DOGE's claimed contract savings of $24.8 billion are ‘overstated,' Bank of America says
DOGE's savings from canceled or renegotiated contracts appear to be "overstated," according to a note from Bank of America Securities.
The cost-cutting team claims to have saved around $24.8 billion in contract cancellations and renegotiations as of March 30, up from $21.6 billion last week.
The BoA analysts noted that much of the jump appeared to come from a $2.9 billion contract cancellation for an unaccompanied childcare facility near the southern border. Savings connected to the Department of the Interior, which manages federal lands, are now $3.0 billion, up from $144 million last week.
DOGE also claimed credit for $4.1 million in savings from General Dynamics' IT support contract for the Office of Medicare Hearings and Appeals' electronic appeal portal. Overall, the team's cuts have affected around $93 million in annual General Dynamics IT (GDIT) contracts, but analysts say this is still a relatively small change and only represents 0.7% of GDIT's total revenue.
They also noted that, despite the cuts, GDIT has won $33.1 million in new contracts since Jan. 20.
DOGE also appears to have exaggerated its savings elsewhere. The team says it saved $9.1 million by cutting a CAE contract for flight simulator maintenance; however, the company had received less than $40,000 in payments from this contract in the last three years, so the real impact is small.
Experts told Fortune that, in cases like these, DOGE appeared to misunderstand how government contracts work, leading to inflated values. Government contracts sometimes have "ceiling values" that are far beyond what would actually have been spent.
Bank of America analysts also noted that the Department of Defense, which receives a significant portion of federal spending, remained largely unaffected. DOGE's reported savings from DoD contracts remain at $14.1 million, unchanged since March 24. USAID accounts for half of DOGE's claimed savings, but many of the contract details have been deleted from the team's "Wall of Receipts," making it harder to independently verify the savings.
Representatives for DOGE did not immediately respond to a request for comment from Fortune, made outside normal working hours.
Elon Musk's cost-cutting initiative, DOGE, wants to cut $1 trillion in federal spending by the end of the year, but many of the team's savings claims have been found to be drastically overstated.
The team's accounting has failed to hold up under constant scrutiny from media outlets and experts, while the public Wall of Receipts has been riddled with errors.
The team has deleted several contracts from its Wall of Receipts after media reports undermined their legitimacy. In one case, DOGE had to revise its largest contract down from $8 billion to $8 million after the contract's vendor explained that the $8 billion figure listed on its procurement record was likely a clerical error. In another instance, the team removed its largest claimed saving—a $1.9 billion contract with software company Centennial Technologies—after a report from the New York Times revealed that the contract was canceled under the Biden administration, not by DOGE. The team later re-added the contract to its savings list.
A previous analysis by Fortune also found that total savings on DOGE's Wall of Receipts were inflated or significantly rounded up. For example, last month, the team claimed to have saved approximately $20 billion from 5,356 contract terminations, but the total savings listed on those contracts only added up to $17.97 billion—more than $2 billion short.
This story was originally featured on Fortune.com
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