After Booz Allen Hamilton announcement plans in March to acquire its only competitor for an imminent contract with the NSA, the information technology consulting firm has lobbied Congress and the White House on antitrust policy, according to news lobbying disclosures covering the second quarter of 2022.
“We have raised the overall question [of the acquisition] for awareness but did not ask Congress to act,” Jessica Klink, a spokeswoman for Booz Allen, told OpenSecrets in a written statement. “As a precaution, we have made a disclosure about the LDA under US antitrust policy.”
But the Department of Justice filed a antitrust lawsuit with the Maryland District Court on June 29 to block the “final agreementto acquire EverWatch, a government contractor that competes with Booz Allen on some intelligence contracts. Subsidiary of EverWatch, Analytical, Computing and Engineering Solutions Inc.and the owner, EC Defense Holdings LLC, were also listed as defendants in the lawsuit.
Booz Allen and Analysis, Computing & Engineering Solutions Inc. were the only contractors to submit a Letter of Intent to bid on a National Security Agency contract, known by its unclassified name “Optimal Decision.” The deal would leave the NSA with a contractor to provide modeling and simulation services, according to the lawsuit, threatening competition in a rapidly consolidating defense industry.
The NSA contacted 14 companies “to gauge their interest” who submitted a letter of intent, according to the lawsuit, which Klink said was “consistent with vigorous competition for this particular market.”
“We continue to strongly disagree with the DOJ’s mischaracterization of this transaction and unequivocally reject any allegations of anti-competitive behavior,” Klink told OpenSecrets.
Booz Allen has spent $250,000 lobbying on a range of issues including security clearance reform, the annual defense budget and 5G from April to June. Booz Allen has spent $4.3 million on lobbying since 2014, according to OpenSecrets data, but that was the first quarter Booz Allen reported lobbying on antitrust policy.
Booz Allen offered an expedited and consolidated trial, but the DOJ filed a preliminary injunction it would preserve the competitive status quo before the court hears the antitrust suit, warning that Booz Allen would control “100% of the signals intelligence modeling and simulation services market” if it acquired EverWatch.
Booz Allen was reward nearly $5.6 billion in contracts by the federal government in 2020, including $2.3 billion from the Department of Defense. The company announced its intention to acquire EverWatch months before the NSA expected to release the request for proposal.
“This merger agreement immediately reduced each company’s incentive to submit a competitive bid and, if successful, would completely eliminate competition between the two, leaving the NSA with a monopoly,” the lawsuit said. argued.
Klink called the DOJ’s characterization of the acquisition a “monopoly merger” with the two companies competing for the single contact “wrong and wrong.” The DOJ lawsuit admits that Booz Allen never lost a contract with EverWatch, which he says competed “vigorously” for Optimal Decision.
The Ministry of Defense is work strengthen monitoring of mergers and acquisitions following a report which found “extreme consolidation” of aerospace and defense prime contractors. The Department’s report recommended antitrust investigations to protect and increase competition in the industrial base.
“[W]When a merger threatens the interests of the DoD, the DoD will support the Federal Trade Commission (FTC) and the Department of Justice (DOJ) in antitrust investigations and recommendations involving the defense industrial base,” the report recommends.
The NSA is part of the Department of Defense, and the antitrust investigation aims to preserve competition with its suppliers. But the case is far from closed, Noted Washington Technology, as the government shoulders a “heavy burden” of proof to block the acquisition even if it leaves the NSA with only one competitor.
But the threat of antitrust lawsuit has forced some defense giants to back off on acquisitions in recent months.
The FTC has filed a lawsuit to block Lockheed Martin’s proposed acquisition of competitor Aerojet Rocketdyne Holdings, as OpenSecrets previously reported. The merger “would allow the combined company to use its control of Aerojet to harm Lockheed’s rivals in a way that would significantly lessen competition in multiple markets for products critical to national defense,” the FTC said. complaint alleged.
Lockheed Martin was the federal government’s top contractor in 2020, according to the federal government’s report contract database. Aerojet was also a major contractor to several agencies, including NASA, the Defense Advanced Research Projects Agency and Missile Defense that year, according to federal contract data.
Lockheed Martin and Aerojet pushed for the merger in the first quarter of 2022. But Lockheed Martin terminated the deal following the FTC lawsuit, just days before the DOD released its report on extreme consolidation in the industry.
Booz Allen argued that the acquisition of EverWatch was different.
“The DOJ’s narrow focus on optimal decision ignores the most fundamental point: Booz Allen competes for many government projects where, in many cases, entrenched incumbents have dominated for years,” Klink told OpenSecrets. . “Through this transaction with EverWatch, Booz Allen would bring needed competition to these projects and strengthen the competition as a whole for years to come.”
Nonetheless, the DOJ filed the injunction last Friday to halt the acquisition, arguing that it “creates continuing and irreparable harm to competition” for Optimal Decision. Prosecutors called the injunction a “temporary separation, not divorce.”
On Wednesday, Maryland District Court Judge Catherine Blake initiated discovery of the facts until August 22 and proposed an injunction hearing on September 15 and 16.