EXCLUSIVE — The Department of War Office of the Inspector General has been urged to review a now-terminated contract with Oracle that ran hundreds of millions of dollars over budget and lasted several years longer than it should have.
The Pentagon started the Defense Civilian Human Resources Management System program in 2018, during President Donald Trump’s first term. Secretary of War Pete Hegseth terminated the contract last year, saying at the time in a memo that further investment into the program “would be throwing more good taxpayer money after bad.”
The American Accountability Foundation has sent a letter this week to the inspector general seeking a financial audit and investigation into why the project failed, though it’s unclear whether the oversight body will heed the request. The office operates a tip line that allows people to report waste, fraud, abuse, and other violations of the law or policies.
The contract was initially supposed to be a one-year effort for $36 million to implement an off-the-shelf cloud-based HR system, but it ultimately came in at $280 million over budget — a more than 700% increase — and was seven years behind schedule.
“Upon reviewing the absolute catastrophe that was Oracle’s $36 million dollar contract with the Department of War, our organization felt taxpayers had not been given adequate answers regarding what happened and how the costs were able to balloon over 700%,” AAF President Tom Jones said in a statement to the Washington Examiner. “We have respectfully requested to the Department of War’s Inspector General that a forensic audit be conducted.”
Hegseth announced the termination of the program — as a part of the whole-of-government effort in 2025 to reduce government spending — in a memo dated March 20, 2025. In a prerecorded video posted on social media, Hegseth said this expenditure and others he nixed at the time “are not a good use of taxpayer dollars … ultimately, that’s who funds us.”
Oracle spokesman Michael Egbert defended the company’s accomplishments.
“Oracle has a proven track record of helping the U.S. government succeed in its most important missions. For example, our longstanding [enterprise resource planning] deployment at the United States Marine Corp helped them achieve the first clean audit for any Department of War agency. Our [human capital management] deployment at [the Army’s integrated personnel and pay system] is also providing exemplary results,” Egbert told the Washington Examiner.
“Oracle’s nearly 50-year history of successful partnerships across federal agencies, combined with our secure, high-performance cloud and [artificial intelligence] technology, is why we continue to secure competitive deals, such as recent wins at the United States Department of Air Force and the Centers for Medicare and Medicaid for Oracle Cloud Infrastructure.”
The Pentagon declined to comment, as did the Office of the Inspector General.
AAF has sent another letter to the Office of Personnel Management regarding Oracle’s track record of delivering on government information technology projects, as OPM seeks proposals for consolidating 119 separate federal HR management systems into a single government-wide platform.
OPM’s request for proposals deadline was last October, and the agency is seeking a 10-year contract that could be worth more than a billion dollars. It has not yet announced the winning bid.
AAF said in the letter that selecting Oracle to lead the project would come with “significant risks.”
OPM declined a request for comment.
In addition to the DCHRMS contract, AAF noted that Oracle was also involved in a Department of Veterans Affairs’ modernization effort, an Air Force Expeditionary Combat Support System, and the Pentagon’s Defense Integrated Military Human Resources System, all of which led to disappointing results and high costs.
“Additionally, we have reached out to OPM expressing our deep concern regarding Oracle’s history with these large contracts and the potential catastrophe that could ensue should they be tasked with executing a similiar contract across the entire federal government,” Jones added.
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Last week, OPM announced a new opportunity for agencies to partner with it to use “vetted” IT tools designed to streamline human capital management capabilities.
“For decades, a decentralized approach to HR service delivery in the federal government has led to suboptimal service, costly and duplicative systems, and inconsistent application of policies,” OPM Director Scott Kupor wrote in the March 17 memo on the subject.
