Federal Contract Spending Cuts Bleed Accenture Stock Price

Consulting groups that do big business with federal agencies are having a DOGE moment. 

Accenture said during its earnings call last week that Department of Government Efficiency-led federal spending cuts were starting to hit sales. The company’s fiscal second-quarter report was otherwise positive, but its stock slid after the announcement, extending the decline since Inauguration Day to 15%.

Terminated for Convenience

“As you know, the new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue,” Accenture CEO Julie Sweet said during the company’s earnings call. Accenture Federal Services accounted for 8% of the company’s global revenue in fiscal 2024.

Consultants like Accenture are scrambling to justify their work as a rash of executive orders and directives jeopardize new and existing contracts with the government. The General Services Administration (GSA), which assists other government agencies with procurement, asked federal agencies to review their contracts with the 10 highest-paid consulting firms (which include Accenture) and terminate the ones that aren’t “mission critical” in a February memo, first reported by NextGov/FCW. Stephen Ehikian, acting head of the GSA, wrote that those companies are set to receive over $65 billion in fees in 2025 and beyond.

Along with Accenture, the list includes Deloitte, General Dynamics, Booz Allen Hamilton, Leidos, Guidehouse, Hill Mission Technologies Corp., Science Applications International Corp. (SAIC), CGI Federal, and IBM.

An official within the GSA who has knowledge of the matter told The Daily Upside that at least 1,700 contracts have been canceled since the start of the Trump administration, equating to roughly $4.5 billion in savings.

Regarding GSA’s directive, Accenture chief Sweet said, “while we continue to believe our work for federal clients is mission critical, we anticipate ongoing uncertainty as the government’s priorities evolve and these assessments unfold.”

According to government filings, at least 10 Accenture Federal Services contracts and subcontracts have been “terminated for convenience” under the current administration. The practice allows a party to cancel an agreement without cause.

Shifting winds in procurement aren’t necessarily a negative for some: 

• The GSA’s procurement powers were expanded recently — POTUS signed an executive order Thursday putting the agency at the center of contracting common goods and services, including information technology. 
• In an earnings call early last week, Toni Townes-Whitley, chief of SAIC, said recent executive orders have had a “nominal” financial impact and that conversations with the administration have been “productive.” She stressed the importance of “outcome-based contracting” and “cutting-edge technology” in the current procurement environment, citing SAIC’s rollout of facial and touchless fingerprint technology to thousands of ICE agents as an example.

Cutting Edge: Companies aligned with what the administration deems necessary spending appear to be faring better than ones that aren’t.