U.S. Treasury Secretary Scott Bessent announced the immediate cancellation of all 31 contracts held by Booz Allen Hamilton, citing systemic failures in the firm’s data security protocols. The terminated agreements, which spanned multiple IRS support projects, represented $4.8 million in annual spending and $21 million in total contractual obligations. Bessent characterized the move as part of a broader presidential directive to eliminate waste and strengthen oversight of federal vendors working with sensitive taxpayer information.

The decision follows the 2018–2020 data breach in which former Booz Allen employee Charles Littlejohn stole and leaked confidential tax returns belonging to approximately 406,000 taxpayers, including those of former President Trump. Littlejohn pleaded guilty in October 2023 and received a five-year prison sentence in January 2024. Treasury investigators concluded that Booz Allen failed to implement adequate safeguards on government systems, leading to the unauthorized disclosure of high-profile individuals’ tax records and raising questions about contractor accountability.

News of the contract cancellations triggered an immediate market response, with Booz Allen’s share price tumbling by more than 8% on the announcement date. While Treasury work represents a small fraction of the company’s roughly $12 billion in annual revenue and its $38 billion order backlog, investors expressed concern over potential reputational damage and heightened scrutiny on future bids. Despite the setback, Booz Allen retains significant defense and intelligence contracts, including a recently awarded five-year, $1.58 billion counter-weapons program, underscoring the firm’s diversified federal business base.