The Trump administration is escalating its efforts to slash federal spending on consulting services, with major firms like Deloitte and Accenture now required to justify billions of dollars’ worth of government contracts. The move, part of an aggressive cost-cutting drive spearheaded by Elon Musk’s Department of Government Efficiency (Doge), has already led to the cancellation of more than 30 contracts, and hundreds more are at risk.
As reported by the Financial Times, ten of the largest U.S. consulting firms—including Deloitte, Accenture, Booz Allen Hamilton, Guidehouse, and IBM—have until Friday to provide justification for their ongoing federal projects. Officials indicate that the review will expand in the coming weeks to include additional firms.
The contract cancellations so far include a $1.9 billion IT services agreement for the Internal Revenue Service (IRS), led by Deloitte. Other terminated contracts affect various federal agencies, including the Department of Defense, the Social Security Administration, and Immigration and Customs Enforcement. Some of these cancellations, according to filings, explicitly cite compliance with Trump’s executive orders targeting diversity, equity, and inclusion (DEI) initiatives.
Josh Gruenbaum, Commissioner of the Federal Acquisition Service, emphasized that only contracts with a “demonstrable return on investment for the taxpayer” would be maintained. He justified the cuts by pointing to the U.S. government’s $36 trillion debt and $2 trillion annual deficit, arguing that it would be “grossly irresponsible” not to conduct a line-by-line audit of expenditures.
The review process has created significant uncertainty across the consulting industry. A senior official at the General Services Administration (GSA) warned firms that simply claiming every contract is “mission critical” would not be an acceptable defense. The Department of Defense is also conducting its own audit of consulting contracts, with results expected in April.
Industry analysts have described the situation as chaotic, with companies struggling to determine which contracts are at risk. Fiona Czerniawska, CEO of research group Source Global, noted that even firms that have not yet faced cancellations are worried about being “Doge’d”—a term now used to describe Musk’s aggressive budget-cutting strategy.
The uncertainty has forced Source Global to revise its forecasts for management consulting revenue in the U.S. public sector, which accounts for about $6 billion annually. The firm now expects revenue to flatline in 2025 and decline outright in 2026, reversing previous projections of modest growth.
Despite the turmoil, some consulting executives see potential opportunities in the long run. If the government increases outsourcing of essential services or expands IT modernization efforts, firms specializing in efficiency-driven solutions may find new revenue streams. This week, the Department of Veterans Affairs announced it had completed its contract review and would cancel 585 non-essential or duplicative agreements—just a fraction of its nearly 90,000 contracts. The news prompted a brief rally in the stock prices of government contractors, though the sector remains down more than 30% since Trump’s re-election.
While administration officials insist that the goal is not to put firms out of business, they maintain that consultants must prove their value. “We’re not looking to put anyone out of business,” a senior GSA official said. “But they need to be candid when analyzing their value regarding return on investment.”
