In brief: The Defense Department, which manages an $850 billion annual budget and employs two million people, is the largest federal agency – and it has long faced scrutiny over wasteful spending and dark budgets. A new reallocation plan seeks to reduce dependence on outside contractors and shift resources toward in-house operations. United States Defense Secretary Pete Hegseth has cut $5.1 billion in defense contracts for consulting and nonessential services. The move targets redundant agreements, with plans to shift much of the work to in-house personnel. The cuts include a range of consulting deals with major firms like Accenture, Booz Allen Hamilton, and Deloitte, which have been providing services to the Defense Health Agency. Hegseth noted in a video posted to X that these terminations alone will save $1.8 billion. Other notable reductions include a $500 million US Navy contract for business process consulting and a $1.4 billion cloud software reseller agreement. Hegseth also cut a $500 million DARPA contract for IT help-desk services, calling it "completely duplicative." Additional terminations target contracts supporting diversity, equity, and inclusion programs, climate initiatives, and coronavirus response efforts – areas Hegseth described as peripheral to core defense operations. In an internal Pentagon memo, Hegseth said the Defense Department's civilian workforce could take over many consulting services currently outsourced to third-party firms. For example, he identified the Air Force's contract with Accenture to resell enterprise cloud IT services as a need that existing government procurement resources could directly fulfill. In addition to terminating contracts, Hegseth directed the Pentagon's chief information officer to work with Musk's task force over the next 30 days on a plan to insource IT consulting and management services across the department. The memo also called for negotiating more favorable rates on cloud computing. The Defense Department is redirecting the funds saved from contract terminations to enhance military readiness, advance cutting-edge technologies, and strengthen national security infrastructure. Key areas receiving increased funding include missile defense systems, hypersonic weapons, artificial intelligence, and cybersecurity. // Related Stories