At face value, Secretary of Defense Pete Hegseth’s announcement earlier this month that he would trim $5.1 billion from the Pentagon’s budget by significantly cutting its contractor workforce appears reasonable. The IT, administrative, and procurement work that the memo purports to cut and that sits with expensive third-party contractors should be handled by federal employees who can serve the Pentagon’s unique needs. Not to mention, they’re far less expensive to employ, which is critical for an agency that has always struggled with keeping costs down.
Last year, the Pentagon’s budget sat at a hefty $824 billion, and it was unable to account for that no-small sum by failing its seventh audit in a row since it began undergoing audits in 2018. For years before that, the Pentagon claimed that because of its size it was “un-auditable.”
Cuts to defense are long overdue, especially when it comes to contractors — many of whom perform the same job as civilian workers but at a significantly higher cost. But what Hegseth is proposing in his vague memo doesn’t quite pass the sniff test as serious, actionable reform that can be executed within the specified time frame provided. If the Trump administration really wants to end wasteful spending at an agency that’s notorious for throwing away taxpayer dollars, it should start with reforms to the Pentagon’s many faltering weapons programs and implement a data-driven review of its contractor ecosystem.
Ballooning Costs and Missing Oversight
For years, congressional leaders have recklessly swollen the Pentagon’s budget, all while failing to exercise proper oversight of this massive source of federal spending, which sits at roughly 50 percent of the federal discretionary budget. Left unchecked, defense contractors profit from outrageously high prices. For example, a Pentagon audit last year on the Air Force’s purchases of aircraft spare parts found that contractors marked up a soap dispenser by 7,943 percent on a Boeing plane.
It’s no small task to help the Pentagon account for its spending, and many have made meaningful recommendations in the past to help Congress get their arms around this ballooning budget. Reforms go all the way back to the False Claims Act of 1863 in response to defense contractor fraud during the Civil War. Then, in the face of a world war, a somewhat unknown Senator Harry S. Truman led the “The Truman Committee” to bring congressional oversight to war profiteering. President Ronald Reagan’s Packard Commission included recommendations on how the military should obtain the goods and services that it needs without overrunning costs. And before the creation of DOGE, watchdog groups such as the Project On Government Oversight have flagged where the federal government is failing to balance spending.
So, it isn’t for lack of solutions. But military spending has continued to increase even though the United States is buying fewer planes, tanks and ships. Congress has the authority to make meaningful reform to the Pentagon budget with recommendations that are in front of them, but the profits and power of the defense industry often prevail with a pressure to compete globally for military dominance.
Just this week, House Republicans have unveiled a bill that proposes a $150 billion increase in Pentagon spending, bringing the total defense budget for fiscal year 2025 to over $1 trillion, if approved. Already, it is clear that Hegseth’s political ploy will not inspire long-lasting change that ensures effective spending in the future.
Hegseth’s directive describes goals that are worth pursuing, but it provides too little time and too little detail to accomplish them. For example, the memo directs Pentagon leadership to complete a software audit within a week, but departmental audits commonly take years to complete. Plus, reasonable costs that result from contract terminations are possible, in addition to legal action.
Where the Money Is
If Hegseth wanted to seriously reform the Pentagon’s budget, he should start by cutting defense spending on large, needless weapons programs. The Pentagon needs to put an end to shelling out on F-35 jets, which, despite over 20 years of development, still fails some of its basic requirements. The most expensive military program in history, it is now projected to cost a staggering $2 trillion, almost twice the 2018 estimate. Most of this money has yet to be spent. Continuing to rely on existing F-15s, F-16s, and F-22s would cost a fraction of that. Then there’s the Sentinel intercontinental ballistic missile (ICBM) program, one of the most recent programs to be flagged by a law that monitors overspending in the military, with its cost soaring by 81 percent over the program’s lifecycle. With no clear reason to replace the existing Minuteman III ICBM fleet, canceling Sentinel could save over $100 billion.
When it comes to cutting people, the contractor workforce has become so entangled with the agency’s overall staffing that a cost-analysis data review is needed before the administration can make thoughtful changes to personnel. This would help answer a critical question: where are contractors necessary, and where are they not? In 2022, the Pentagon committed more money on federal contracts than all other government agencies combined.
Hegseth is right to target contractors in his bid to reduce waste at the Pentagon. As a previous review of the Pentagon’s service contracting budget and spending data found, contractor employees cost 2.94 times more than an average civilian employee performing the same job.
But without a thorough audit of the bloated contractor workforce, it’s difficult to understand where cuts will be most needed.
So, although Hegseth’s memo might play well as a soundbite, it falls short of the larger systemic change needed to rein in the Pentagon’s unchecked spending. The U.S. government needs much more than a one-page memo to tackle the Pentagon’s long-standing issue with waste. Until that changes, taxpayers will continue footing the bill for a defense budget that continues to grow with too little accountability. And reforms will continue to exist only on paper.
