President Donald Trump is taking a sledgehammer to one of Washington’s most bloated industries: federal consulting.
For decades, politically connected consulting firms have siphoned billions from taxpayers with vague deliverables and padded labor costs. But now, under Trump’s leadership, this may finally be coming to an end.
Firms that once acted like they had the upper hand are now slashing fees, offering credits worth hundreds of millions, and even throwing in free artificial intelligence (AI) services just to stay in the government’s good graces.
Seven of the ten largest federal consulting firms — including Accenture, Booz Allen Hamilton, Deloitte, and IBM — have scrambled to offer up to $20 billion in concessions after the Trump administration demanded they cut prices or risk being booted from government contracts altogether, according to a new report from the Wall Street Journal. The ten firms combined are set to rake in more than $65 billion in fees from their current federal contracts.
The administration already gave them a chance to eliminate non-essential spending, but found the efforts to be “wholly insufficient, to the point of being insulting,” according to a letter from Federal Acquisition Service Commissioner Josh Gruenbaum, the Trump administration official leading the review.
Instead of cutting wasteful spending, the firms provided “voluminous pages of PowerPoint slides” defending the contracts.
The Trump administration’s ultimatum was blunt: cut your fees or lose your contracts. Now, that approach appears to be working.
“At least two firms offered 7% to 10% discounts on their labor costs within existing contracts, while others provided credit proposals of $100 million toward their work. At least one company offered free deployment of AI agents within the government to make it easier for federal agencies to work together,” the Journal reports.
Booz Allen Hamilton, which generates nearly all of its $11 billion in annual revenue from contracts with the federal government, offered substantial fee reductions during a second round of negotiations with the Trump administration. They had already offered more than $1 billion in reductions.
The Trump administration says this move isn’t about gutting services — it’s about restoring fiscal sanity and rooting out waste.
“These contracts represent non-essential spending on third party consultants to perform services more efficiently performed by the highly skilled members of our DoD workforce using existing resources,” Hegseth wrote in a memo.
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