The Signal Interview
Booz Allen Hamilton has submitted recommendations to the US government for how it could save “tens of billions of dollars,” its chief executive told Semafor, as one of Washington’s biggest contractors races to salvage a relationship that delivers 98% of its revenues.
The new Trump administration has been turbulent for many CEOs. For Horacio Rozanski, it has put almost all of his roughly $11 billion of annual sales in question. Some of his firm’s contracts have already been axed since President Donald Trump and Elon Musk, his Department of Government Efficiency enforcer, began looking to cut billions of dollars from what the federal government pays firms like Booz Allen, Accenture and Deloitte.
Booz Allen’s stock has fallen more than 40% since Election Day, and a company that pitches itself as an advanced technology business supporting its country’s most critical missions has found itself the target of mocking criticism from Cabinet members. “What kind of risk management is that?” Treasury Secretary Scott Bessent asked on the All-In podcast, describing the firm’s “entrenched” position in government agencies as evidence of “grift.”
“Our stuff works and it saves money,” Rozanski, an Argentine-born former strategy consultant, said in his firm’s defense in an interview this week.
Just 11 days before the election, he had told investors he felt very good about Booz Allen’s position. “There’s always the possibility of a black swan-type event,” he acknowledged then, but his firm had a record of adapting to new administrations’ new demands faster than anybody else.
Even now, Rozanski says that while Trump’s search for efficiencies could create a smaller government in the short term, “that will free up both dollars and possibility.” Longer-term, he argues, Washington needs to make structural changes to become more efficient “that a technology company like us can help with.”
Pitching a cost center as a cost-cutter
Rozanski’s argument is that what DOGE sees as the problem can be its solution. “The entire thesis for government efficiency is about bringing technology in to make the government more efficient. And this is what we do for a living,” he says.
Over the years, he contends his firm made many suggestions for how the US government could save money, but was ignored. “The political will wasn’t always there, and I give the current administration and DOGE credit for creating and putting a spotlight on this,” he adds diplomatically. “This is the first time in our collective memory we’ve been asked to recommend savings.”
Booz Allen has dusted off old ideas, and added to them, to offer the administration more than 40 recommendations in the past two weeks “that collectively would save tens of billions of dollars,” Rozanski says. Burdensome regulations, such as rules requiring contractors to go through two different security clearance processes to work in two different agencies, have inflated industry costs by 15% to 30%, he estimates.
His firm has offered up far smaller cuts from its own revenues — the $1 billion or more it suggests it could sacrifice from its current contracts is spread over their lifetime, rather than the 10% cut the headline figure might suggest.
Rozanski says its proposals are getting “really very good traction” in some parts of Washington, but admits it is “early days.” This week the General Services Administration, the government’s procurement arm, signalled its displeasure with the “insulting” savings offered up by consultancies so far. The agency didn’t name names, but accused industry members of “faulty reasoning, financial obfuscations and gamesmanship” and warned them that firms that failed to offer “dramatic cost reductions” could have their projects terminated.
Demonstrating value to a cost-focused client
“A government that is willing to transform itself and to be more efficient will also get better at buying on value,” Rozanski predicts. “And from a Booz Allen perspective, I love that. I welcome competing more on value.”
His business, which reported 13.5% revenue growth last quarter, has been gaining market share on rivals who offer more traditional consulting services, and brings deep technology skills and relationships with tech partners that prove its worth, he says. Last month, for example, Booz Allen announced a partnership with Shield AI to develop “AI-enabled autonomous solutions” for the Department of Defense, protecting US troops in “complex, dynamic operational environments.”
Two years after Mariana Mazzucato and Rosie Collington argued in The Big Con that Booz Allen’s industry “infantilizes our governments,” Rozanski defends the role of outside contractors. Asking why Washington needs Booz Allen is like asking why the government doesn’t build its own tanks, missiles or satellites, he says. The private sector brings a dynamism and an ability to adapt that government cannot match, he argues, and it can take the risks that are essential for innovation. “If I run a program internally, and it doesn’t turn out, I don’t have to spend three years in congressional hearings after that.”
The diversification dilemma
Rozanski joined Booz Allen as a summer intern in 1991, when it was a more conventional consultancy, and in his decade as CEO he has helped recast it as a sophisticated technology partner to the most sensitive defence and intelligence agencies. Much of its work is secret. But the projects the firm can talk about include introducing the first large language model to the International Space Station and designing “Brilliant Swarms,” a satellite network to complement Trump’s proposed Golden Dome missile defense system. (“It’s almost like Uber, where the missile is the passenger, and then the intelligent network tries to figure out who’s in the best position to pick up that passenger,” Rozanski explains.)
Booz Allen is now so deeply embedded in Washington that Iran sanctioned both Rozanski and his firm during the first Trump administration. But Bessent is not alone in wondering how it could become so exposed to one customer.
“This was a conscious decision,” Rozanski responds. Because three-quarters of its work relates to national security, it has deliberately turned down commercial clients to avoid potential conflicts.
“You can imagine that, given the work that we do, traveling to China is not a good idea for Booz Allen people,” he remarks. “I can’t say to a company, ‘Sure, we will do this work for you, but we will not enter your second largest market.’”
That said, Rozanski adds, his firm is always looking for potential commercial opportunities, and it now sees “a demand signal.” Technology partners from startups to hyperscalers have asked Booz Allen if it would help them with their commercial clients and international work, he says, and it will look at more of those opportunities if they do not cross any lines drawn by Washington.
“In a changing world, we change and adapt as well.”
Telling a louder story
Few companies have deeper relationships in Washington than Booz Allen, yet the market reaction to the new administration suggests that Rozanski’s firm, or at least its investors, were caught off guard by the scale and speed with which the DOGE agenda has moved.
Asked whether he was blindsided, Rozanski responds instead that the company’s national security emphasis meant that it “focused more on doing the work than on talking about it.” Its government clients understand how it has changed from a consultancy to a vital technology partner, he says. “New people coming in, we need to do a better job of engaging and making sure they understand it, too… We didn’t tell the story as loudly as we should have.”
Rozanski is now working overtime to get his message out, including by doing interviews with The Wall Street Journal and Fox Business, which counts the president among its regular viewers. He has also sought to have a “robust internal conversation” with his employees, not sugar-coating the situation, but also demonstrating the opportunities Booz Allen could yet seize.
“People have different degrees of worry depending on the work specifically that they do,” he says. “It varies a little bit, but nobody’s panicking.”