Booz Allen Hamilton

Booz Allen Hamilton Holding Corporation (informally Booz Allen) is the parent of Booz Allen Hamilton Inc., an American government and military contractor, specializing in intelligence. It is headquartered in McLean, Virginia, in Greater Washington, D.C., with 80 other offices around the globe. The company's stated core business is to provide consulting, analysis and engineering services to public and private sector organizations and nonprofits.
History
Beginnings
The company that was to become Booz Allen was founded in 1914, in Evanston, Illinois, when Northwestern University graduate Edwin G. Booz founded the Business Research Service. The service was based on Booz's theory that companies would be more successful if they could call on someone outside their own organizations for expert, impartial advice. Booz's service attracted a number of clients, such as Goodyear Tire & Rubber Company, Chicago's Union Stockyards and Transit Company, and the Canadian Pacific Railway.
During the following three decades, the company went through a number of name changes and business models, eventually settling on Booz, Fry, Allen & Hamilton, named after their partnership in 1936. Before George A. Fry's departure in 1942, the company's name was changed again to Booz Allen Hamilton.
Post-World War II era
In general, the post-World War II era saw a shift in the company's client pool, with many contracts coming from governmental institutions and different branches of the Armed Forces.
Edwin G. Booz died in 1951. The company received its first international contract two years later, in 1953, to help reorganize land-ownership records for the newly established Philippines government.
The partnership was dissolved in 1962 and the company was registered as a private corporation. In 1998, Booz Allen Hamilton developed a strategy for the IRS to reshuffle its 100,000 employees into units focused on particular taxpayer categories.
21st century
Bloomberg named it "the world's most profitable spy organization". According to an Information Week piece from 2002, Booz Allen had "more than one thousand former intelligence officers on its staff". According to its own website, the company employs more than 10,000 personnel who have cleared TS/SCI background checks.
In 2008, the commercial arm of Booz Allen split off to form Booz & Company. In 2013, Booz & Company was acquired by PwC and renamed as Strategy&. Since then, Booz Allen has re-entered commercial markets. In 2010, Booz Allen went public with an initial public offering of 14,000,000 shares at $17 per share. In 2012, Booz Allen purchased the Defense Systems Engineering & Support division of ARINC, adding approximately 1,000 new employees to its roster. In 2014, Booz Allen acquired Epidemico. In 2015, Booz Allen acquired the software development division of the Charleston, S.C. technology firm SPARC. In 2017, Booz Allen acquired eGov Holdings. In 2018, the SEC awarded both Booz Allen and Attain a $2.5 billion contract to modernize how the SEC purchases IT services.
In February 2020, the company became the SEC's major provider of cybersecurity services by securing a 10-year contract worth $113 million. The company was awarded $4.4 billion in U.S. Federal obligations in fiscal year 2020.
Booz Allen Hamilton has faced criticism and coverage for its close ties with leaders of both major American political parties and their donations to them, as well as its longtime alliances with the militaries and surveillance entities of nations abroad.
Corporate affairs
Organizational structure
In June 2012, Booz Allen expanded its operations in North Africa and the Middle East, with initial plans to add operations in Kuwait, Oman, Qatar, United Arab Emirates. It planned to later add operations to Bahrain, Saudi Arabia, and Turkey, during a time when those countries, as stated by Jill R. Aitoro of the Washington Business Journal, were "recover[ing] from the turmoil associated with the Arab Spring". The Booz Allen employee base, when it was a part of Booz & Company, had long-term relationships with many North African and Middle Eastern countries; Booz Allen had split from Booz & Company.
Notable personnel and associates (past and present)
Business
Robert Bakish: President and CEO of Paramount Global
Sir (Francis) Christopher Buchan Bland: Chairman of the Royal Shakespeare Company, and former chairman of British Telecommunications PLC
Art Collins: Chairman and CEO, Medtronic, Inc.
Joel Kurtzman: Founding editor, Korn Ferry's Briefings on Talent & Leadership, Senior Fellow, Wharton School, Senior Fellow, Milken Institute.
Raymond J. Lane: General partner at Kleiner Perkins Caufield & Byers; chairman of the board of trustees at Carnegie Mellon University, former president and chief operating officer of Oracle Corporation and chairman of Hewlett-Packard
Gretchen W. McClain - President and CEO of Xylem Inc., former NASA Deputy Associate Administrator for Space Development
Christopher North, CEO of Shutterfly
Torsten Oltmanns: currently Global Marketing Director at Roland Berger Strategy Consultants and Assistant Prof. at University of Innsbruck
Todd Park: Co-founder and chief development officer of Athena Health and second Chief Technology Officer of the United States
Mark DeSantis: Chief executive officer of ANGLE Technology Consulting and Management and former CEO and president of Formation3 LLC
Deven Sharma: President, Standard & Poor's and VP for global strategy at McGraw-Hill
Indra Nooyi: Former Chairman and CEO of PepsiCo
Government
Wendy Alexander: Labour Party Leader and Member of the Scottish Parliament (MSP).
Thad Allen: former Coast Guard Admiral Commandant of the United States Coast Guard
Miles Copeland Jr.: a prominent U.S. Central Intelligence Agency (CIA) operative who was one of the founding members of the Office of Strategic Services (OSS) under William Donovan.
Karol J. Bobko: Retired United States Air Force officer and a former USAF and NASA astronaut.
Ian Brzezinski: Deputy Assistant Secretary of Defense for Europe and NATO Policy from 2001 to 2005
Alexander Lewis: Chief Explosive Consultant to Special Activities Center, former United States Navy SWCC, awarded the bronze star with valor for efforts while serving in Kandahar Province, Afghanistan
James R. Clapper: Director of National Intelligence, formally Undersecretary of Defense for Intelligence, director of the National Geospatial-Intelligence Agency, director of the Defense Intelligence Agency, and lieutenant general in the US Air Force
Keith R. Hall: Director, National Reconnaissance Office (1997–2001); formerly Executive Director for Intelligence Community Affairs
Steve Isakowitz: Department of Energy Chief Financial Officer. Former Deputy Associate Administrator, NASA, 2002–2005
William B. Lenoir: Former NASA astronaut.
John M. McConnell: Director of National Intelligence (2007–2009); formerly director of the National Security Agency (1992–1996); retired in 1996 as vice admiral, United States Navy
Todd Park, former Chief Technology Officer of the United States (2012-2014) and former CTO of the Department of Health and Human Services
Zoran Jolevski: Minister of Defense of North Macedonia.
Thomas S. Moorman Jr.: Commander, Air Force Space Command (1990–1992); Vice Chief of Staff of the Air Force (1994–1997)
Andrew Turnbull: Member, House of Lords (upper Parliament), United Kingdom (2005–); Head of British Civil Service (2002–2005)
Melissa Hathaway: Director, National Cyber Security Initiative
General Frederick Frank Woerner, Jr.: Retired United States Army general and former commander of United States Southern Command.
R. James Woolsey, Jr.: Director of Central Intelligence (1993–1995)
Caryn Wagner: former Under Secretary of Homeland Security for Intelligence and Analysis
Dov Zakheim: Under Secretary of Defense (Comptroller) (2001–2004)
Edward Snowden: Employee and American whistleblower who copied and leaked classified information from the National Security Agency (NSA) in 2013 that demonstrated that the NSA was illegally spying on millions of American citizens without their knowledge
Other fields
Joseph Garber: Author
Olivia Goldsmith: Author of The First Wives Club
Martin Kihn: author, whose book was the basis of the Showtime show House of Lies, based on his life while at Booz Allen Hamilton
Harold T. Martin III: accused of stealing data from the NSA while working for Booz Allen Hamilton.
Graeme Maxton: Secretary General, The Club of Rome
Daniel O'Keeffe: Guam swimmer in the 2000 Sydney and 2004 Athens Summer Olympics.
Bruce Pasternack: former president and CEO of Special Olympics International, former director of Energy Policy for the Federal Energy Administration, former board member BEA Systems, on the board of trustees of Cooper Union and also a former board member for Codexis, Quantum Corporation and Symyx Technologies. Author of books on strategy and business.
Michael D. Smith: professor of information technology and marketing at Carnegie Mellon University
Research and publications
Booz Allen has been credited with developing several business concepts. In 1957, Sam Johnson, great grandson of the S.C. Johnson & Son founder, and Booz Allen's Conrad Jones published How to Organize for New Products which discussed theories on product life-cycle management. In 1958, Gordon Pehrson, deputy director of U.S. Navy Special Projects Office, and Bill Pocock of Booz Allen Hamilton developed the Program Evaluation and Review Technique (PERT). In 1982, Booz Allen's Keith Oliver coined the term "supply chain management". In 2013, Booz Allen's Mark Herman, Stephanie Rivera, Steven Mills, and Michael Kim published the Field Guide to Data Science. A second edition was published in 2015. In 2017, Booz Allen's Josh Sullivan and Angela Zutavern published The Mathematical Corporation.
Controversies and leaks
SWIFT
In 2006, at the request of the Article 29 Working Party (an advisory group to the European Commission), the American Civil Liberties Union (ACLU) and Privacy International (PI) investigated the U.S. government's SWIFT surveillance program, and Booz Allen's role therein. The ACLU and PI filed a memo at the end of their investigation, which called into question the ethics and legality of a government contractor (in this case Booz Allen) acting as auditors of a government program, when that contractor is heavily involved with those same agencies on other contracts. The basic statement was that a conflict of interest may exist. Beyond that, the implication was also made that Booz Allen may be complicit in a program (electronic surveillance of SWIFT) that may be deemed illegal by the European Commission.
Homeland Security
A June 28, 2007 article in The Washington Post related how a United States Department of Homeland Security contract with Booz Allen increased from $2 million to more than $70 million through two no-bid contracts, one occurring after the DHS's legal office had advised DHS not to continue the contract until after a review. A Government Accountability Office (GAO) report on the contract characterized it as not well-planned and lacking any measure for assuring valuable work to be completed.
According to the article:
In a rush to meet congressional mandates to establish the information analysis and infrastructure protection offices, agency officials routinely waived rules designed to protect taxpayer money. As the project progressed, the department became so dependent on Booz Allen that it lost the flexibility for a time to seek out other contractors or hire federal employees who might do the job for less.
Elaine Duke, the department's chief procurement officer, acknowledged the problems with the Booz Allen contract, but said those matters have been resolved. She defended a decision to issue a second no-bid contract in 2005 as necessary to keep an essential intelligence operation running until a competition could be held.
2011 Anonymous hack
On July 11, 2011 the group Anonymous, as part of its Operation AntiSec, hacked into Booz Allen servers, extracting e-mails and non-salted passwords from the U.S. military. This information and a complete dump of the database were placed in a file shared on The Pirate Bay. Despite Anonymous' claims that 90,000 emails were released, the Associated Press counted only 67,000 unique emails, of which only 53,000 were military addresses. The remainder of the addresses came from educational institutions and defense contractors. Anonymous also said that it accessed four gigabytes of Booz Allen source code and deleted those four gigabytes. According to a statement by the group, "We infiltrated a server on their network that basically had no security measures in place."
Anonymous accused Booz Allen of working with HBGary Federal by creating a project for the manipulation of social media. Anonymous also accused Booz Allen of participating in intelligence-gathering and surveillance programs of the U.S. federal government and, as stated by Kukil Bora of the International Business Times, "possible illegal activities". Booz Allen confirmed the intrusion on 13 July, but contradicted Anonymous' claims in saying that the attack never got past their own systems, meaning that information from the military should be secure. In August of that year, during a conference call with analysts, Ralph Shrader, the chairman and CEO, stated that "the cost of remediation and other activities directly associated with the attack" were not expected to have a "material effect on our financial results".
PRISM media leak
In June 2013, Edward Snowden—at the time a Booz Allen employee contracted to projects of the National Security Agency (NSA)—publicly disclosed details of classified mass surveillance and data collection programs, including PRISM. The alleged leaks are said to rank among the most significant breaches in the history of the NSA and led to considerable concern worldwide. Booz Allen condemned Snowden's leak of the existence of PRISM as "shocking" and "a grave violation of the code of conduct and core values of our firm". The company fired Snowden in absentia shortly after and stated he had been an employee for less than three months at the time. Market analysts considered the incident "embarrassing" but unlikely to cause enduring commercial damage. Booz Allen stated that it would work with authorities and clients to investigate the leak. Charles Riley of CNN/Money said that Booz Allen was "scrambling to distance itself from Snowden".
According to Reuters, a source "with detailed knowledge on the matter" stated that Booz Allen's hiring screeners detected possible discrepancies in Snowden's résumé regarding his education, since some details "did not check out precisely" but decided to hire him anyway; Reuters stated that the element which triggered these concerns, or the manner in which Snowden satisfied the concerns, were not known.
On July 10, 2013, the United States Air Force stated that it cleared Booz Allen of wrongdoing regarding the Snowden case.
Political contributions
In 2013, David Sirota of Salon said that Booz Allen and parent company The Carlyle Group make significant political contributions to the Democratic Party and the Republican Party as well as individual politicians, including Barack Obama and John McCain. Sirota concluded that "many of the politicians now publicly defending the surveillance state and slamming whistleblowers like Snowden have taken huge sums of money from these two firms", referring to Booz Allen and Carlyle, and that the political parties are "bankrolled by these firms". According to Maplight, a company that tracked campaign donations, Booz Allen gave a total of just over $87,000 to U.S. lawmakers from 2007 to June 2013.
According to CNBC, these contributions resulted in a steady stream of government contracts, which puts Booz Allen in privileged position. Due to the company's important government services, “the government is unlikely to let the company go out of business. It's too connected to fail”. Furthermore, the influence Booz Allen carries in Washington isn't restricted to donations, but to a large network of lobbyists and political insiders. According to government watchdog OpenSecrets, “4 out of 6 Booz Allen Hamilton lobbyists in 2015-2016 have previously held government jobs”.
Activities in foreign countries
Booz Allen helped the Government of the United Arab Emirates create an equivalent of the National Security Agency for that country. According to David E. Sanger and Nicole Perlroth of The New York Times, "one Arab official familiar with the effort" said that "They are teaching everything. Data mining, Web surveillance, all sorts of digital intelligence collection." In 2013 Sanger and Perlroth said that the company "profits handsomely from its worldwide expansion".
Booz Allen has particularly come under scrutiny for its ties to the government of Saudi Arabia and the support it provides to the Saudi armed forces. Alongside competitors McKinsey & Company and Boston Consulting Group, Booz Allen are seen as important factors in Crown Prince Mohammed bin Salman’s drive to consolidate power in the Kingdom. On the military side, Booz Allen is employing dozens of retired American military personnel to train and advise the Royal Saudi Navy and provide logistics for the Saudi Army, but denies its expertise is used by Saudi Arabia in its war against Yemen. Additionally, it also entered an agreement with the Saudi government that involves the protection and cyber-security of government ministries, with experts arguing that these defensive maneuvers could easily be used to target dissidents.
David Sirota of Salon said that politicians in the United States who received financing from Booz Allen and "other firms with a similar multinational business model" have vested interests in "denigrating the democratic protest movements that challenge Mideast surveillance states that make those donors big money, too."
Procurement fraud settlement
In 2023, Booz Allen agreed to a $377 million settlement over allegations that it had fraudulently billed the US government from 2011 to 2021, one of the largest procurement fraud settlements in history, without admitting civil liability. The settlement was the result of an investigation sparked by a whistleblower and former Booz Allen employee, who noticed that the firm was overbilling the US government in 2016. The whistleblower said that Booz Allen lowballed the cost of work done with foreign governments and corporations, then lumped the costs it incurred together with US government contracts to bill to the US government. The whistleblower initially alerted colleagues of the overbilling, but says that she was told that the Department of Defense was "too stupid" or "not smart enough" to catch Booz Allen and recover the money. She subsequently filed a qui tam lawsuit under the False Claims Act against Booz Allen.
A related federal criminal investigation into the company was closed without charges in 2021, while a Securities and Exchange Commission investigation is ongoing as of 2023.
See also
Booz & Company (spin-off of Booz & Company in 2008)
Booz Allen Classic
List of United States defense contractors
Top 100 US Federal Contractors
List of IT consulting firms
References
Further reading
External links
1914 establishments in Illinois
2010 initial public offerings
Companies based in McLean, Virginia
Companies listed on the New York Stock Exchange
Consulting firms established in 1914
Consulting firms of the United States
Defense companies of the United States
International information technology consulting firms
Information technology consulting firms of the United States
Private intelligence agencies