Booz Allen Hamilton among targets for federal contract cuts​

The Trump administration is intensifying its efforts to reduce federal spending on consulting services, placing Booz Allen Hamilton—a firm that derives 98 percent of its $11 billion annual revenue from US government contracts—under significant scrutiny, reports the Wall Street Journal. A recent memo from Stephen Ehikian, the acting administrator of GSA, calls for federal agencies to review and justify their contracts with the top ten highest paid consulting firms, including Booz Allen, Accenture, Deloitte, and IBM. The memo highlights that these firms are collectively set to receive over $65 billion in fees in 2025 and beyond, emphasizing the need for change. ​

Booz Allen Hamilton has a longstanding relationship with the federal government, dating back to 1940 when it began advising the Secretary of the Navy ahead of World War II. Over the years, the firm has evolved from traditional consulting to a technology-driven company, with approximately 70% of its 34,000 employees now working in technology roles. The company boasts one of the largest artificial intelligence operations within the federal sector. Despite potential short-term disruptions due to the administration's review, CEO Horacio Rozanski expressed confidence in Booz Allen's alignment with government priorities, particularly in leveraging technology to enhance efficiency.

The Department of Government Efficiency (DOGE), led by Elon Musk, has already initiated cuts to some Booz Allen contracts, notably within the Departments of Labor and Commerce, reports Wired. Competitors such as Accenture and Deloitte have also experienced contract reductions. These actions are part of a broader initiative to eliminate what the administration deems non-essential consulting expenditures.

In a related move, Politico reports the Department of Veterans Affairs (VA) recently paused $2 billion in planned contract cuts after concerns arose that such reductions could negatively impact critical health services for veterans. This decision underscores the complexities and potential unintended consequences of broad cost-cutting measures within federal agencies.

As the 7 March 2025 deadline approaches for agencies to report which consulting contracts they intend to retain or terminate, the full impact of these reviews on firms like Booz Allen Hamilton remains uncertain, reports the Washington Business Journal. Industry experts caution that the ambiguity surrounding terms like "mission critical" could lead to significant uncertainty within the consulting sector, potentially disrupting services that are integral to government operations.