The Trump Administration is now targeting “value-added resellers” in the IT industry as it broadens its cost-cutting efforts beyond leading consulting firms, according to a news report.
The Wall Street Journal reported that the General Services Administration asked the executives of 10 technology providers to explain their work and look for areas to cut. “Value-added resellers” are third-party technology firms who often piece together technology products and services for the federal government.
The U.S. spends $82 billion yearly on IT services and products. GSA said in its inquiry that complex procurement processes have led to “excessive markups and increased costs to the taxpayer.”
Discover how your GovCon IT firm could be impacted by these cost-cutting efforts at the Potomac Officers Club’s summer series of military-specific GovCon conferences! The 2025 Army Summit is scheduled for June 18, with the 2025 Air and Space Summit on July 31. The 2025 Navy Summit wraps up the summer on August 26. Sign up for all three GovCon events!
Though Wash100 Award winner Elon Musk is stepping away from day-to-day activities in Washington with the Department of Government Efficiency, the greater effort to slash budgets is expected to proceed. GSA has been negotiating with leading companies to reduce and restructure some consulting contracts.
GSA’s OneGov Strategy
This effort from GSA is part of an overall strategy to modernize how the federal government procures goods and services by approaching acquisition as a shared enterprise. Under the initial phase of the OneGov Strategy, standardized terms and pricing will be developed to streamline agency access to IT services.
President Donald Trump signed an executive order in April instructing federal agencies to prioritize acquiring commercially-available products whenever possible and avoid unnecessary spending on custom products when commercial platforms would suit government requirements. The Wall Street Journal article said that the GSA inquiry suggested the federal government wants to cut out the middle men.
How Contracting Reform Impacts GovCons
GovCon revenue and jobs grew over the last 20 years as the government became more dependent on the private sector for tasks and services previously performed by federal employees. The idea was that competition among contractors would keep costs down.
Fast forward to today, the results of that transition have become a liability for GovCons during President Trump’s second term. The administration is targeting contractors for cuts because they lack the civil service protections of federal employees. Politico reported that GSA is focusing on agreements it labels “non-essential contracts,” or “any contract that merely generates a report, research, coaching or an artifact,” according to a memo viewed by the news outlet.
These cuts are starting to ripple into the consulting world that inhabits much of northern Virginia. Consulting firms mentioned in GSA’s list of more than 20,000 contracts have reported layoffs for nearly 3,600 staffers in the District of Columbia, Maryland and Virginia since Trump took office again on January 20.
Can the Government Cancel a Contract Early?
The federal government can award companies a “kill fee” to cancel a contract early, Christine Harada, who oversaw procurement at GSA and in the White House during the Obama and Biden administrations, told Politico. Though it’s against federal business practices, she said, to cancel a contract in progress just to get a better deal.
But companies seeking remedies in court for these should beware. Darrell West, a Brookings Institution senior fellow who covers GovCon, was quoted by Politico as saying that a company won’t get another future contract if it sues this White House.
Learn more about cost-cutting efforts in the U.S. military services during the Potomac Officers Club’s summer series of GovCon events! Hear directly from U.S. Army Chief Information Officer Leonel Garciga during the 2025 Army Summit on June 18. Dig into Space Force Vice Chief of Space Operations Gen. Michael Guetlein’s keynote at the 2025 Air and Space Summit on July 31. Find out more about U.S. Navy IT investment priorities in FY 2026 from service CIO Jane Rathbun at the 2025 Navy Summit on August 26. Get admission to all three GovCon conferences!
