Investing.com -- U.S. Secretary of Defense Pete Hegseth announced the cancellation of over $580 million in Department of Defense (DOD) contracts and grants on Thursday, deeming them misaligned with current priorities and a poor use of taxpayer dollars. The decision is part of an ongoing initiative to eliminate wasteful spending within the DOD, ensuring resources are directed toward essential warfighter needs.
The terminated contracts include a long-overdue HR software project that has exceeded its budget by $280 million, as well as a series of DOD grants totaling $360 million. These grants were intended for projects such as decarbonizing emissions from Navy ships and diversifying the Navy by engaging underrepresented BIPOC students and scholars. Additionally, $30 million in contracts with consulting firms Gartner (NYSE:IT) and McKinsey for IT services and unused licenses have been cut.
Secretary Hegseth emphasized the importance of transparency and accountability in the allocation of government funds, underscoring the duty to taxpayers to utilize their contributions effectively. The DOD’s partnership with the Doge initiative has led to a cumulative reduction of $800 million in wasteful spending over the first few weeks of this effort.
In his statement, Hegseth expressed the department’s commitment to continue identifying and eliminating unnecessary expenditures to support and equip U.S. warfighters adequately. The Secretary signed the memo officially enacting these cancellations and assured that further actions to reduce wasteful spending are forthcoming.
The cuts at the DOD have been impacting various stocks across Wall Street. Lockheed Martin Corporation (NYSE:LMT), Northrop Grumman Corporation (NYSE:NOC), General Dynamics Corporation (NYSE:GD), Booz Allen Hamilton Holding (NYSE:BAH), Accenture plc (NYSE:ACN), and Palantir Technologies Inc (NASDAQ:PLTR) are among the stocks that have been pressured on the government cuts.