Companies are worried they're about to get 'DOGE'd'

The Trump administration's establishment of the DOGE (Department of Government Efficiency) office has sparked significant concern and uncertainty among company executives across a range of industries. This new office, led by a team focused on cutting federal spending, is rapidly terminating contracts it deems wasteful, even those that have already been obligated. The impact of these cuts is being closely monitored by businesses, many of which rely on federal contracts for a substantial portion of their revenue. According to data from AlphaSense, a market intelligence platform, executives from over 130 companies across 30 industries have had to address the potential impact of the DOGE office on their business during panel interviews and earnings calls since Trump's electoral victory in November. These industries span from software to defense, and the uncertainty is particularly pronounced in sectors heavily dependent on federal contracts, such as professional services, where the government's annual spending on goods and services totals approximately $800 billion. Thomas Logan, CEO and founder of Mirion Technologies, a radiation-detection company, expressed concerns about the unpredictable dynamics in government funding. Logan noted that his company participates in several federal contracts, including those with the Department of Energy and the Department of Defense, and expects that budgetary changes will be volatile throughout the year. While some executives are uncertain about the DOGE office's impact, others are more optimistic. Workday CEO Carl Eschenbach, speaking at the Morgan Stanley Technology, Media, and Telecom conference, welcomed the DOGE office's interest in modernizing the federal government's software systems. Eschenbach stated that over time, the DOGE initiative could become a tailwind for companies like Workday, which focus on federal government technology. However, he acknowledged the current uncertainty and the unknown timing of potential benefits. Easterly Government Properties, a company that manages commercial real estate leased to federal agencies, sees an opportunity in the DOGE office's mandate. CEO Darrell Crate, during a February 25 earnings call, emphasized that Easterly is "uniquely positioned" to assist the DOGE office and the General Services Administration (GSA) in their efforts. Easterly's spokesperson highlighted that the company's portfolio is primarily in firm-term leases, which cannot be terminated without cause, and that their properties are mission-critical. Palantir, a data analytics firm, also expressed optimism about the Trump administration's efforts to digitize the federal government. During a February 3 earnings call, Palantir CTO Shyam Sankar and CEO Alex Karp described the administration's approach as a "disruption" that could ultimately benefit the company. Karp stated, "We love disruption, and whatever is good for America will be good for Americans and very good for Palantir." However, Palantir's stock price dropped by 25% three weeks later when Defense Secretary Pete Hegseth announced an 8% budget cut, amounting to $50 billion, for the Defense Department. To prepare for potential contract terminations, Joseph Jordan, former acting administrator for the Office of Federal Procurement Policy and CEO of Actuparo, a consulting firm for businesses with federal contracts, advised companies to have a "DOGE emergency prep kit" ready. Jordan recommended that businesses review their contracts for keywords that the Trump administration has criticized, such as those related to diversity, equity, and inclusion (DEI) programs. Additionally, companies should understand their contractual rights, reassess the pricing of their services, and determine if their services are critical to the respective federal agency. Jordan also suggested that companies stay informed about staffing changes at federal agencies, which could be affected by the DOGE office's cuts. The DOGE office's aggressive approach to budget cuts, coupled with the Trump administration's return-to-office mandate, is creating a challenging environment for companies with federal contracts. While some see potential benefits from the push for modernization and efficiency, others are bracing for the possibility of sudden and significant financial impacts. The uncertainty surrounding the DOGE office's actions is prompting many businesses to take proactive steps to safeguard their interests and adapt to the changing landscape of federal contracting.