Treasury drops Booz Allen

The Treasury Department told senators it canceled Booz Allen Hamilton contracts because it no longer trusted the firm’s vetting after the Internal Revenue Service leak case. (fedscoop.com) Treasury Secretary Scott Bessent said at a Senate Appropriations subcommittee hearing on April 22, 2026, that the department lost “confidence” in Booz Allen and ended the work on that basis. Treasury had announced on March 30 that it was canceling 31 Booz Allen contracts with $21 million in total obligations and about $4.8 million in annual spending. (fedscoop.com 1) (fedscoop.com 2) In its March 30 statement, Treasury tied the move to Charles Edward Littlejohn, a Booz Allen employee who worked at the Internal Revenue Service and stole and leaked taxpayer data between 2018 and 2020. Treasury said the Internal Revenue Service later determined that about 406,000 taxpayers were affected. (home.treasury.gov) Littlejohn was charged in September 2023, pleaded guilty, and in January 2024 was sentenced to five years in prison for unauthorized disclosure of tax return information to news organizations. The Justice Department said he stole returns tied to a high-ranking public official and to thousands of wealthy Americans. (justice.gov 1) (justice.gov 2) Federal contracting depends on outside firms handling government systems and data under agency supervision, so contractor screening and internal controls are treated as part of the government’s own security perimeter. Treasury said Booz Allen “failed to implement adequate safeguards” for confidential taxpayer information available through its Internal Revenue Service contracts. (home.treasury.gov) The cancellation also lands during a broader Trump administration push to cut consulting work across government. FedScoop reported this month that the General Services Administration told agencies to terminate contracts with the federal government’s top 10 consulting firms, saying agencies had not moved fast enough. (fedscoop.com) Booz Allen said in March that it was “surprised” by Treasury’s decision and said it had “fully” supported the government’s investigation into Littlejohn. The company said it has “strong processes and policies” to support federal agency security requirements. (fedscoop.com) The Internal Revenue Service has been dealing with the fallout for more than two years. The agency said the criminal investigation was led by the Treasury Inspector General for Tax Administration, and FedScoop later reported that the inspector general found the Internal Revenue Service still faced security challenges after the breach. (irs.gov) (fedscoop.com) Bessent’s testimony turned a one-paragraph contract cancellation into a procurement standard: Treasury is now saying a contractor can lose business not only for a breach itself, but for failing the government’s trust test on who gets through the door. (fedscoop.com)