DOGE Federal IT Vendor Impact Series: Accenture Federal Services

The Trump administration and its Department of Government Efficiency (DOGE) have generated massive upheaval across the board in federal operations, including in the federal IT segment. As of March 2025, thousands of contracts described by DOGE as “non-mission critical” have been canceled, including some across the federal IT and professional services landscape. TBR’s DOGE Federal IT Vendor Impact Series explores vendor-specific DOGE-related developments and impacts on earnings performance. Click here to receive upcoming series blogs in your inbox as soon as they’ve published.

AFS navigates DOGE disruptions: Strong 1Q25 growth amid federal IT spending cuts

Accenture Federal Services’ parent company, Accenture, released its 1Q25 (FY2Q25) earnings March 20, which included some details, albeit limited, about the impact DOGE’s cuts have had on the company’s $5-plus billion federal subsidiary. Although TBR estimates AFS’ quarterly sales in 1Q25 were $1.44 billion, up 18.3% year-to-year on a statutory basis and 7.6% on an organic basis (excluding the impact of the 2Q24 Cognosante acquisition), Accenture CEO Julie Sweet was careful to note during the company’s 1Q25 earnings call that AFS experienced delayed procurement cycles, particularly on net-new programs, during the quarter. That said, AFS’ estimated 1Q25 sales remained in line with TBR expectations.
 
TBR had projected AFS’ 1Q25 quarterly revenue would fall between $1.40 billion and $1.55 billion, implying statutory year-to-year growth of between 14.7% and 27.0% and organic year-to-year growth of between 4.0% and 16.3%. By TBR estimates, AFS achieved double-digit top-line organic growth in four of the six quarters between 4Q23 and 1Q25, and organic growth of at least 9% in the other two quarters. We anticipated the slowdown in AFS’ organic growth in 1Q25 but did not factor any DOGE-related impacts into our calculations.
 
All indications from the cohort of federal systems integrators (FSIs) tracked by TBR, as well as anecdotes from our secondary research, suggested that federal IT spending would begin to naturally cool down in federal fiscal year 2025 (FFY25) after a four-year bull market featuring unprecedented expansion of federal IT budgets and growth on behalf of the FSIs. After all, what goes up must eventually come down, but we could not have fully predicted or quantified the early impact of DOGE on AFS or the broader federal market.

TBR believes DOGE canceled nearly $93 million in potential AFS revenue across 10 DOE task orders

Sweet did not mention any specific programs culled from AFS’ book of business by DOGE’s cost-cutting actions. However, TBR is aware that in 1Q25, DOGE canceled 10 task orders on the U.S. Department of Energy’s (DOE) Chief Information Officer Business Operations Support Services 2.0 (CBOSS 2.0) blanket purchase agreement (BPA) for IT modernization and business process services. AFS was the incumbent on the first iteration of the program, CBOSS 1.0, winning the contract with the DOE in 2018.
 
AFS also secured the $3.5 billion, seven-plus-year recompete on CBOSS 2.0 in January 2025 to continue providing IT support solutions and technology and advisory services around security strategy, operations and environmental management. After AFS won this recompete, Booz Allen Hamilton (BAH) and Leidos protested, prompting the DOE to reconsider the award and review AFS’ winning bid and subsequently leaving a major deal win on AFS’ books in protest limbo. However, we do not believe the challenge by BAH and Leidos was related in any way to the 10 canceled task orders or to DOGE.
 
The full impact of the 10 canceled task orders on AFS remains unclear, but TBR’s secondary research indicates the terminated work has a total contract value (TCV) of nearly $93 million, including a $35 million order from DOE’s CIO office and a $2 million order for geospatial services. If we assume all $93 million worth of orders was booked by AFS as the prime awardee, that sum would represent just under 2% of AFS’ estimated FY24 revenue of $5.4 billion.
 
According to TBR’s 1H25 Accenture Federal Services Vendor Profile, “We estimate Cognosante will add up to $400 million in annualized, acquired revenue to AFS’ top line after the acquisition is fully integrated in 1Q25.” Cognosante vastly enhanced AFS’ cloud migration, program management and platforms for federal IT health agencies. Acquiring Cognosante also expanded AFS’ footprint within the Centers for Medicare and Medicaid Services (CMS) and the Department of Veterans Affairs (VA). With Cognosante fully integrated as of 2Q25, and with no additional acquisitions assumed or expected in the company’s FY25 (though we believe M&A is under consideration by AFS and the other leading FSIs to offset near-term DOGE-related growth headwinds), TBR had projected AFS’ FY25 revenue would be between $5.76 billion and $5.87 billion, up between 6% and 8% on both a statutory and organic basis, at least prior to any DOGE-related impact.
 
If all $93 million in TCV for the 10 canceled CBOSS 2.0 task orders were erased from AFS’ order book, it would reduce AFS’ projected growth to between 4% and 5.5% in FY25 (assuming no other exogenous DOGE-related impacts or unexpected internal impediments to FY25 top-line growth). For context, we estimate that AFS realized double-digit year-to-year organic growth in nine of the 17 quarters between 1Q21 and 1Q25, with estimated organic growth of at least 5% in the other eight quarters.

AFS faces $75 million in additional cuts outside CBOSS 2.0

The General Service Administration (GSA) will continue to review the contracts held by AFS and nine other companies* the Trump administration instructed DOGE to initially target in an effort to cut $65 billion in consulting fees the federal government is set to pay in FFY25 and future years. According to the “DOGE-Terminated Contracts Tracker” on the GX2 website, which tracks developments in federal contracting, AFS has had a total of $75 million in contracts terminated by DOGE as of the publishing of this blog (the CBOSS 2.0 program was not among the listed cancellations).
 
Cancelled awards were with the Department of Agriculture, Department of the Interior, Social Security Administration (SSA), Department of the Treasury, Department of Homeland Security (DHS), Department of Education, and Department of Health & Human Services (HHS, which houses CMS).
 
Of the more than $16.2 billion in TCV (8,373 contracts) listed as canceled on GX2’s DOGE-Terminated Contracts Tracker, over $2.8 billion (624 individual contracts) was awarded by HHS and $1.75 billion (420 individual contracts) was awarded by the VA. If DOGE’s contract terminations continue to fall disproportionately on federal healthcare agencies, AFS may not realize the full expected value of the Cognosante acquisition and top-line growth at one of the perennial growth leaders in TBR’s Federal IT Services Benchmark since the COVID-19 pandemic will be stunted in FY25.
 
Sweet reemphasized in the company’s 1Q25 earnings call that Accenture believes its “work for federal clients is mission-critical,” but TBR is unsure if this will be sufficient to protect AFS’ revenue base from a major disruption in FY25 and FY26. Conversely, Sweet also mentioned, “We see major opportunities over time for us to help consolidate, modernize and reinvent the federal government to drive a whole new level of efficiency.”

AFS pivots to emphasize mission-critical offerings and efficiencies

We believe AFS will pursue new, longer-term opportunities in this shifting federal IT environment by emphasizing its ability to scale cloud, data and generative AI (GenAI)-based solutions agencywide to generate efficiencies, as demanded by DOGE and the Trump administration. AFS will focus on maximizing speed to solution and clearly demonstrating program ROI to prove its offerings are, in fact, mission-critical.
 
We also expect AFS to double down on advisory services related to resource management, cultural and operational change management, and risk management — critical precursors to federal digital transformations. AFS’ previous investments in AI-enhanced service delivery will be a significant advantage compared to its peers with less mature internal AI capabilities, enabling AFS to showcase how its internal application of AI technologies has optimized operations. AFS’ AI-enhanced service delivery will also enable the company to generate more cost-competitive bids and meet increasingly aggressive IT project timelines for federal digital IT modernization programs.

*BAH, CGI Federal, Deloitte Consulting, General Dynamics IT (GDIT), Guidehouse, HII Mission Technologies, IBM, Leidos and SAIC

 

TBR’s DOGE Federal IT Impact Series will include analysis of Accenture Federal Services, General Dynamics Technologies, CACI, IBM, CGI, Leidos, IFC International, Maximus, Booz Allen Hamilton and SAIC. Click here to download a preview of our federal IT research and receive upcoming series blogs in your inbox as soon as they’ve published.