Consulting Firms Propose Savings to Avoid Cuts

Major US consultancies are signalling a shift toward cost-efficiency, offering billions in concessions to continue working with the government. Yet, this could reshape how federal contracts are awarded. The move is designed to head off sweeping spending cuts that the Trump administration is pursuing, but may challenge long-standing consulting practices.

For years, consulting giants such as Accenture, Deloitte, and IBM have held lucrative government contracts. But growing pressure from both the White House and agencies such as the General Services Administration (GSA) has forced the industry to re-examine its pricing, contract structures, and overall value to taxpayers. This review gained urgency following the creation of the Office of Government Efficiency (DOGE), which has aggressively terminated public sector jobs and torn up contracts in a bid to slash spending.

Several top consultancies reportedly submitted proposals identifying up to $24 billion in long-term savings. One firm alone offered $12 billion in potential cost reductions. Suggestions included limiting annual price increases, transitioning to performance-based payment models, and even consolidating procurement across government agencies to unlock bulk purchasing power. In some cases, contractors proposed bypassing federal middlemen in favour of direct vendor deals to reduce markups.

What’s emerging is a more fundamental rethink of how the US government sources professional services. While the DOGE initiative’s extreme measures have sparked court challenges, the GSA is adopting a more collaborative but still firm approach to saving money. Some consultancies even highlighted inefficiencies in competitors’ practices, indicating a willingness to self-regulate as a survival tactic.

If accepted widely, these concessions could create a blueprint for federal procurement reform, favouring outcome-driven solutions over traditional billable hours. It also signals a shift away from opaque pricing and fragmented contracts that critics argue have hurt taxpayer value. However, much depends on how willingly firms and federal bodies adjust to this emerging strategy.

Source: Australian Financial Review, Business Insider, Fox Business