Shares of Booz Allen Hamilton (NYSE:BAH) dropped 8% on Monday after the U.S. Treasury Department said it had terminated all of its contracts with the consulting group, pointing to concerns around data security.
The Treasury said it cancelled 31 individual contracts with Booz Allen Hamilton, amounting to about $4.8 million in annual spending and roughly $21 million in total contractual commitments. Treasury Secretary Scott Bessent said the move was part of a broader effort to “root out waste, fraud, and abuse” in federal expenditures.
The decision follows a high-profile data breach linked to a former Booz Allen employee, Charles Edward Littlejohn, who between 2018 and 2020 unlawfully accessed and disclosed confidential tax records belonging to approximately 406,000 taxpayers. Littlejohn has since pleaded guilty to felony charges related to the unauthorized release of sensitive taxpayer information.
Bessent said the contract terminations were driven by the firm’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.”
The loss of the Treasury contracts marks a setback for Booz Allen Hamilton, which generates a significant portion of its revenue from government work. The sharp market reaction highlights investor unease over the potential impact on the firm’s public-sector business and its reputation for handling sensitive information.