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The Snowden Effect: Is Booz Allen feeling it?

Edward Snowden speaking during his dinner with a group of four retired US ex-intelligence workers and activists at a luxurious room in an unidentified location. Snowden warned of dangers to democracy in the first video released of the fugitive since Russia granted him temporary asylum in August.

Edward Snowden’s former employer Booz Allen Hamilton announces earnings today. The ginormous contractor gets almost all of its revenue from the federal government: $5.8 billion worth last year. But the landscape for companies like Booz Allen might be shifting.

It’s no secret money’s tight in Washington. American University professor Gordon Adams points to sequestration, budget battles, as well as a pre-existing drawdown in defense spending.

“I think every company either in the defense business or the intelligence business is looking at probably a long-term downward trend,” he says.

And what about backlash from the Snowden leaks? Well, Todd Harrison is another (less-infamous) former Booz Allen employee. He’s now a senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments. He says, yes, some in Congress are skeptical about outsourcing surveillance, asking questions like:

Why did someone like Edward Snowden have the clearance he had and why was he doing this work in the first place as a contractor?”

But Harrison says that skepticism won’t have an immediate effect on contractors like Booz Allen Hamilton.

Still, the company acknowledges it makes 99 percent of its money from government sources. In SEC documents it wrote:

“If our relationships with such agencies are harmed, our future revenue and operating profits would decline.”

 

About the author

Kate Davidson is a regular contributor to Marketplace.

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