Hegseth announces $580 million cuts to tackle wasteful spending

Involving Pentagon contracts

In an ongoing effort to address inefficiencies and wasteful spending, US Defence Secretary Pete Hegseth signed a memo on March 20, 2025, directing the termination of more than $580 million (£460 million) in contracts, grants, and programmes in the US.

According to a Pentagon statement, the move is part of the US Department of Defence’s broader strategy to ensure taxpayer money is used more effectively, aligning with the priorities set out by President Donald J. Trump and the Department of Defence.

The memo, titled ‘Continuing Elimination of Wasteful Spending at the Department of Defence,’ mandates the termination of several projects identified by the US Department of Government Efficiency that do not align with the Department’s goals.

In his prerecorded remarks, Hegseth explained that the cuts target programmes that are not a “good use of taxpayer dollars,” emphasising that, ultimately, the taxpayers fund the department’s operations.

“We owe them transparency, and we must ensure that we are using their money wisely,” Hegseth said.

Among the most significant cuts is a Defence Civilian Human Resources Management System software development programme. Originally initiated in 2018, the programme aimed to streamline many of the Department’s human resources operations.

The project was projected to take one year to complete and cost around $36 million. However, it has faced considerable delays, with the development almost eight years behind schedule and a staggering $280 million (£224 million) over budget.

“That’s 780% over budget – we’re not doing that anymore,” Hegseth remarked, highlighting the inefficiency of the project and the urgent need for reform.

Another area of focus is the termination of external consulting contracts. One notable contract, worth $30 million, was allocated to a company that had purchased several unused software licences, further exemplifying wasteful spending. Hegseth’s office also disclosed cuts to several other contracts that had not delivered value for money, reiterating the importance of scrutinising all expenditures.

The memo also revealed cuts in grants, totalling $360 million (£288 million). Some terminated grants include a $6 million initiative to decarbonise emissions from US Navy ships, a $5.2 million grant intended to diversify the US Navy, and a $9 million university grant to develop “equitable AI and machine learning models.”

Hegseth was particularly critical of the latter, stating that to better support the department’s mission, “lethal machine learning models, not equitable ones,” were needed.

“These cuts reflect the need to ensure our resources are focused on operational effectiveness, not politically-driven initiatives,” Hegseth explained.

Hegseth’s announcement brings the total savings from cuts since February 20, 2025, to $800 million (£640 million). Hegseth stressed that these savings would be reinvested in ensuring that military personnel, also known as “warfighters,” are adequately equipped and supported.

“Our warfighters are working hard, and we are working hard alongside them to make sure they have what they need,” Hegseth said. “We deeply appreciate their dedication, and this is just the beginning. We have much more to come.”

The latest cuts come as part of a larger strategy to eliminate fraud, waste, and abuse within the Pentagon, a priority for Hegseth and the current administration. Hegseth concluded his remarks by promising that more cuts are on the way.

“Stay tuned,” Hegseth said. “We’re going to keep going for you guys.”

The move to slash spending has been widely praised by critics of US government inefficiency, who argue that greater oversight and accountability are needed to ensure taxpayer funds are used responsibly. However, some have raised concerns about the impact on smaller contractors and research programmes, particularly those aimed at advancing technology and diversity within the military.

Hero image: Some of the terminated grants include a $6 million initiative to decarbonise US Navy ships’ emissions. Credit: United States Fleet Forces Command