Treasury cancels Booz Allen contracts over tax-data safeguards, shares slide

NEW YORK — Booz Allen Hamilton shares fell sharply after the U.S. Treasury Department announced it was canceling all Treasury contracts with the consulting and technology firm, citing failures to adequately protect sensitive taxpayer information connected to a high-profile leak case.

Treasury Secretary Scott Bessent said the department is terminating 31 contracts with Booz Allen worth about $4.8 million in annual spending and roughly $21 million in long-term commitments. The move is part of the Trump administration’s broader push to target what it calls “waste, fraud, and abuse” in federal contracting, an agenda that has begun producing direct financial consequences for some vendors.

In explaining the cancellations, Treasury pointed to the case of Charles Edward Littlejohn, a former IRS contractor who previously worked for Booz Allen and was convicted after leaking tax-return data. The disclosures included President Donald Trump’s returns and information tied to thousands of wealthy Americans, data that was later used in investigative reporting that detailed how top earners minimize taxes.

Booz Allen condemned Littlejohn’s actions and emphasized that it has a zero-tolerance approach for legal violations. The company said it supported the government’s investigation and expects to continue discussions with Treasury about the decision, but investors reacted to the cancellation as another signal of heightened political risk for firms heavily dependent on federal work.

Although the Treasury contracts represent a small slice of Booz Allen’s revenue, the company is unusually exposed to shifts in Washington because it generates nearly all of its sales from U.S. government customers. That concentration has made the stock sensitive to headlines about contractor audits, procurement slowdowns, and spending reductions.

The market reaction was swift. Shares were down about 11% during Monday trading, compounding a rough year in which investors have worried about a tougher contracting environment and the risk that additional agencies could cut or rebid long-standing consulting arrangements.

For the administration, the cancellation offers a visible example of enforcement tied to contractor accountability. For Booz Allen and its peers, it underscores a new reality: policy-driven contractor scrutiny can move from rhetoric to contract terminations with little warning, potentially reshaping how firms price, staff, and secure sensitive government programs.