U.S. Treasury Secretary Scott Bessent announced the cancellation of all 31 contracts with Booz Allen Hamilton, citing failures to protect sensitive taxpayer data. The contracts represented $4.8 million in annual spending and $21 million in total obligations. Bessent framed the move as part of broader efforts to tighten oversight of government contractors and restore public confidence, stating that Booz Allen “failed to implement adequate safeguards” during its work with the Internal Revenue Service.

The decision follows a major IRS data breach between 2018 and 2020, in which former Booz Allen employee Charles Edward Littlejohn stole and leaked confidential tax returns for approximately 406,000 taxpayers, including President Trump. Littlejohn pleaded guilty to felony charges in October 2023 and received a five-year prison sentence in January 2024. While Booz Allen maintains that the breach occurred on government systems and has condemned Littlejohn’s actions, the incident prompted the Treasury to sever its relationship with the firm.

Shares of Booz Allen Hamilton fell by 8.12% on the day of the announcement, reflecting investor concern over the loss of Treasury business. Treasury contracts account for a small fraction of the firm’s fiscal 2025 revenue, which totaled $12 billion, and its current backlog stands at $38 billion. Despite the contract cancellations, Booz Allen retains significant Department of Defense agreements, including a five-year, $1.58 billion counter–weapons of mass destruction intelligence analysis deal signed in August.