There is a new sheriff in town and his name is Donald Trump. He has hired a couple of deputies named Elon Musk and Vivek Ramaswamy to clean up the town with the newly minted advisory team called the Department of Government Efficiency, or DOGE because, well, acronyms are what government does. So how does this impact you in 2025 and beyond, the government contractors and technology firms that FedTrax works with?
Fear Porn You’ve Heard
Game over, man! Slash and burn. These two cowboys are going to come in and cut everything, and that means you government contractors are going to take a haircut and expect a pair of clippers set to ‘bald’ instead of scissors. DOGE is coming for you.
Take a breath. Pump the brakes. I’ve heard all the fear porn too. Take a look at history and how many times the doomsday tales have come true. You’d need a scientific calculator to total the number of times they haven’t. And the porn is on steroids when it comes to the Donald and his administration. Each time a new morsel is gaslit in the media, I range from chuckle to spit the coffee on the keyboard at how rich it is. Heck, he’s going to prosecute his political enemies don’t you know.
That said, dude won the election. It’s a second shot to make his legacy, and beside the border issue, reduction of waste in the budget via the DOGE is up there in priority for the administration. What is reasonable to expect?
Federal Agencies DOGE May Impact
The DOGE mandate is to reduce wasteful spending and overburdening regulation (which demand dollars to monitor and enforce) and implement changes to function better, a lot better.
The Labor Tree
Expect the first thing that will be attacked budget-wise is personnel. Elon reduced headcount at Twitter by more than 80% by most accounts. You can decide whether X runs at least as effectively now than before he showed up with the pink slips. We can anticipate steps for voluntary headcount reduction first, like demanding reduction in teleworking. Everyone shows up five days a week at the office. That will eliminate a percentage, maybe a large percentage, of Federal employees who became very comfortable with working from home after COVID.
The low lying labor fruit beyond attrition will likely be non-value-added positions at the largest Federal employers. If you think you may be one because you are a government worker and don’t really know what you do every day, keep your head on a swivel. The Department of Defense has nearly 800K employees among the 4 major services (make it 5 with Space Force now), DISA and the rest of the non-combat agencies in what is called the 4th Estate. DoD will be impacted, and the Army and Navy have the largest head count therein with over 450K people between them. Then there is the VA (Veteran’s Affairs) with ~ 435K, DHS (Homeland Security) ~ 212K to round out the biggies. Consistent with what you would think about the Trump administration, expect paper pushing type work to be targeted and not door kickers, doctors and nurses, or mission operators. More on why later.
Process Efficiency
DOGE has efficiency in the name, so the focus will by definition be running more efficiently, eliminating unnecessary or wasteful processes, and duplicative work. Watchdog organizations like the Government Accountability Office (GAO) make recommendations on this as part of their jobs. Expect DOGE to push to implement more of them, perhaps by penalizing failure to do so in future budgets. DoD contracts and how they are managed will get attention, as will any agencies with a historically poor track record on program management and acquisition practices.
Fraud, Waste and Abuse
Fraud will become a bigger DOGE focus as savings there are dollar for dollar. That means Federal entitlements where checks are cut will be under the microscope. but also the likely suspects like the Federal Unemployment Insurance system, Heath and Human Services (HHS) programs like Medicare, Medicaid, the Children’s Health Insurance program (CHIP), the VA, USDA’s Supplemental Nutrition Assistance program (SNAP), the IRS and without question Social Security (SSA). This doesn’t mean that DOGE will be cutting benefits willie nillie, it means fraud, waste and abuse (called program integrity at CMS) will be actively sought out. You can bet that Muskiswamy is convinced that billions are buried in this bucket.
The Federal Mission
There has always been much debate about the size of the Federal government and what it actually should be involved with at all. What is a government function? Expect DOGE to examine departments and entire agencies where their missions are not considered an essential part of what the administration believes government should be doing. Loans and other monies from agencies in question range from the Department of Education to Agriculture, Commerce, and Housing and Urban Development (HUD). When it comes to Federal contracts and grants, if you’re working on something that made Rand Paul’s annual Festivas list of spending grievances (looking at you, caterpillar sex change research guy), you’ll want to broaden the company portfolio.
These type of budget decisions are always controversial, will be defended vigorously, and will be implemented slowly if at all once they are made public and run the media cycle. The DOGE won’t be able to turn around the Federal freighter like it is a jetski.
Every challenge brings forth new opportunity. In the next post, we’ll talk about optimism for those in technology and government contracting.