Oracle Loses $280M Contract Amid Defense Cuts
1min read Oracle, a leading software company, has been impacted by recent cuts to government contracts, as part of a broader wave of reductions affecting several tech giants. The Department of Defense has terminated contracts, including those with oracle, as part of a $580 million reduction in funding, grants, and contracts. This move is aimed at curbing excessive spending and workforce reductions under the Trump administration.
The cuts specifically targeted the Defense Civilian Human Resources Management System (DCHRMS), a personnel management software based on Oracle technology. Additionally, diversity, equity, and inclusion programs, as well as climate change and Covid research initiatives, were also affected. Defense Secretary Pete Hegseth justified the cuts, stating that further investment in the DCHRMS project would be "throwing more good taxpayer money after bad." He noted that the project was six years behind schedule and over $280 million over budget.
Oracle, along with defense and engineering firm leidos, was identified as one of the companies impacted by these terminations. The Defense Department had awarded Oracle an HR management software contract in 2019, highlighting the company's extensive use in over 500 government organizations. The major spending cuts are part of ongoing efforts by the Trump administration and the Department of Government Efficiency, led by Elon Musk, to limit the federal workforce and eliminate perceived wastes in spending.
The government's spending on contracts in fiscal 2023 amounted to approximately $759 billion, with the Department of Defense accounting for $456 billion of that total. More than half of the Defense Department's contract allotments are for services, including professional, management, and logistics support. Musk's own companies have benefited from these contracts, receiving at least $20 billion from the federal government.
The impact of these cuts on Oracle and other tech giants underscores the broader trend of government contracting reductions. As the administration seeks to streamline spending and reduce waste, companies that rely heavily on government contracts may face significant financial repercussions. The termination of Oracle's contract serves as a cautionary tale for other tech firms, highlighting the risks associated with government dependency.
