Tech vendors are awaiting the outcome of a constitutional battle to decide the fate of government contracts worth hundreds of millions of dollars after US President Donald Trump issued an executive order calling for the federal Department of Education to be dismantled.
Accenture, General Dynamics, T-Rex Solutions, and Peraton – which acquired fellow Department of Education vendor Perspecta in 2021 – are all eyeing how the unprecedented decision to close the Department of Education, created by Congress in 1979, will play out.
Last week, Trump issued an executive order instructing the Secretary of Education, Linda McMahon, to close the department. As he signed the order, Trump said: "We're going to shut it down, and shut it down as quickly as possible."
However, tech suppliers to the $268 billion budget department will have to wait until Congress and the department act on the order before they learn the future of the important revenue streams.
While only an act of Congress can actually shut down the department, according to the US constitution, Republican Senator Bill Cassidy, who chairs the chamber's Health, Education, Labor and Pensions Committee, said he planned to submit the required legislation.
Trump said that "useful functions" performed by the department would continue, in some cases carried out by other federal agencies and departments. This might include the administration of federal student aid – such as loans and grants – as well as support for special education, student poverty, and civil rights enforcement, according to reports.
One Department of Education tech supplier speaking to The Register on condition of anonymity said it was business as usual as far as its contracts were concerned and the department had not notified suppliers of any potential changes to their arrangements. However, the future of the Federal Student Aid Data Center, the centralized source for information regarding federal financial assistance programs, remained a focus of concern.
Global outsourcing and consultancy firm Accenture has a contract worth up to $37.3 million with the Institute of Education Sciences, the statistics, research, and evaluation branch of the department. The current award amount is $11.4 million, with modifications made in January 2025. The contract began in September 2024 and is set to remain in place for three years.
Reports suggest $900 million in contracts have been canceled at the institute, while mass layoffs have all but erased the workforce, although there is no official notice suggesting the Accenture contract has been canceled. Accenture has so far declined to comment.
Peraton is a tech services company that works with a number of US government agencies. In 2021, it bought Perspecta, also a government tech services specialist, for $7.1 billion.
Peraton has a contract with the Department of Education to provide IT services to the Federal Student Aid's Virtual Data Center, potentially worth up to $576.8 million. It began in September 2015 and could potentially continue until July 2028 under current contract terms.
General Dynamics has a contract with the Department of Education worth up to $238.8 million that began in 2022 and is potentially set to end in 2032. T-Rex Solutions has a contract worth up to $54 million and set to end in 2029.
General Dynamics has declined to comment while the remaining vendors are yet to respond. The Register has offered the Department of Education the opportunity to comment. ®
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