DHS and DOGE's $10.5B in projected savings from canceled contracts won't fully materialize, GAO says

The Department of Homeland Security will not realize the $10.5 billion in potential savings it reported, along with the Department of Government Efficiency, after canceling hundreds of federal contracts, a government watchdog concluded in a new report.

The Government Accountability Office concluded in its Sept. 3 report that “DHS will not fully achieve the amount of reported potential cost avoidance.”

GAO said DHS’s estimate “overstates the total amount of costs avoided” and that “actual cost avoidance will be less than the amount that DHS has reported as potential cost avoidance.”

DHS needed many of the goods and services covered by the canceled contracts and consequently obtained them through other contracts instead, GAO reported.

"GAO found that 95 percent of DHS’s reported $10.5 billion in potential cost avoidance was attributable to 30 terminated indefinite delivery/indefinite-quantity contracts in place for DHS to meet information technology requirements," read the report. "These contracts had a 10-year period of performance, from fiscal years 2025 through 2034."

In the first half of 2025, President Trump issued a "series of executive orders directing federal agency heads to review and terminate contracts in a manner deemed to be in the federal government’s interest" as a way to reduce government spending, GAO pointed out.

According to the agency's report, Trump also directed every federal agency to "publicly provide details of terminated programs, contracts, and grants." 

DHS started to publicly post "data on contract terminations" on its website in late February 2025.

GAO reviewed over 17,000 agency-wide contracts and found that DHS fully or partially terminated 438 contracts from Jan. 20 to Sept. 30, 2025.

More than $1.6 billion had been obligated on those contracts before they were terminated. Since then, DHS "deobligated" a net $92 million.

Those deobligations “represent cost savings in that they reduce federal obligations and may be available for other purposes,” GAO said. 

However, the watchdog warned that DHS "should subsequently obligate additional funds to perform similar work associated with terminated contracts, the amount of cost savings or avoidance would be further diminished."

GAO said that terminating a contract does not necessarily mean eliminating the underlying government expense. 

“The government often incurs a cost when it terminates a contract for convenience,” the report reads.