Trump Admin Targets Tech Contracts With Feds To Streamline Bloated Gov't
A new report cites an internal memo from the General Services Administration informing 'Big Tech' that the Trump administration is expanding its cost-cutting review of federal contractors beyond consulting firms to include now technology providers—specifically value-added resellers (VARs) like Dell and CDW.
The letter, obtained by The Wall Street Journal, was sent by Josh Gruenbaum, Commissioner of the GSA's Federal Acquisition Service, to 10 tech firms in recent weeks, demanding an explanation of services and a breakdown of costs and markups, targeting inflated pricing practices and inefficiencies.
Gruenbaum oversees the review of federal contractors and has given tech firms until June 11 to respond. The US spends a staggering $82 billion annually on IT products and services through a complex procurement process. He noted that some of these services carry excessive markups and inflate costs to taxpayers, warning the tech firms, "This must change."
"We don't need to outsource everything; we don't need to always go and buy bespoke, specialized products and services," Gruenbaum told WSJ in an interview, adding, "The point is, really, can you shape shift the way the federal government does business? We think unequivocally 'yes.'"
WSJ provided an update on contract cancellations since President Trump stepped into office:
11,297 contracts canceled across 60 agencies, saving $33 billion
2,809 consulting contracts terminated
Goldman analysts recently downgraded Booz Allen from "Neutral" to "Sell," noting medium-term revenue growth is expected to be flat as federal civilian spending comes under pressure and priorities shift within various federal agencies.
DOGE data shows that Booz Allen has had 68 contracts canceled, with 41 of these being contracts that had not been fully paid out, and the remainder having been fully paid. The 60 contracts account for over $600 million in deals.
Goldman also expects government IT outlays to slow in the coming year.
Here are the 20 other companies with the highest percentage of revenue from the US government.
The key takeaway is that the federal procurement process is in urgent need of reform. Looking ahead, the White House is expected to ask Congress next week to formally codify several cost-cutting measures from the Department of Government Efficiency (DOGE).
Tyler Durden
Sun, 06/01/2025 - 11:05
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