Booz Allen's view of itself in a world of more direct tech contracts
Booz Allen Hamilton Horacio Rozanski speaking at the Semafor World Economy 2026 event on April 14 in Washington, D.C. Photo by Tasos Katopodis / Getty Images for Semafor World Economy
By
Ross Wilkers
In talking with Wall Street, Booz Allen Hamilton CEO Horacio Rozanski advocates for his company remaining a key part of making commercial products work for agencies.
The Defense Department’s $7 billion enterprise software agreement with Oracle announced Thursday consolidates existing pacts with the tech giant and represents how agencies are rethinking how they work with commercial software companies.
DOD has done the same with Dell, Palantir, Anduril and others over the past 12 months as part of its push to streamline and bring together existing contracts with those companies. The General Services Administration’s OneGov initiative is structured in a similar manner to achieve more volume discounts and other economies of scale by engaging more directly with software providers.
Are these moves and others like them translating to more market share for vendors, and therefore less for integrators and other government technology services companies?
During Booz Allen Hamilton’s fiscal first quarter earnings call with investors Friday, chief executive Horacio Rozanski said the firm has “not yet seen the shift in the way one could hypothesize it will affect the business.”
Rozanski said that if the shift had taken place, Booz Allen’s expenses incurred on behalf of its government clients while performing contract work would have gone down. There would be a “bigger gap in the revenue ex-billables and the gross revenue number,” he said.
Booz Allen reports both of those top-line figures separately to help investors gauge the business. Revenue excluding billable expenses totaled $2 billion for the firm’s fiscal first quarter ended June 30 and was down 3.8% from the prior year period, while billable expenses adds another $800 million to the overall sales figure.
Kristine Martin Anderson, Booz Allen’s chief operating officer, said payments to subcontractors represent the majority of its billable expenses.
Back to Oracle’s new pact with DOD. It is the newest example of a world where agencies take a more direct route for technology contracts, but Rozanski sees Booz Allen as remaining a key part of making the products work for agencies.
“Every time one of the large hyperscalers gets a contract like that, we're in conversations with them because the reality is that especially in some of these key missions that are most important, the ones that are growing the most, the last mile gets more and more complex to execute,” Rozanski told analysts. “Having these capabilities available to the warfighter at the edge becomes something that is going to be essential to unlocking the demand.
“Whether the contract is such that a cloud buy gets done through us or directly is really not that significant to the value that we're bringing to the differentiation that we're bringing into our capacity to affect mission,” Rozanski added.
As part of that differentiation push, Booz Allen is working to turn more of its offerings into products as opposed to pure-play services. Booz Allen’s $720 million agreement to buy the Ultra Mission Solutions business includes a portfolio of software, encryption and edge-compute products.
Rozanski said that transaction points to autonomy as a keen area of interest for Booz Allen, along with capabilities in the network connectivity concept known as C3BM -- Command, Control, Communications and Battle Management.
Fiscal first quarter revenue of $2.8 billion was 4.2% down from the prior year period, while profit of $334 million showed a 7.4% increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).
The firm’s headcount stood at 30,900 as of June 30, also down 7.5% from the prior year period, after two rounds of layoffs and a restructuring mostly focused on its still-challenged civil business.
The Trump administration has terminated or reduced the scope of many services contracts with Booz Allen over the past 12 months. Consulting work has been a point of particular scrutiny from the administration.
Booz Allen’s full fiscal year 2027 outlook remains unchanged, holding to revenue of $11.2 billion-to-$11.7 billion with adjusted EBITDA of $1.24 billion-to-$1.29 billion. That translates to an adjusted EBITDA margin of roughly 11%.