Booz Allen Gets Its Hand Caught in the Revolving Door

Late last month, the Government Accountability Office (GAO) issued a decision in a dispute over the award of a U.S. Navy support services contract. Normally, GAO bid protest decisions garner little attention because they typically involve small or little-known companies, low-dollar contracts, or mundane legal issues. This one, however, caught our eye for being the exact opposite in all three respects.

Top-100 federal contractor Serco challenged the award of a $354 million task order for ship maintenance to top-20 contractor Booz Allen Hamilton. The deal is a follow-on to a task order that Serco had been performing. Serco alleges the process was tainted by a blatant conflict of interest — the type of situation POGO has long warned would be the inevitable result of the rapidly spinning Pentagon revolving door — and a deliberate effort by Navy officials to tilt the competition in Booz Allen’s favor.

Serco claims Navy officials gave Booz Allen non-public information about Serco that gave Booz Allen an unfair competitive advantage. Two of those officials were program managers who later left the Navy for jobs with companies partnering with Booz Allen. According to the GAO, those officials “played significant roles” in the company’s proposal preparation efforts.

The decision identified them only as “Sam Smith” and “John Jones.” But it provides other key details — that both are former captains who went through the revolving door in 2018, one going to CDI Government Services (formerly Gryphon Technologies) and the other joining Hepburn & Sons LLC — which led us to surmise that “Sam Smith” is Jeff Sinclair and “John Jones” is Tim Crone. (Sinclair’s LinkedIn profile shows that he left CDI in 2020 to work for Hepburn & Sons. According to the GAO, “Subsequently, Smith left CDI and accepted employment with Hepburn where he continued to assist BAH [Booz Allen Hamilton] in its proposal preparation.”) POGO was unsuccessful in our attempt to contact Sinclair and Crone.

The GAO found that the two officials had “virtually unlimited access to Serco’s detailed information regarding prior costs, … staffing, technical approach, and past performance.” Both “were recruited and hired … by BAH’s subcontractors to assist in BAH’s proposal preparation efforts.” The GAO found that immediately after “Jones” joined Hepburn & Sons, he began meeting with Booz Allen representatives and gave them the inside dope on Serco.

Federal contracting regulations are explicit when it comes to ethical standards: “Government business shall be conducted in a manner above reproach and … with complete impartiality and with preferential treatment for none. … The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.” Federal laws also require a former Pentagon official who “participated personally and substantially” in an acquisition over $10 million to receive a written ethics opinion prior to accepting compensation from a Department of Defense contractor. POGO advocated in our most recent Baker’s Dozen that ethics opinions should be publicly available to help protect the integrity of the contracting process. In this case, we are unable to determine what guidance, if any, “Smith” and “Jones” received before passing through the revolving door.

Per the GAO’s recommendations, Booz Allen will be disqualified from the task order competition unless the Navy finds a way to mitigate the impact of the improper disclosure and seeks revised bids.

Booz Allen provided POGO the following statement about the decision: “While we cannot comment on the specifics of the matter, we take strong issue with the accuracy and characterization of the protest allegations and have filed a request for reconsideration.”

Hepburn & Sons told POGO they also “strongly disagree” with the GAO’s decision and are seeking reconsideration. “Our expectation is that a closer look at the facts will result in a restatement of the decision to correct the record and to confirm that Hepburn and Sons, including its employees, did not obtain or divulge any non-public information related to this award.”

This isn’t Booz Allen’s first unfortunate experience with the revolving door. Ten years ago, its San Antonio, Texas, office was temporarily suspended from federal contracting when an employee, a former Air Force officer, shared with coworkers non-public information about an upcoming contract. At the time, the company publicly admitted it had “significant issues concerning the methods by which it captures business and human assets, including former government personnel, and its handling, dissemination, and use of non-public information,” and promised to implement company-wide ethics reforms.

If Booz Allen did implement reforms, they don’t seem to have adhered to them in this instance. Instead of trading on the insider status of its own “human assets,” the company appears to have made use of a partner’s recent revolvers to get access to non-public information. A company of Booz Allen’s stature and experience should have known it was on shaky ethical and legal ground.

The Navy deserves its share of criticism, too. First, it apparently allowed contracting officials to improperly assist Booz Allen. Then, when Serco filed its first bid protest early last year, the Navy investigated Serco’s allegations and found no evidence of wrongdoing, a conclusion the GAO said lacked “a reasonable basis.”

The ball is back in the Navy’s court. We hope they learned their lesson and avoid the ethical pitfalls in this and all future contract competitions.