Oracle, one of the world’s largest software companies, is among the latest casualties of the Trump administration’s sweeping cuts to government contracts. The Department of Defense (DoD) has reportedly terminated its contracts with Oracle and several other tech companies as part of a cost-cutting initiative. This move is expected to have significant financial implications for these companies.
Last week, Defense Secretary Pete Hegseth announced the DoD’s plan to slash $580 million from funding, grants, and contracts. This decision is anticipated to impact companies doing business with the Pentagon, including Oracle, which provides the DoD with its Defense Civilian Human Resources Management System (DCHRMS) software. Other affected sectors include diversity, equity, and inclusion programs, as well as climate change and Covid-19 research.
Impact on Oracle and Other Tech Companies
The DCHRMS initiative, which is based on Oracle’s software, has been identified as one of the major casualties of these cuts. A report from Bloomberg revealed that Oracle and Leidos, a defense and engineering firm, are among the companies affected by the terminations.
“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 stated in a memo dated March 20.
He further pointed out that the HR project was six years behind schedule and over $280 million over budget. In 2019, Oracle was awarded an HR management software contract by the Defense Department, with the company’s technology used in more than 500 government organizations.
A Broader Economic Impact?
The scale of these cuts is not limited to Oracle. Other tech companies like Accenture have also reported losses due to the termination of government contracts. Accenture’s Federal Services business, which contributed to about 8% of the company’s global revenue in fiscal 2024, was among those impacted.
“As you know, the new administration has a clear goal to run the federal government more efficiently,” Accenture CEO Julie Spellman Sweet told investors in an earnings call. “During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue.”
After this announcement, Accenture’s shares fell by more than 7%. Experts, including investor Danny Moses, who predicted the 2008 stock market crash, have begun warning about the potential wider economic impact of these contract terminations. Moses believes that the markets have not yet priced in the consequences of the loss of these private-sector contracts.
The terminations are expected to significantly influence business decisions, including hiring. According to Moses, as more laid-off federal workers seek jobs, the private sector may provide fewer opportunities due to these 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.”
As north Florida continues to navigate these complex changes, we’ll keep you informed on how this situation unfolds and its implications for our local economy and community.
This story was originally featured on Fortune.com
