- Oracle, the software behemoth, is reportedly among a group of tech companies whose contracts with the Department of Defense have been cut as a result of the Trump administration’s mass spending and workforce reductions. Tech firm Accenture, which also had a government contract terminated, warned earlier this month of the negative financial repercussions of the contract loss.
Oracle is one of the latest tech giants to be impacted by sweeping cuts to government contracts.
Defense Secretary Pete Hegseth announced last week the department would cut $580 million in funding, grants, and contracts—hitting companies that do business with the Pentagon.
Those cuts targeted the Defense Civilian Human Resources Management System (DCHRMS)—a personnel management software—as well as diversity, equity, and inclusion programs, plus climate change and Covid research line items.
The DCHRMS initiative is based on Oracle software. Looking through contracts and defense websites, Bloomberg identified Oracle, in addition to defense and engineering firm Leidos, as among the companies affected by terminations, the outlet reported Friday.
“This program was intended to streamline a significant portion of the Department's legacy Human Resources (HR) information technology stack—an important mission we still need to achieve—but further investment in the DCHRMS project would be throwing more good taxpayer money after bad,” Hegseth said in a March 20 memo.
He added that the human resources project was six years behind schedule—with two more years needed until the program was operational—and more than $280 million over budget.
Oracle and the Defense Department did not respond to Fortune’s requests for comment.
The Defense Department awarded Oracle an HR management software contract in 2019, and the company said at the time its technology was used in more than 500 government organizations.
The major spending cuts are part of continued efforts by President Donald Trump’s administrations and the Elon Musk-led Department of Government Efficiency to limit the power of the federal workforce and eliminate what the administration says are wastes in spending. The government spent about $759 billion on contracts in fiscal 2023, including $456 billion from the Department of Defense, according to the U.S. Government Accountability Office.
More than half of the Defense Department's contract allotments are for services, including on professional, management, and logistics support. Musk’s own companies have benefitted from these contracts, receiving at least $20 billion from the federal government.
Early evidence of tech companies taking a hit
The mass terminations of government contracts with private sector companies could have meaningful economic impact. Business management software company Accenture reported earlier this month that its Federal Services business lost federal contracts as a result of DOGE’s reviews. Federal Services made up about 8% of Accenture’s global revenue in fiscal 2024, according to CEO Julie Spellman Sweet.
“As you know, the new administration has a clear goal to run the federal government more efficiently,” Sweet told investors in an earnings call. “During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue.”
Following the call, Accenture’s shares sank more than 7%.
Some experts have already begun to warn about the broader economic impact of these contract eliminations. Investor Danny Moses, who predicted the 2008 stock market crash, argued that the markets had not yet priced in the impact of the loss of private-sector contracts.
Moses told Fortune last week that companies with government contracts will begin to change how they make business decisions, including hiring, based on cuts. He added that as more fired federal workers seek out jobs, they may find fewer private-sector opportunities as a result of contract losses, contributing to an “unvirtuous cycle.”
“It’s not as simple as just, ‘We think there’s fraud, let’s cut waste, let’s cut expenses,’” Moses said. “And it’s not just about the federal workers, and it’s not just about the expenses out of those programs. It’s about the contracts with the private sector.”
