deploying, or managing IT systems, or offering strategic or technical IT expertise).”
On the other hand, the memo does not provide DOD’s definition of a direct service provider.
“Merely reclassifying integrator or consultant contracts to avoid the requirement to evade review is prohibited,” Hegseth wrote, adding that the defense secretary for acquisition and sustainment will lead the work to monitor compliance across DOD.
Stan Soloway, former president of the Professional Services Council and a former DOD acquisition official, told us he sees the memo as having some merit but has concerns over the downstream impacts.
“The way it is structured and the elements of it can lead to a big slowdown and a real fear on the part of government folks to award contracts that they actually need,” Soloway said.
DOD makes awards to contractors to fill needs in their own capabilities and this memo does not acknowledge the department’s human capital challenges, Soloway added.
The department has previously said it planned a civilian employee reduction of between 5% and 8% to follow the Trump administration’s push for deep cuts across the federal workforce.
“The contracts they are targeting are really reflective of where the human capital gaps are and they are missing that whole piece. It is inextricable.” Soloway said.
Hegseth’s new contracting memo says the A&S office has also been directed to review existing IT consulting or management services contracts and task orders “for viability and alternatives under the above guidance.”
Contracts that directly support “defense weapon system programs” and their “directly associated program sustainment activities” are excluded from the requirement, as are contracts and task orders with a total value below $10 million.
What the memo calls “advisory and assistance services” contracts are also under the new scrutiny. Hegseth defines this work as including expert advice, recommendations, studies, analyses, or support for management, strategic planning, policy development, organizational assessments, technical expertise, or operational decision-making.
As far as DOD itself goes, components have been directed to maximize the utilization of their employees for “broad functions” that include IT but extend far beyond that. This scope of work also includes analytical research, administrative support, human resources, training and education, compliance, and reporting.
That aspect of Hegseth’s new directive comes amid DOD’s own expectation that the military’s main IT services component, the Defense Information Systems Agency, will lose roughly 10% of its total staff as part of the Trump administration’s push to reduce the overall federal workforce.
DISA’s total workforce comprises about 20,000 workers with slightly more than half contractors, about 6,800 DOD civilians and 1,200 active-duty military.
