Trump administration targets tech contractors in expanding crackdown on US federal spending

Trump administration targets tech contractors in expanding crackdown on US federal spending

The Trump administration is intensifying its push to cut federal spending by turning its attention from consulting giants to technology vendors, marking a new phase in its campaign to overhaul government contracting. The move comes after months of high-profile contract cancellations and layoffs in the consulting sector and signals a broader effort to reshape how the federal government procures goods and services, the Wall Street Journal reported.

The General Services Administration (GSA) sent letters on Wednesday to 10 technology companies—including major federal suppliers Dell and CDW—demanding that they justify their contracts and identify areas for cost reduction. These companies, categorised as value-added resellers (VARs), assemble and deliver technology services to federal agencies. The US spends more than $80 billion annually on IT, but the GSA said in its letter that “complex procurement processes” have led to “excessive markups and increased costs to the taxpayer.”

Tech firms under pressure to disclose pricing

The letter, signed by Josh Gruenbaum, head of the GSA’s Federal Acquisition Service, calls on the firms to provide detailed breakdowns of pricing and markups and to “evaluate whether the offered pricing is appropriate given best commercial industry comparables.” Responses are due by June 11.

Neither Dell nor CDW responded to requests for comment.

This latest crackdown follows a wave of cuts in the consulting sector. Booz Allen Hamilton announced plans to lay off 2,500 employees last week as part of the administration’s broader effort to rein in federal spending. Consulting firms such as Deloitte and Guidehouse have also been pressured to reprice or terminate contracts.

Tens of billions already slashed

Since January, the administration has cancelled more than 11,000 contracts across 60 agencies, producing an estimated $33 billion in savings, according to a person familiar with the review. Cuts have ranged from IT services at the Education Department to project management work at the Treasury.

The White House’s cost-cutting initiative, known internally as OneGov, is focused on consolidating procurement and shifting toward “outcomes-based” contracts, where vendors are paid for measurable results rather than billable hours or open-ended service delivery. The administration is also encouraging agencies to rely more on in-house talent.

“We don’t need to outsource everything,” Gruenbaum said in an interview. “The point is, really, can you shape shift the way the federal government does business? We think unequivocally ‘yes.’”

Bypassing middlemen, buying direct

In April, President Trump signed an executive order directing federal agencies to prioritise purchasing off-the-shelf products directly from manufacturers, a clear signal that the administration wants to minimise the role of resellers and other intermediaries in government IT spending.

The GSA’s recent letter reinforces that directive, asking firms to provide cost breakdowns and suggesting that future purchasing may bypass VARs entirely when possible. This shift could upend a multibillion-dollar segment of the federal technology supply chain.

Though Elon Musk has stepped away from his advisory role on government efficiency, officials say the administration’s cost-cutting agenda remains firmly in place.

“We’re not done,” one official said. “Technology, just like consulting, is overdue for disruption in how the federal government buys it.”