Booz Allen Hamilton

Type Public (NYSE: BAH)
Industry Consulting
Government contractor
Founded 1914 (1914)
Founder(s) Edwin Booz
James L. Allen
Headquarters McLean, Virginia, U.S.[1]
Key people Ralph Shrader, Chairman & Chief Executive Officer[1]
Revenue US$5 billion (FY2009)[1]
Employees 26,400[1]
Website www.boozallen.com

Booz Allen Hamilton Inc. NYSE: BAH, or more commonly Booz Allen, is an American public consulting firm headquartered in McLean, Fairfax County, Virginia, with 80 other offices throughout the United States. Ralph Shrader is its Chairman and Chief Executive Officer. The firm was founded by Edwin Booz in Chicago circa 1914. It is listed as number 438 in the 2011 Fortune 500 and is listed as the 9th largest US Government contractor (the largest for consulting services) by Washington Technology magazine in 2011.

Booz Allen is a defense and civil contractor for the US federal government. Booz Allen’s services include strategic planning, human capital and learning, communications, operational improvement, information technology work, systems engineering, organizational change efforts, modeling and simulation, program management, assurance and resilience, and economic business analysis.

As of August 2008, what was formerly Booz Allen Hamilton’s parent company (which used the Booz Allen name itself) divided in two. The Booz Allen Hamilton moniker was retained by the half focusing on U.S. governmental matters, with Booz & Company taking sole control of its commercial strategy and international portfolio. Booz Allen Hamilton is majority owned by private equity firm The Carlyle Group, while Booz & Company is owned and operated as a partnership.[2] On November 17, 2010 Booz Allen's shares of common stock began trading at the New York Stock Exchange.

Contents

History

Early years

After graduating from Northwestern University in Chicago in 1914, Edwin G. Booz developed the business theory that companies would be more successful if they could call on someone outside their own organizations for expert, impartial advice.[3] This theory developed into a new profession — management consulting — and the firm that would bear his name.

"In 1940, the firm was hired to help the United States Secretary of the Navy with World War II preparations. Since then, Booz Allen has had a hand in several notable private and public engagements throughout its years, such as advising on the breakup of Ma Bell and helping organize the National Football League in the 1960s."[4]

Organization

In 1970, Booz Allen first went public with an initial offering of 500,000 shares at $24 per share.[5][6] However, in 1976 public trading ceased in the largest-ever leveraged buyout involving a consulting firm where Booz Allen's partners bought back the stock, through one of the first management buyouts (MBO), and returned the firm to private ownership with a new governance structure. In 2007 managing director Marc Gerencser said that being privately held allowed the firm to consider long-range investments that companies beholden to shareholders might not be able to make.[7]

On June 21, 2010 Booz Allen Hamilton filed with the U.S. Securities and Exchange Commission (SEC) to raise up to $300 million in an initial public offering.[8] Booz Allen went public on November 17, 2010.

Prominent client initiatives

Internal Revenue Service

In 1998, Booz Allen was chosen to help the Internal Revenue Service (IRS) modernize and shed its reputation for dismal customer service. The firm developed a strategy for the IRS to reshuffle its 100,000 employees into units focused on particular taxpayer categories: individuals, charities, businesses and so on. "We made some very dramatic changes in the way the IRS is organized," said CEO Ralph Shrader.[9] (Reports from the Government Accountability Office (GAO) have pointed to mixed results, including poor management of the IRS's IT portfolio and contractors.)[10]

New South Wales, Australia

In 1988, the newly elected Greiner State Government commissioned a report into the State Rail Authority (SRA) of New South Wales by Booz Allen Hamilton. The resulting report recommended up to 8,000 job losses, including the withdrawal of staff from 94 country railway stations, withdrawing services on the Nyngan- Bourke line, Queanbeyan - Cooma line and Glen Innes- Wallangarra line, the discontinuation of several country passenger services (the Canberra XPT, the Silver City Comet to Broken Hill and various diesel locomotive hauled services) and the removal of sleeper trains from services to Brisbane and Melbourne. The report also recommended the removal of all country passenger services and small freight operations, but the government did not consider this to be politically feasible.[11] The SRA was divided into business units - CityRail, responsible for urban railways; CountryLink, responsible for country passenger services; FreightRail, responsible for freight services; and Rail Estate, responsible for rail property.[12]

Notable members and alumni

Business

Government

Other

Criticisms and controversies

SWIFT

In 2006 at the request of the Article 29 Working Group, an advisory group to the European Commission (EC), 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 EC.[64][65]

Democracy Now!

Another controversy, related to some of the senior staff of Booz Allen (past and present) and related to its performance on some specific U.S. intelligence agency contracts, was brought to light on January 12, 2007 in an interview conducted by Democracy Now! with Tim Shorrock,[66] an independent investigative journalist, and separately in an article he wrote for the Salon online magazine. Through investigation of Booz Allen employees, Shorrock asserts that there is a sort of revolving-door conflict of interest between Booz Allen and the U.S. government, and between multiple other contractors and the U.S. government in general. Regarding Booz Allen, Shorrock referred to such people as John M. McConnell, R. James Woolsey, Jr., and James R. Clapper, all of whom have gone back and forth between government and industry (Booz Allen in particular), and who may present the appearance that certain government contractors receive undue or unlawful business from the government, and that certain government contractors may exert undue or unlawful influence on government. Shorrock further relates that Booz Allen was a sub-contractor with two programs at the U.S. National Security Agency (NSA), called Trailblazer and Pioneer Groundbreaker.

Homeland Security

A June 28, 2007 Washington Post article related how a U.S. 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,

A review of memos, e-mail and other contracting documents obtained by The Washington Post show that 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 C. Duke, the department's chief procurement officer, acknowledged the problems with the Booz Allen contract. But Duke 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.[67]

PISCES

Known as PISCES (Personal Identification Secure Comparison and Evaluation System), the “terrorist interdiction system” matches passengers inbound for the United States against facial images, fingerprints and biographical information at airports in high-risk countries. A data network permits U.S. authorities to be informed of problems with inbound passengers. Although PISCES was operational in the months prior to September 11, it apparently failed to detect any of the terrorists involved in the attack.[68]

Privacy advocates have alleged that the PISCES system is deployed in various countries that are known for human rights abuses (ie Pakistan and Iraq) and that facilitating them with an advanced database system capable of storing biometric details of travelers (often without consent of their own nationals) poses a danger to human rights activists and government opponents.

See also

References

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  3. ^ Booz Allen History
  4. ^ Vault Snapshot of Booz Allen Hamilton
  5. ^ Booz Allen Hamilton Historical Timeline
  6. ^ Booz Allen Hamilton - History of Booz Allen 1970s
  7. ^ To counter scrutiny Booz Allen puts ethics first
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External links