Booz Allen spied well before Snowden
The leak about its work for the NSA has it in the spotlight now, but it's been on the espionage job since World War II.
Drake Bennett and Michael Riley at Bloomberg Businessweek laid out Booz Allen's long history in government intelligence as part of its recent cover story on the company and the future of government contractors. Booz Allen's relationship with the government dates back to 1940, when the consulting firm best known for helping Goodyear Tire (GT) and Montgomery Ward was called in by the secretary of the Navy to help develop a sensor system to track German submarines.
Booz is a bit more entangled in national security matters today, as Snowden's revelations about the National Security Agency's Prism spy program revealed. When Google (GOOG), Facebook (FB) and Apple (AAPL) were all forced to backpedal and spin after Snowden's leak of classified information available to Booz Allen at NSA facilities, the consulting company's influence in the intelligence community became abundantly clear.
Throughout the Cold War and more recently in the battle against global terrorism, Booz Allen Hamilton became an unofficial link in the national security infrastructure. In 2008 it finally spun off its Booz & Co. commercial consulting business and became a full-time government contractor majority-owned by private equity firm Carlyle Group (CG).
At the end of its last fiscal year, in March 2013, Booz Allen Hamilton reported $5.76 billion in revenue. A full 99% of that came from government contracts, as did $219 million in profits. Almost a quarter of its revenue -- $1.3 billion -- was from major U.S. intelligence agencies that have been all too willing to dole out cash to intelligence contractors over the past decade.
According to Bloomberg, about 70% of the 2013 U.S. intelligence budget is contracted out. The Office of the Director of National Intelligence says almost a fifth of intelligence personnel now work in the private sector.
Booz Allen will still get a big chunk of that business, provided it can weather the damage from Snowden's leak. Its stock dropped 4% the morning after Snowden went public, and it still hasn't recovered. Sen. Dianne Feinstein, D-Calif., who chairs the Select Committee on Intelligence, wants to take another look at the role of private contractors in intelligence work and plans to restrict their access to classified information.
It is ridiculous that people do not understand that a company is NOT responsible for 'clearing' employees. Is it he AGENCY that provides the clearance. The company just hires them. Therefore, the fact that someone leaks information is a failing of who provided the clearance, not who provided the employment.
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