The Trump administration’s cost-cutting initiative, spearheaded by Elon Musk’s Department of Government Efficiency (DOGE), is facing scrutiny.
While DOGE has touted the cancellation of over 1,100 federal contracts, data published by the agency itself reveals a significant portion of these cancellations are unlikely to save the government any money.
Last week, DOGE released an initial list of 1,125 contracts terminated across the federal government.
However, data displayed on DOGE’s “Wall of Receipts” indicates that 417 of these contract cancellations, representing nearly 40% of the total, are projected to yield no financial benefit.
This lack of savings is primarily due to the fact that the total value of these contracts has already been fully obligated.
This means the government is legally bound to spend the funds on the purchased goods or services, and in many instances, has already fulfilled its financial obligation.
“Pointless” cancellations: are savings just a mirage?
“It’s like confiscating used ammunition after it’s been shot when there’s nothing left in it. It doesn’t accomplish any policy objective,” Charles Tiefer, a retired University of Baltimore law professor and expert on government contracting law, told Fortune.
He added that the “terminating so many contracts pointlessly obviously doesn’t accomplish anything for saving money.”
Examples of these already-paid contracts include subscriptions to media services like The Associated Press and Politico, completed research studies, delivered training, purchased software, and past internships.
Despite the lack of tangible savings, an administration official defended the cancellations, arguing that it makes sense to eliminate contracts deemed as potential “dead weight.”
The official requested anonymity because they were not authorized to discuss the matter publicly.
DOGE data values the 417 contracts in question at a total of $478 million.
Dozens of other canceled contracts are also expected to generate minimal, if any, savings.
“Slash and burn” approach: experts raise concerns
“It’s too late for the government to change its mind on many of these contracts and walk away from its payment obligation,” Tiefer cautioned, noting that DOGE appeared to be adopting a “slash and burn” approach to contract cutting.
Tiefer, who served on the Commission on Wartime Contracting in Iraq and Afghanistan, argued that this approach could negatively impact the performance of government agencies.
He suggested that genuine savings could be achieved through collaboration with agency contracting officers and inspectors general to identify efficiencies, a strategy the administration has not pursued.
Inflated savings claims: a closer look at the bottom line
While DOGE claims the overall contract cancellations are projected to save more than $7 billion, independent experts have questioned the accuracy of this figure, suggesting it may be inflated.
The canceled contracts encompassed a diverse range of goods and services.
For instance, the Department of Housing and Urban Development awarded a contract in September to purchase and install office furniture at various branches.
While the contract doesn’t expire until later this year, federal records reveal that the agency had already committed to spending the maximum amount of $567,809 with a furniture company.
Similarly, the US Agency for International Development negotiated a $145,549 contract last year to clean the carpet at its headquarters in Washington.
However, the full amount had already been obligated to a firm owned by a Native American tribe based in Michigan.
Another contract, worth $249,600, had already been spent on a Washington, D.C., firm to assist the Department of Transportation with the recent transition between administrations.
Contradictory goals: hampering modernization efforts?
Adding to the controversy, some of the canceled contracts were designed to modernize and improve government operations, which seems at odds with DOGE’s cost-cutting mandate.
One such contract, among the largest, involved a consulting firm hired to help reorganize the Centers for Disease Control and Prevention’s National Center for Immunization and Respiratory Diseases, the agency that spearheaded the response to the Covid-19 pandemic.
The full amount of $13.6 million had already been obligated to Deloitte Consulting LLP for assistance with the restructuring, which included closing several research offices.
The post Musk’s DOGE cancels contracts, but savings questioned: are cuts just for show? appeared first on Invezz
