The Navy has been in a yearslong struggle to modernize its critically important human resources computer systems that underpin a whole host of vital tasks like pay and promotions.

But a contract for what might have been one of the most promising efforts to upgrade the systems just fell victim to billionaire Elon Musk’s cost-cutting Department of Government Efficiency, or DOGE, according to sources interviewed by Military.com. As a result, a critical and aging server in Tennessee that holds most of the service’s pay and promotion data is operating with no backup in the event of a natural disaster.

The contract was a relatively small $170 million award to a company called Pantheon to move all the data on that server into the cloud and out of danger. It was canceled in early May.

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The HR systems go unnoticed when they work as intended but, when they break, the consequences are drastic. In 2022, Military.com reported extensively about the effects on sailors when the Navy fell behind on issuing them a key discharge document, sometimes making them wait for months into their civilian lives.

“Everything in terms of what sailors access, in terms of [the Navy’s online HR portal] would be impacted because they run on those mainframes,” a senior Navy personnel official told Military.com in an interview last week, speaking about the server in Tennessee. “Reconstituting it would probably take anywhere between nine and 16 months, during which time we could not promote sailors effectively.”

Another person familiar with the details of the contract added that the Navy “almost lost it [the servers] due to flooding a little less than two months ago.”

Both were granted anonymity to talk freely about the situation without fear of retaliation.

Meanwhile, Navy Secretary John Phelan went on TV Thursday and bragged that “DOGE has been very good to work with” and that the service got rid of “300 different IT systems, none of which were talking with each other.”

“We’ve cleared that out and have started basically brand-new,” he said.

Fixing a Failing System

To begin to understand how the Navy got to this point, one must go back to 2019 when the service first embarked on its journey to consolidate and modernize more than 55 disparate systems — some of which were going on being nearly half a century old at that point.

The effort became known as Navy Pay and Personnel System, or NP2.

It was clear by 2022 that the effort was not going well. Sailors were posting online about struggles to get pay issues fixed, and some came forward saying that they had had to wait more than a hundred days for their discharge paperwork.

Those delays meant that discharged sailors were left overpaying thousands of dollars for unnecessary rent, paying tens of thousands of dollars to self-fund moves that should have been paid for, experiencing delays in getting jobs, and were forced to contemplate the possibility of losing medical care.

The NP2 system eventually cost the Navy more than $1 billion while the service’s personnel office told lawmakers the program “has not progressed as desired,” according to documents submitted to the House Defense Appropriations Committee in early May.

Also, the Navy still had 55 “legacy” systems costing it $122 million a year and, according to its responses to Congress, the project is now seven years behind schedule.

“All the indications were the program was going to fail the sailor,” the Navy official told Military.com. The decision was made to bring in another smaller team to at least address an urgent problem: aging servers with no backup.

“HR operations could essentially be paralyzed for a year if we didn’t do something,” the official said, explaining that there were no contingency plans to keep the servers running in the event of an emergency.

That’s where the now-canceled contract came in. The Navy’s personnel office hired a company called Pantheon in June 2024 and gave it $170 million to basically move that server data into cloud storage and out of danger.

But part of that effort included modernizing data going back as far as World War II, which was sometimes as basic as just pictures of paper files.

As a bonus, the Navy would gain better access to personnel data that could help leaders understand what was going on with sailors — something that has been a hallmark for the service’s current personnel boss.

“We can’t connect the data right now from where the sailor is in the training pipeline and where they’re going next and what shipping is going to do to that supply chain,” the Navy official explained. “So, we wind up firing instructors, only to find out we got a big cohort of people who need them coming in four weeks later.”

Unlike the NP2 effort, the Navy official even said that Pantheon was “making a lot of headway” on untangling the mess that was one of the last two physical data centers in the Navy.

But then came DOGE.

‘You Just Shot the Wrong Target’

Shortly after President Donald Trump was elected, his political ally and billionaire businessman Elon Musk was tapped to lead a government cost-cutting and efficiency effort that has become known as DOGE. Musk, the world’s richest man, and his team slashed federal agencies and workers without the consent of Congress — often haphazardly — triggering numerous lawsuits and public outcry throughout the first months of the Trump administration.

Top Pentagon officials in the Trump administration have touted DOGE cuts in recent weeks but typically without offering much in the way of details.

In early March, the Pentagon’s top spokesman, Sean Parnell, posted a video message on social media claiming DOGE had made “initial findings” that “will probably save $80 million in wasteful spending” but provided examples that totaled only $13 million.

Phelan also joined in with similar videos that touted cuts to “IT contracts that are ineffective and over-budget” while offering no further details.

More broadly, DOGE has also developed a track record of inaccurate or inflated claims about the savings it is generating by slashing government spending.

Still, some officials, including the two who spoke with Military.com, were broadly supportive of the contract cutting efforts by DOGE.

“The department desperately needs to get more efficient,” the Navy official said, adding that they thought “the DOGE effort is a reasonable effort — it’s a good effort.”

According to the official, the cancellation of the Pantheon contract aimed at moving HR data to the cloud was the broader Navy bureaucracy simply protecting the large, existing NP2 contract and using DOGE as their hitman.

From their perspective inside the Navy’s personnel infrastructure, DOGE got played by the IT and contracting bureaucracy within the service, and “they were handed a statement of work on a contract that they didn’t even read.”

The other person familiar with the Pantheon contract told Military.com that it was flagged to DOGE, and a DOGE representative told them “they never even looked at it — he had never seen it or read it” before it was cancelled.

“He asked me for a copy,” they added.

Military.com reached out to the Navy with a list of questions that included what role top service officials — namely the chief information officer and a top program executive — played in flagging the contract to DOGE, the relationships those officials had with the contractors behind NP2, and whether they felt the NP2 contract was a good value.

A Navy spokesman offered a brief statement to Military.com that didn’t dispute that DOGE canceled the Pantheon contract aimed at fixing the shortcomings of the larger, unproductive NP2 contract but said that Musk’s team recommended it, not the Navy.

“The decision is part of a broader effort to realign resources and optimize IT capabilities that enhance readiness, accelerate decision-making, and strengthen the lethality of our naval forces,” the statement added.

Both the person familiar with the contract and the Navy personnel official were shocked when they found out the news.

“We said, ‘Hey, no, you’re right, there are things in this program that need to be cut — you just shot the wrong target,'” the official said.

Other disputes over the value of contracts terminated by DOGE have also occurred.

Last week, Military.com also reported that DOGE canceled a contract for a program that helped troops better utilize their tuition assistance.

Under that contract, “20% of first-time TA users shifted from low market-value programs to STEM fields like cybersecurity and engineering, critical for the defense industrial base,” according to a statement from the company that was performing the service. The term STEM refers to science, technology, engineering and mathematics.

Now, with the Navy’s HR data backup efforts stalled, there are serious concerns about what happens if a storm knocks out the server — as well as the fate of long-term efforts to bring service data and HR systems into the modern age.

Losing the server for months would mean hits to morale when promotion boards aren’t able to meet and to retention when those sailors decide to leave the force, the Navy told Congress in the document reviewed by Military.com.

“Additionally, this could further threaten our ability to continue to meet our recruiting goals,” according to the Navy.

The service spokesman stressed that “the Navy is focused on the well-being of the men and women who serve as we look to optimize resources essential to Navy personnel systems, pay management, and operational readiness.”

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