Booz Allen Hamilton's shares fell sharply on Monday after the U.S. Treasury Department announced it had ended all contractual relationships with the consulting group, pointing to lapses in data protection as the reason for the action. The market reacted to the announcement with the company's stock declining about 8%.
The Treasury said it terminated 31 separate contracts with Booz Allen Hamilton. Collectively those engagements represented approximately $4.8 million in annual spending and $21 million in total obligations. Treasury Secretary Scott Bessent framed the decision as part of an effort to "root out waste, fraud, and abuse" in government spending.
The termination follows a substantial breach involving a former Booz Allen employee, Charles Edward Littlejohn. According to the Treasury announcement, Littlejohn unlawfully removed and disclosed confidential tax returns and related information for roughly 406,000 taxpayers between 2018 and 2020. Littlejohn has pleaded guilty to felony charges for disclosing confidential tax information without authorization.
Secretary Bessent specifically cited Booz Allen’s failure "to implement adequate safeguards to protect sensitive data, including the confidential taxpayer information it had access to through its contracts with the Internal Revenue Service" as the basis for the contract cancellations.
For Booz Allen, which provides consulting and advisory services across multiple government agencies, the loss of these Treasury contracts represents a material setback. Market commentary at the time of the announcement emphasized investor concern that the cancellations could have reputational consequences and weigh on the company’s government-focused business segment.
The Treasury action highlights two parallel developments: the operational fallout from a high-profile data breach and immediate budgetary implications tied to the terminated contracts. While the contracts in question account for defined annual and total obligations, the announcement also underscores broader questions investors have raised about the firm's handling of sensitive information and the potential for further impacts on government work.
Contextual note: The information in this report is confined to the details provided in the Treasury announcement and related statements about the employee prosecution and does not extend beyond those facts.