Department of Justice sues Booz Allen to block proposed EverWatch acquisition

The Justice Department filed an antitrust lawsuit Wednesday to block technology consulting firm Booz Allen Hamilton from a proposed acquisition due to fears that the merger could create a monopoly bidder for National Security Agency defense contracts.

The Justice Department filed a lawsuit in the U.S. District Court for the District of Maryland alleging that Booz Allen’s proposed acquisition of EverWatch, a subsidiary of EC Defense Holdings, would directly threaten competition for government contracts that provide operational modeling and simulation services to the NSA.

“Booz Allen’s agreement to acquire EverWatch imperils competition in a market that is vital to our national security,” said Jonathan Kanter, assistant attorney general within the Justice Department’s Antitrust Division. “Both the acquisition agreement and the underlying transaction violate federal antitrust law.” 

As the principal U.S. defense intelligence agency specializing in cryptology, signals intelligence and the interception of communications, NSA periodically issues government contracts to support its signals intelligence data missions.

Booz Allen announced its plan to take over EverWatch in March, shortly before the NSA was scheduled to release the requests for their latest government contract needs. 

Prior to the merger agreement, Booz Allen and EverWatch competed head-to-head to win NSA contracts and then “Booz Allen decided to buy its only rival,” the Justice Department said.

Booz Allen, which is headquartered in McLean, Virginia, pushed back strongly on the DOJ’s claim that the merger would lessen competition and hurt the federal government.

“We strongly disagree with the DOJ’s characterization of the proposed transaction,” Jessica Klenk, director of media relations at Booz Allen Hamilton told FedScoop.

“We refute any suggestion that the proposed transaction would harm government agencies or taxpayers, and are ready to vigorously defend ourselves against any allegation of anticompetitive behavior,” Klenk said.

She added that the proposed merger would provide significant benefits to the government by bringing together two companies with “complementary abilities” to support the country’s national security interests and said that the industry for such government contracts was “highly competitive.”