Two Pentagon projects set to be axed, risking costly do-over - report

[Human Hand Touching Futuristic Virtual Screen with HR icon. Human Resources management Recruitment Employment Headhunting Concept]
Alexander Sikov

The U.S. Navy and Air Force are poised to cancel two nearly complete software projects aimed at overhauling outdated human resources systems, _Reuters _reported, citing seven sources familiar with the matter.

The reason? Sources said officials want other companies - including Salesforce (NYSE:CRM [https://seekingalpha.com/symbol/CRM]) and Palantir (NASDAQ:PLTR [https://seekingalpha.com/symbol/PLTR]) - to have a chance to win similar projects, which could lead to a costly do-over.

Accenture (NYSE:ACN [https://seekingalpha.com/symbol/ACN]) in 2019 secured a contract to modernize core HR functions for the Air Force with Oracle (NYSE:ORCL [https://seekingalpha.com/symbol/ORCL]). Over the years, the project grew to cost $368M and its first deployment was scheduled for this summer.

But Darlene Costello, then-acting assistant secretary of the Air Force, in May placed the project on a 90-day "strategic pause" and called for exploring alternate solutions.

Sources told _Reuters _that the now-retired Costello had been facing pressure from other Air Force officials who wanted to steer a new HR project to Salesforce (NYSE:CRM [https://seekingalpha.com/symbol/CRM]) and Palantir (NASDAQ:PLTR [https://seekingalpha.com/symbol/PLTR]).

Space Force was set to receive the Air Force's new payroll system in the coming months. But it is pulling out of the project as its officials want to launch another HR platform to be led by Workday (NASDAQ:WDAY [https://seekingalpha.com/symbol/WDAY]), according to sources.

The Air Force and Space Force "want to start over with vendors that do not meet their requirements, leading to significant duplication and massive costs," said John Weiler, director, Information Technology Acquisition Advisory Council.

Hawaiian firm Nakupuna Companies in 2022 took over a project with other firms to integrate the Navy's payroll and personnel systems into one platform using Oracle (NYSE:ORCL [https://seekingalpha.com/symbol/ORCL]) software. The project - dubbed "NP2" - cost ~$425M since 2023 and was set to be rolled out earlier this year.

But the head of Naval Personnel, now-retired Rick Cheeseman, sought to cancel the project in June. Another assessment of the project was mandated, leaving it in limbo.

Sources said this was due to Cheeseman's anger over a DOGE decision to cancel a $171M contract for Pantheon Data that essentially duplicated parts of the HR project.

The Pentagon is taking "swift action" to fix the "antiquated" defense contracting process, its press secretary Kingsley Wilson said [https://www.reuters.com/world/us/how-unraveling-two-pentagon-projects-may-result-costly-do-over-2025-08-13/]. "This is how we will rebuild the military with necessary speed, while ensuring taxpayer dollars are spent wisely in the process."

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