In a significant move to streamline federal spending, the Trump administration has expanded its contract cost-cutting initiative to encompass major technology firms. On June 1, 2025, the General Services Administration (GSA) dispatched letters to ten prominent tech companies, including Dell Technologies and CDW Corp, requesting detailed cost breakdowns and justifications for services provided. This action aims to eliminate excessive markups and promote direct purchases from manufacturers, aligning with the administration’s broader effort to reduce government expenditures.
Since January, the administration has canceled 11,297 contracts, achieving $33 billion in savings across 60 federal agencies. Earlier phases of this initiative targeted consulting firms such as Booz Allen Hamilton, Accenture, and Deloitte. Notably, Booz Allen recently announced 2,500 job cuts in response to these measures.
The GSA’s OneGov program, central to this overhaul, seeks to centralize procurement and implement outcomes-based contracting. An executive order signed by President Trump in April supports purchasing more off-the-shelf products directly from producers to minimize reliance on intermediaries.
Commissioner Josh Gruenbaum emphasized the need to reshape federal procurement to reduce outsourcing and utilize existing government personnel more effectively. He stated, “We don’t need to outsource everything; we don’t need to always go and buy bespoke, specialized products and services.”
Company responses to the GSA’s request are due by June 11. Dell and CDW have not yet commented on the matter.
Dell Technologies and CDW Corp, two of the top value-added resellers (VARs) serving federal clients, now face increased scrutiny under this initiative. While these companies provide essential IT hardware and services to agencies, the administration questions the necessity and efficiency of middlemen in government procurement.
The administration’s approach reflects a broader trend towards transparency and accountability. By requesting cost justifications, the GSA aims to identify inflated pricing models and ensure that taxpayers receive maximum value. The initiative also encourages the use of commercially available, standardized products that can be procured quickly and cost-effectively.
The OneGov strategy aims to standardize pricing and contract terms across agencies, fostering a more consistent and efficient procurement process. By engaging directly with OEMs, the government anticipates improved transparency, streamlined acquisitions, and enhanced cybersecurity protections.
The implications for the tech industry are significant. VARs like Dell and CDW may need to adjust their business models, possibly shifting focus to value-added services that justify their role beyond simple reselling. Industry analysts suggest that companies offering integrated solutions and support may be better positioned to weather this shift.
Beyond the tech sector, this initiative forms part of a broader reform agenda. The Trump administration has launched a comprehensive review of the Federal Acquisition Regulation (FAR) to simplify processes and eliminate redundant requirements. The goal is to modernize procurement rules, making them more flexible and conducive to innovation.
This wave of reforms also coincides with efforts to strengthen cybersecurity and supply chain integrity. By dealing directly with OEMs, the government hopes to better vet and secure the technology it procures. This approach aligns with national security objectives, particularly amid rising concerns about supply chain vulnerabilities.
The administration’s focus on cost efficiency and direct procurement may also spur competition among tech suppliers. Smaller firms offering competitive pricing and innovative products could gain access to federal contracts that were previously dominated by larger incumbents.
As the June 11 deadline approaches, industry watchers are closely monitoring how companies respond to the GSA’s demands. The outcome may redefine the relationship between the federal government and its technology vendors, setting new standards for accountability and performance.
Ultimately, the Trump administration’s contract overhaul underscores a fundamental shift in how the federal government approaches procurement. By prioritizing transparency, cost control, and direct sourcing, the administration aims to create a more efficient, effective, and secure procurement ecosystem.
The coming weeks will reveal whether the targeted companies adapt quickly to the new expectations or face further repercussions as the federal government continues to recalibrate its procurement strategy.
