Booz Allen Hamilton $BAH ( ▲ 0.84% ) shares fell sharply after the US Treasury Department said it is canceling all of its contracts with the firm. The decision follows the case of a former employee who pleaded guilty to leaking confidential tax information about President Donald Trump and thousands of wealthy Americans to media outlets between 2018 and 2020.
The former contractor, Charles Edward Littlejohn, was sentenced to five years in prison in January 2024.
Treasury Cuts Ties After Security Failures
Treasury said it terminated all 31 of its contracts with Booz Allen, worth a combined $21 million. The department cited failures to put proper safeguards in place to protect sensitive taxpayer data accessed through work with the IRS.
Treasury Secretary Scott Bessent said the firm did not adequately protect confidential information, prompting the move to sever ties.
Heavy Reliance on Government Work
The news hits a company deeply tied to federal contracts. Nearly all of Booz Allen’s revenue comes from the US government, with more than 70% tied to defense and intelligence agencies. Civil agencies, including the Treasury, make up the rest.
The timing is especially painful. Just last week, Booz Allen raised its annual profit outlook after posting stronger-than-expected third-quarter earnings, making Monday’s contract cancellations a sharp reversal in narrative for investors.