WASHINGTON — The U.S. Department of Justice filed an antitrust lawsuit against information technology consulting company Booz Allen Hamilton to block a planned acquisition, citing fears the purchase could harm the National Security Agency.
In a complaint filed June 29 in a Maryland federal court, the U.S. alleged that the merger of Booz Allen and EverWatch Corp. would eliminate competition, harm taxpayers, and result in lower quality, less innovative services.
“Booz Allen’s agreement to acquire EverWatch imperils competition in a market that is vital to our national security,” Assistant Attorney General Jonathan Kanter, who works in the Justice Department’s Antitrust Division, said in a statement. “Both the acquisition agreement and the underlying transaction violate federal antitrust law.”
EverWatch supplies products and services, including artificial intelligence and cloud capabilities, to the defense and intelligence communities.
Booz Allen and EverWatch have competed in providing operational modeling and simulation services to the NSA, a lead agency in cryptology, signals intelligence and cybersecurity. The Justice Department considers the Virginia-based companies rivals that once hoped to outdo each other, court documents show.
Booz Allen publicized its prospective purchase of EverWatch in March, shortly before the NSA was scheduled to release a request for proposals, in which the two companies are believed to be the only bidders.
Booz Allen expected the deal to close in the first quarter of its fiscal 2023. Terms of the transaction were not disclosed.
The Justice Department this week alleged the merger violates the Sherman Act, a measure that prohibits the restriction of competition and commerce, because it immediately reduced each company’s incentive to bid aggressively.
Booz Allen pushed back on the department’s characterization.
Spokesperson Jessica Klenk on June 30 told C4ISRNET the transaction would “bring together two companies with complementary capabilities to enhance delivery of mission-critical services in support of our collective national security interests” and further benefit government clients.
“We refute any suggestion that the proposed transaction would harm government agencies or taxpayers,” Klenk added, “and are ready to vigorously defend ourselves against any allegation of anticompetitive behavior.”
Booz Allen had not responded to the Justice Department’s complaint as of June 30, according to court records. Portions of the department’s complaint were redacted.
Colin Demarest is a reporter at C4ISRNET, where he covers military networks, cyber and IT. Colin previously covered the Department of Energy and its National Nuclear Security Administration — namely Cold War cleanup and nuclear weapons development — for a daily newspaper in South Carolina. Colin is also an award-winning photographer.