Why It Matters

The Department of Homeland Security (DHS) claimed that terminating contracts would save over $10.5 billion in costs, but a U.S. Government Accountability Office (GAO) report published on September 3 found that DHS is unlikely to realize most of those projected savings because the agency can obtain many of the same services through existing contracts.

The gap between DHS's public projections and what the agency is actually realizing from its termination efforts reveals a fundamental problem with how the Trump administration is measuring success in its cost-cutting initiative. If DHS continues to need the goods and services covered by those terminated contracts and meets those needs through other contracts, then those costs are not avoided but incurred through alternative vehicles instead.

The Big Picture

In early 2025, the Trump administration directed federal agencies to review and potentially terminate contracts to reduce federal spending. DHS conducted a department-wide review of over 17,000 contracts to assess their importance to the agency's mission, in consultation with the United States Department of Government Efficiency (DOGE), which the Trump administration established to assist agencies in carrying out administration priorities.

According to GAO's independent analysis of federal procurement data, from January 20, 2025, through September 30, 2025, DHS terminated 438 contracts and deobligated a net total of over $92 million on those contracts. DHS had obligated over $1.6 billion on these 438 contracts before their termination. Of the 438 terminated contracts, 261 had deobligations since termination totaling $249,158,880, while 32 had additional obligations of $156,791,323, and 145 saw no additional deobligations or obligations.

However, DHS's own public accounting differs from GAO's independent analysis. DHS reported that from late January 2025 through September 30, 2025, it terminated 521 contracts with an obligated value at termination of over $1.2 billion and nearly $181 million in deobligations since termination. The discrepancy between DHS's count of 521 and GAO's count of 438 reflects differences in how the two entities categorized and counted contract terminations.

The $10.5 billion figure that DHS claimed as potential cost avoidance overstates actual costs avoided for two distinct reasons. First, it represents the maximum that could be obligated on these contracts, not how much would have actually been obligated. Second, if DHS continues to need the goods and services covered by those terminated contracts and meets those needs through other contracts, then those costs would not be avoided but incurred through those contracts instead.

Ninety-five percent of DHS's reported $10.5 billion in potential cost avoidance was attributable to 30 terminated indefinite delivery and indefinite-quantity contracts for information technology requirements. These 30 IT contracts had 10 years of performance spanning fiscal years 2025 through 2034. However, DHS obligated over $1.7 billion in fiscal year 2025 through existing government-wide contracts to meet the same IT requirements covered by the 30 terminated IDIQ contracts, meaning those costs were not avoided but were incurred through alternative vehicles.

In March 2025, DHS began requiring approval by the Deputy Secretary for all contract terminations regardless of value and for awards of any contracts worth $25 million or more. The requirement for Deputy Secretary approval of contract terminations was rescinded in April 2026.

The Bottom Line

The GAO's findings suggest that the Trump administration's contract termination strategy, while substantial in scope, has not delivered the savings it publicly claimed. With actual net deobligations of $92 million against a claimed $10.5 billion in potential cost avoidance, and with DHS already obligating $1.7 billion through alternative contracts to meet the same IT requirements, the administration faces a credibility gap on its cost-cutting agenda. As DHS continues to meet its operational needs through other contracts through fiscal year 2034, the actual cost avoidance will shrink further, making the initial projections increasingly difficult to defend.

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