US President Donald Trump has issued an executive order to dismantle the federal Department of Education. Tech vendors are waiting to see the outcome of the constitutional battle that will decide the fate of government contract worth hundreds of million dollars. Accenture, General Dynamics T-Rex Solutions and Peraton, which acquired Perspecta, a Department of Education vendor, in 2021, are all watching how the unprecedented decision by Congress to close the Department of Education will play out.
Last Thursday, Trump issued an Executive Order instructing Secretary of Education Linda McMahon to close the Department. Trump signed the order and said: “We’re going to shut it down, and shut it down as quickly as possible.”
Tech suppliers to the $268 Billion Budget Department will have to wait until Congress acts on the order to learn the future of their important revenue streams. According to the US Constitution, only an act by Congress can shut down the department. Republican Senator Bill Cassidy, the chair of the chamber’s Health, Education, Labor and Pensions Committee, has said that he plans to submit the necessary legislation.
Trump stated that “useful functions” will continue to be performed by the department, and in some cases by other federal departments. According to reports, this could include the administration and support of federal student aid, such as loans and grant, as well as special education, student poverty and civil rights enforcement.
A Department of Education tech provider speaking to The Register under condition of anonymity stated that business was as usual in terms of its contracts and the department hadn’t notified suppliers of potential changes to their arrangements. The future of the Federal Student Aid Data Center (19459028), the centralized source of information about federal financial assistance programs remained a concern.
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Global outsourcer and consultancy Accenture The current award is $11.4 million with modifications in January 2025. The contract was signed in September 2024, and will last for three years.
According to reports, $900 million worth of contractswere canceled by the institute. Mass layoffs are also believed to have virtually eliminated the workforce. Accenture has declined to comment.
Peraton, a tech company that provides services to US government agencies, is located at
. In 2021 it purchased Perspecta, another government tech services specialist for $7.1 billion.
Peraton holds a contract from the Department of Education for IT services at the Federal Student Aid Virtual Data Center. This contract could be worth up to $576.8 millions. The contract began in September 2015. It could continue under the current terms until July 2028.
General Dynamics holds a contract worth up to $238.8 millions with the Department of Education that began in 2022. It is set to potentially end in 2032. T-Rex Solutions is set to receive a contractworth up to 54 million dollars that will end in 2029. General Dynamics declined to comment, while the other vendors have yet to respond. The Register offered the Department of Education an opportunity to comment. (r)
