The Social Security Administration (SSA) is making major budget cuts, significantly reducing its spending on private contractors. The agency is prioritizing full-time government jobs over outsourced work to manage costs more efficiently. Acting Commissioner Leland Dudek shared the decision with SSA employees during a meeting on Wednesday.
Major Contractors Affected
Two of the biggest private contractors impacted by the cuts include:
| Contractor | Previous SSA Contracts (FY 2024) |
| Leidos Holdings Inc. | $316 million |
| IT Concepts | $98 million |
These reductions are part of a broader restructuring effort led by Elon Musk’s Department of Government Efficiency (DOGE), which is pushing deep staff reductions across multiple federal agencies.
Employee and Contractor Layoffs
Dudek announced that the agency would be letting go of 200 full-time Social Security employees, along with another 200 private contractors by Friday. He emphasized that SSA aims to keep layoffs balanced between direct employees and outsourced workers in the future.
Workforce Restructuring and Federal Employee Protection
SSA released a statement on Thursday, explaining that these changes are part of a government-wide effort to streamline operations. The agency will focus on keeping roles that directly serve the public, such as field office and processing center positions. However, some employees may be reassigned to new roles that are considered “mission critical.”
Impact on Private Contractors
Leidos, a major federal contractor with government contracts worth nearly $12 billion, is one of the hardest-hit companies. The reduction in contracts signals a shift in government priorities, favoring efficiency over outsourcing.
Leidos’ Chief Executive Officer, Tom Bell, responded to the changes by highlighting that the company is well-positioned to adapt. Bell stated that the new administration’s focus on reducing regulations and improving efficiency aligns with Leidos’ mission.
Confusion Over Budget Cuts
There have been conflicting reports about the exact amount of budget reductions. DOGE originally claimed that it had slashed $232 million in Leidos contracts, but the actual cut was only $560,000. Mistakes in DOGE’s financial records, including a misreported $8 billion contract that was actually $8 million, have raised questions about the true scale of the savings.
SSA Leadership Changes
The Social Security Administration has undergone significant leadership changes recently. Earlier this month, its top two career officials retired. The White House quickly promoted Dudek—who had previously worked at a lower level in the agency and had been involved in DOGE’s anti-fraud efforts—to acting commissioner.
DOGE claims to have saved the government $65 billion, but its published spending cut details do not add up to that amount. These inconsistencies have fueled skepticism about the actual financial impact of its reforms.
FAQs on Social Security Cuts Contractors
What is the reason for the SSA contractor cuts?
The cuts are part of a broader effort to reduce government spending and prioritize full-time federal jobs over outsourced contracts.
Which companies are most affected?
Leidos Holdings Inc. and IT Concepts, which previously held large contracts with the SSA, are among the most impacted firms.
Will these cuts affect Social Security benefits?
No, the SSA has stated that these reductions target outsourced services and internal restructuring, not benefit payments to the public.
How many employees are being laid off?
The SSA is laying off 200 government employees and 200 contractors as part of this effort.
What role does DOGE play in these cuts?
DOGE is leading a government-wide push to cut costs, eliminate inefficiencies, and reduce reliance on outside contractors.