DOGE Canceled More Than $85 Billion in Federal Contracts. Many Were Canceled Without Reviewing What They Did.

The Department of Government Efficiency has canceled, reduced, or restructured an estimated $85 billion or more in federal contracts across every major department. The sheer speed of the cancellations created a compounding problem: agencies now scrambling to identify what they lost.

What You Should Know

DOGE targeted contracts across every major federal department. USAID was the hardest-hit agency; its contract portfolio was effectively frozen, collapsing development contracts, humanitarian programs, and consulting arrangements. HHS cuts focused on administrative overhead and IT modernization. A GAO analysis found that layoffs in the Education Department’s civil rights division alone cost $38 million - with employees paid months after termination because dismissal procedures were improperly followed.

DOGE is an advisory body without independent contracting authority. Formal cancellations were executed by agency heads using ‘termination for convenience’ provisions - meaning terminated contractors are entitled to settlement costs, adding unexpected expenses on top of service gaps.

The System Under Pressure

More than a dozen lawsuits have been filed against the administration challenging the cancellations. By the end of 2025, more than 25,000 workers had been fired and then rehired - in about half the cases because courts ruled the terminations improper. The Congressional Budget Office and GAO both noted that most cuts were executed before Congress finalized its 2026 appropriations bills.

The administration’s $200 billion claimed savings figure from DOGE has not been independently verified. Meanwhile, the financial costs of improper firings are accumulating through settlement payments, back pay, and termination settlement obligations to contractors.

The Receipts

Fed-Spend confirmed the $85 billion estimate. Brookings confirmed the 25,747 fire-and-rehire figure. PBS/NewsHour confirmed the GAO $38 million DOE finding. CBPP documented the cuts bypassing congressional approval.

What Happens Next

The full financial audit of DOGE’s actions has not been completed. Congressional auditors are reviewing the scope of contract cancellations and personnel costs. Multiple lawsuits remain active in federal courts with outcomes that could generate additional back-pay obligations.

References: Fed-Spend | Brookings | PBS NewsHour