Booz Allen Pushes Back on Antitrust Lawsuit, Sets Its Sights on Raytheon, Lockheed

Booz Allen Hamilton is fighting back against a U.S. Department of Justice (DOJ) antitrust lawsuit seeking to block its purchase of cyber firm EverWatch, whose national security clients could help the 22nd largest U.S. defense contractor by revenue compete with defense contracting powerhouses like Lockheed and Raytheon, with billions of dollars in government contracts at stake. In recent filings, the firm has identified 14 opportunities to win lucrative contracts alongside EverWatch, unseating competitors and boosting its position in the national security space.

In a June complaint by the DOJ, the federal agency claims that the merger of Booz Allen and EverWatch will undermine market competition, harm taxpayers, and limit services provided to the National Security Agency, arguing that the purchase would specifically harm a signals intelligence and simulation contract known as “Optimal Decision.” Booz Allen and EverWatch are largely regarded as the only two serious bidders, with the DOJ arguing that permitting the transaction to move forward would result in a monopoly.

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“The government’s narrative is not only inaccurate—it makes no sense,” attorneys for Booz Allen said in documents filed Aug. 1 in Maryland federal court. “As a matter of basic math, the government’s suggestion that the proposed transaction is a ‘scheme’ to buy off competition for OD is bizarre.” The 14 potential procurements are worth “billions of dollars” and are the driving force behind the proposed transaction, not the “relatively small” Optimal Decision work, they argued.

EverWatch is currently owned by Maryland-based private equity firm Enlightenment Capital, and supplies artificial intelligence, data science, insider-threat analysis, and cloud capabilities, alongside other products and technologies. The company is smaller than Booz Allen, which employs around 30,000 people. Booz Allen’s 2021 defense revenue came in at $5.5 billion, which is dwarfed by Lockheed and Raytheon’s 2021 revenue, which came in at $64.5 billion and $41.9 billion, respectively.

Lawyers for Booz Allen are continuing to make the case that the merger will stimulate competition by enabling it to take on the bigger, entrenched defense contractors. Pending approval by the court, the transaction is expected to close in the first quarter of Booz Allen’s fiscal 2023.