WASHINGTON, January 26, 2026, 12:13 (EST)
- Treasury terminated all Booz Allen Hamilton contracts, citing weak safeguards for sensitive IRS data
- The department said it has 31 contracts with the firm, worth $4.8 million a year and $21 million in obligations
- The decision revives fallout from the 2018–2020 tax-return leak tied to former contractor Charles Littlejohn
The U.S. Treasury Department has canceled all of its contracts with Booz Allen Hamilton, saying the consulting firm failed to protect sensitive data linked to work for the Internal Revenue Service. Reuters
The move lands as the Trump administration presses agencies to show they are tightening control over government spending and access to taxpayer information, after a breach that embarrassed the IRS and fueled questions about contractor oversight.
It also puts a spotlight back on how much federal work runs through outside firms that handle high-value data — and what happens when a vendor is blamed for a breakdown, even years later.
Treasury said it has 31 separate contracts with Booz Allen totaling $4.8 million in annual spending and $21 million in total obligations — a term agencies use for funds already committed under contracts, whether spent yet or not. Treasury Secretary Scott Bessent said the cancellations fit the push to “root out waste, fraud, and abuse” and said Booz Allen “failed to implement adequate safeguards” for “confidential taxpayer information.” Treasury
Treasury pointed to the case of Charles Edward Littlejohn, who worked as a Booz Allen employee and, between 2018 and 2020, stole and leaked tax-return information, the department said.
Treasury said the IRS has determined the breach has affected about 406,000 taxpayers so far. Littlejohn later pleaded guilty to a felony for disclosing confidential tax information without authorization, Treasury said.
Littlejohn was sentenced in 2024 to five years in prison after prosecutors said he leaked tax data about President Donald Trump and other wealthy Americans to news outlets. The Associated Press reported the material went to The New York Times and ProPublica, and cited prosecutors describing the episode as “unparalleled in the IRS’s history.” Apnews
The IRS is the U.S. tax collection agency, and its secrecy rules around returns are among the strictest in government. Any large breach carries both legal risk and political fallout, particularly when it involves a sitting president’s tax information.
Booz Allen did not immediately comment in the reports. Treasury’s announcement did not say whether it would pursue a broader penalty such as suspension or debarment, which could block a contractor from competing for future federal work.
Booz Allen is a big player in U.S. government consulting, competing across agencies with firms such as Leidos and Science Applications International Corp. A public contract break of this kind is likely to be watched closely by other vendors that build business around handling regulated data.
But the step does not answer the harder operational question: who takes over the work tied to those 31 contracts, and how quickly. Treasury did not detail how it will replace Booz Allen on active tasks or whether the canceled work will be rebid, shifted in-house, or halted.
For now, Treasury framed the decision as a trust-and-controls move — one aimed at drawing a straight line from contractor behavior to consequences, even when the original breach sits several years back.
