The U.S. Department of Justice is investigating some of the ways Booz Allen Hamilton Holding Corp (BAH.N), one of the largest consulting firms in the world, charges the government for services and accounts for costs, the company said in a filing on Thursday that sent its shares down 12 percent after the bell.
The Justice Department informed a Booz Allen unit of the investigation earlier this month, Booz Allen said in the brief regulatory filing, adding that it was cooperating with the government. The company declined to comment beyond the filing and an identical statement it posted on its website.
Public affairs representatives at the Justice Department did not respond to requests for comment, but the agency as a rule does not make statements about ongoing investigations.
The firm said its audit processes had not identified any material weaknesses or "significant erroneous cost charging." (bit.ly/2rB0v5C)
Headquartered in McLean, Virginia near the Central Intelligence Agency and U.S. capital, Booz Allen generates almost all its revenue from government work. According to its latest annual report, the company receives nearly half of its revenues, $2.7 billion, from defense contracts, and nearly a quarter, $1.3 billion, from intelligence offices such as the National Security Agency (NSA).
It also brings in about $1.6 billion from contracts with Homeland Security, Health and Human Services, Veteran Affairs, Treasury and Justice and other domestic departments.
Booz Allen gained attention for its NSA work. It employed Edward Snowden, who exposed the agency's vast domestic and international surveillance operations by leaking a trove of secret files to news organizations in 2013. Then, for the second time in three years, an employee working under an NSA contract was charged last year with stealing classified information.
In October, the company hired former FBI Director Robert Mueller to conduct an external review of its security practices. But Mueller has since stepped away from that review after being named in May as special counsel to oversee the Federal Bureau of Investigation’s probe of alleged Russian meddling in the 2016 U.S. election.
Booz Allen has come under scrutiny in the past for its work on a U.S. government program of surveilling the global cooperative called the Society for Worldwide Interbank Financial Telecommunication, no-bid contracts it was given by Homeland Security and the high price tag for data software it provided to the National Institutes of Health.
(Reporting by Narottam Medhora in Bengaluru; Additional reporting by Lisa Lambert and Dustin Volz; Writing by Lisa Lambert; Editing by Diane Craft and Cynthia Osterman)