Tracking government spending: Contractual services and supplies

"We expect massive cuts of all federal contractors and others who are overbilling the federal government," said DOGE co-leader Vivek Ramaswamy on Fox Business' Sunday Morning Futures.

Contracting commercial companies for government goods and services dates back to the late 1700s. Over the years, laws have streamlined the process and helped make contracts more competitive. 

"One of the things we've been talking about for years is this notion of outcome-based contracting. Instead of trying to figure out what does everything cost and how to do it. Let's define an outcome, something that the government really needs, and let private industry compete for that," Rozanski said. 

Military contractors are only required to provide an explanation for prices if the contract is worth more than $2 million. If an item is labeled as "commercial," companies do not have to justify prices. 

In 2023, Booz Allen Hamilton agreed to pay $377.45 million to settle allegations that the company improperly billed commercial and international costs to its government contracts. 

"I think part of the challenge is the system. This system is built to manage risk and to get things done with the lowest risk possible. It is not built for speed," Rozanski said. "We need DOGE to succeed in shifting towards efficiency, towards effectiveness. It's what our clients want, it's what we want. Will there be winners and losers in that? Of course. I expect I want Booz Allen to be a winner in that. But at the end of the day, we need to compete."

The Department of Defense obligated around $550 billion to government contracts in 2024, more than half of all government spending on contractors. Some analysts estimate the department could save millions by streamlining negotiations. 

Some small businesses say that DOGE likely won't have an impact on their work. 

"From a sort of an efficiency standpoint, we all of us have to operate at the optimum level of efficiency," Arkisys co-founder Dave Barnhart said. "I'm not quite sure that'll have an effect, because we're essentially already operating as quickly as we possibly can within the U.S. government."

"This particular arena of space and most especially the domain that we are talking about, which is servicing, that is doing something to a spacecraft in space after its launch, hasn't been done before. It's a wide-open research area. All kinds of innovation can happen," Barnhart said. 

Other small business owners say they believe DOGE could help make the contracting process move faster. 

"One day you come up with the idea quickly. You got to get the funding and you got to develop it," Aspetto co-founder Abbas Haider said. "You put in your white paper, that's phase one funding. Then it's phase two funding, then it's phase three funding. By the time you're on phase two, it's months. Someone else has probably already copied your idea or already done something similar. So, why would I go to the government for those funding?" 

"In our case, we're just going to go ahead and take the risk and fund it ourselves, because it would just move things a lot faster," Haider said. 

"I do believe they're going to focus on innovation. If you're going to compete with countries like China, you have to focus on innovation," Haider said. 

NASA contributes most of its funding to contractors to develop innovative products for space travel. In 2024, the agency allocated more than 76% of its budget to contracts.