Orhan Turan
U.S. President Donald Trump’s administration is expanding its federal spending review beyond consulting firms and is now looking at contracts with tech companies, the Wall Street Journal reported on Saturday, citing a letter it saw from the General Services Administration (GSA).
Cutting federal spending was one of Trump’s main promises during his election campaign, and he made good on that word with the establishment of the Department of Government Efficiency headed by Tesla (TSLA) CEO Elon Musk. The billionaire businessman last week exited the agency.
According to WSJ, the GSA last Wednesday sent a letter to 10 technology firms, including Dell Technologies (NYSE:DELL) and CDW (NASDAQ:CDW), asking their executives to justify their contract work and look for savings. The letter is aimed at companies known as value-added resellers, who put together different technology products and services for the government.
The GSA did not immediately respond to Seeking Alpha’s request for comment. Dell (NYSE:DELL) and CDW (NASDAQ:CDW) also did not immediately respond to similar requests.
As per WSJ, the letter was sent by GSA’s Federal Acquisition Service commissioner Josh Gruenbaum.
Since January, the federal government has canceled 11,297 contracts across 60 agencies, leading to $33B in overall savings, the Journal said, citing a person with knowledge of the GSA’s efforts.
The GSA’s letter to the 10 tech companies suggests that the government wants to cut out middlemen, when possible, WSJ said. It asks the firms to provide a detailed breakdown of their costs and markups on products.