Deep Staters On Edge As DOGE’s DoD Strike Team Hits Pentagon With Sweeping Contract Cuts

The U.S. Department of Defense has failed every single financial audit since audits began in fiscal year 2018. Despite commanding the largest budget of any federal agency—nearly $850 billion annually—the Pentagon still can’t account for large swaths of its spending. Over the years, trillions have been flagged as “unaccounted for,” fueling speculation around off-the-books operations that taxpayers are kept in the dark about. Even the Government Accountability Office recently warned that the DoD may not meet its target for a clean audit until at least 2028.

On Monday, a team of Goldman analysts led by Noah Poponak told clients that the team of the Department of Government Efficiency (DOGE) at DoD is quietly ramping up contract cancellations. Yes, the DoD—the mecca for bloated budgets and opaque spending—is now the target of DOGE’s slash-and-burn operations. That news alone might have Deep Staters and their Beltway contractor buddies on edge through summer. 

Deep state will be terribly vexed: “Department of Government Efficiency (DOGE) contract cancellation activity has picked up at the Department of Defense” – GS

— zerohedge (@zerohedge) July 7, 2025

Poponak pointed out that contract cancellations at the DoD now rank second in total canceled IT contract value among federal agencies, just behind Health and Human Services. 

Notably impacted are consulting firms Booz Allen Hamilton (BAH) and Leidos (LDOS), with several high-value contracts terminated, including a $310 million hypersonic ISR project for LDOS and multiple contracts for BAH totaling over $130 million.

Poponak pointed out, “These DoD contract cancellations may have been impacted by recently passed DoD memos that raise the threshold for contracting IT and services work at the department.” 

“We also view this to mean DOGE activity is continuing across the government despite leadership personnel changes. We reiterate our cautious view of the Gov’t IT & Services sector, and are Sell rated on BAH, CACI, SAIC, and VVX; Neutral on LDOS and AMTM; Buy rated on PSN. We continue to think the group will face contracting, backlog, revenue, and margin headwinds over the medium-term.” 

Cleaning up the DoD will be the most challenging task yet in rooting out waste and fraud. According to the GAO, the Pentagon is unlikely to pass a full audit by 2028. For decades, the GAO has issued more than 100 recommendations to help the DoD address its financial management failures—most of which remain unresolved.

Related:

• Goldman: DOGE Sparks “Cautious View” On Gov’t IT & Services

• Goldman Downgrades Booz Allen Hamilton To ‘Sell’ Amid DOGE Contract Cancellations

As for DOGE more broadly, President Trump has made it abundantly clear that the cost-cutting theatrics were just that—a circus act (hence Elon Musk’s public frustrations).

The new playbook? Ignore austerity (for now). It’s all about juicing revenue—and yes, piling on more debt—in a massive, multi-trillion-dollar bet to grow the nation out of its debt mess.

So if the so-called cost-cutting was little more than political theater, at least DOGE managed to neuter agency-captured USAID and gut key DEI initiatives funding Marxist activists, thus slowing the spread of wokeism, sabotaging the nation from within across government agencies, the military, and corporations.