US Navy and Air Force stare at $800 million loss as Trump administration scraps two HR projects to work with new tech firms: Report

The Navy and Air Force are preparing to cancel two large-scale human resources software programmes that together have cost more than $800 million and taken over a decade to develop.

Officials have frozen the projects, originally aimed at replacing outdated HR systems, to give other firms—including Salesforce and billionaire Peter Thiel’s Palantir—a shot at similar work.

The decision could amount to an expensive reset, Reueters reported.

President Donald Trump entered office pledging to root out “waste and abuse” in government spending.

His Department of Government Efficiency (DOGE) claims to have cancelled over $14 billion in Pentagon contracts.

But actions such as firing the Pentagon’s inspector general, ordering speed and risk-taking in defence procurement, and leaving key leadership posts vacant have weakened oversight, raising the risk of ballooning costs as old projects are abandoned in favour of new ones.

“There is a very real sense that we are in the regulatory Wild West with this administration – and it should come as no surprise that the traditional limits of ‘normal contracting’ are repeatedly going to be pushed and pressed in this environment,” said Franklin Turner, a federal contracting lawyer was quoted as saying by Reuters.

While legally the Pentagon can terminate contracts “for convenience,” he warned it must reimburse contractors for wind-down costs and fund any replacement efforts.

The White House maintains the moves are about efficiency.

“Defense Secretary Hegseth is doing a great job restoring a focus on warfighters at the DOD while carrying out the American people’s agenda to more effectively steward taxpayer dollars,” said Deputy Press Secretary Anna Kelly.

Pentagon Press Secretary Kingsley Wilson said the administration was taking “swift action” to fix an “antiquated” process, in line with Trump’s executive orders.

The Air Force’s Oracle-based HR platform, launched in 2019 under Accenture to modernise payroll, absence management and related functions, grew to cost $368 million and was slated for its first rollout this summer at the Air Force Academy, promising $39 million in annual savings.

But a May memo from then-Acting Assistant Secretary Darlene Costello ordered a “strategic pause” to consider other technical solutions, under pressure from officials favouring Salesforce and Palantir.

Space Force, which was set to adopt the system, is also pulling out to pursue a new platform led by Workday.

John Weiler, head of the Information Technology Acquisition Advisory Council, criticised the move, saying the services “want to start over with vendors that do not meet their requirements, leading to significant duplication and massive costs.”

Oracle said it was “working closely with DOGE to accelerate the government’s transformation to modern technology at the best price for the taxpayer.”

In the Navy, a $425 million project known as NP2—integrating payroll and personnel systems using Oracle software—was poised for launch after winning positive reviews.

But retired Admiral Rick Cheeseman, the Navy’s top HR official at the time, moved to cancel it following the termination of a $171 million Pantheon Data contract he supported.

“I am beyond exasperated with how this happened,” he wrote in an email, threatening to pull funding from NP2 unless the Pantheon deal was reinstated.

The Navy says it is still prioritising “essential personnel resources” to strengthen readiness through fiscal discipline.

Both projects, already years in the making, now face indefinite delays as the services explore alternatives—moves that could trigger large termination payments and further inflate costs to taxpayers.