Booz Allen Hamilton

Early years

After graduating from Northwestern University in Evanston, Illinois 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. This theory developed into a new profession — management consulting — and the firm that would bear his name.

According to the company, "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."

The firm has gone through several name changes in its 100 years of existence. These include: Edwin G. Booz, Business Engineering Service; Edwin G. Booz Surveys; Edwin G. Booz and Fry Surveys; Booz, Fry, Allen & Hamilton; Booz, Allen & Hamilton; and finally Booz Allen Hamilton.

Organization

In 1970, Booz Allen first went public with an initial offering of 500,000 shares at $24 per share. 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.

New South Wales, Australia

In 1988, the newly elected Greiner State Government commissioned a report into the State Rail Authority 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. 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.

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. (Reports from the Government Accountability Office (GAO) have pointed to mixed results, including poor management of the IRS's IT portfolio and contractors.)

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,

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.

National Institutes of Health

In March 2011, The National Institutes of Health reported that Booz Allen Hamilton spent at least $350M of public funds to develop the caBIG "Cancer biomedical Informatics Grid" not including supplemental grants and stimulus recovery funds. The NIH report recommended an immediate moratorium on software contracts and a full audit of budget expenditures. The original goals of the program were to share cancer data between NIH funded study centers. caBIG quickly grew in scope beyond the funded objectives, which the NIH cited as a key cause of failure. Funding levels for caBIG were the largest ever spent for a US biomedical research network. As of May 2012, the caBIG program was retired.

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 disclosures

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 Wednesday 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. 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. 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."

Activities in foreign countries

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 when those countries, as stated by Jill R. Aitoro of the Washington Business Journal, "recover 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 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."

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".

Employee demographics

In 2013 Booz Allen had 25,000 employees, of which half carried top secret security clearances. In 2014, Booz Allen Hamilton Holding Corporation was awarded a "Top 2014 Workplace" by the Washington Post in their annual feature.

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