By Chip Cutter

WASHINGTON -- When the Trump administration recently ordered big consulting firms to offer price concessions on the billions of dollars in projects they do for the federal government, Booz Allen Hamilton CEO Horacio Rozanski sprang into action.

For Booz, which makes 98% of its roughly $11 billion in annual revenue from government-related work, the assignment was existential. Rozanski and his team pulled in more than 100 employees to develop a response, which included more than $1 billion in potential cost savings.

Rozanski, 57 years old, is a more than three-decade Booz veteran who has experienced budget showdowns and new administrations before. But the second Trump term is different.

"Slow means never, and fast means now," Rozanski said. "It's been a jolt to the system. It's been a jolt to the industry."

The jolts are likely to continue. Booz's stock is down about 35% since the inauguration, and the Trump administration is expected to demand deeper cuts from the firms.

In an interview in the capital this week, Rozanski discussed Booz's response, whether staff cuts will follow -- and why the company is so concentrated in government work. Here are excerpts, condensed and edited:

The Wall Street Journal: The General Services Administration asked companies to explain their work in a way a 15-year-old could understand. What's your answer?

Rozanski: We're an advanced technology company. Our work in the federal government spans some of the most critical missions. We're talking about space, the intelligence community and some of the health agencies like the Veterans Affairs administration. Our work, for the most part, is about bringing technology into those missions to make them faster, better and more efficient.

WSJ: The GSA asked firms like yours to say which projects could potentially be canceled. What did you propose?

Rozanski: There is some work that, in the spirit of efficiency, the government could choose to in-source or maybe not do because it's not a priority. And we identified contracts where, because we've become more efficient, the same work could be done at a lower cost.

WSJ: Does that mean Booz Allen could lose more than $1 billion in revenue?

Rozanski: GSA would need to talk to the partner agencies that actually own the work. But, presumably, an outcome would be that a lot of these dollars don't come to Booz Allen.

WSJ: What are examples of contracts you feel are no longer needed or the government could do itself?

Rozanski: We don't have a lot of work that is studies and things like that, but there is some.

There's work where we're supporting, say, a research effort the government may not need us to do, or may not want to continue. There's work that maybe was commissioned three or four years ago that no longer makes sense.

WSJ: Will the price concessions mean layoffs?

Rozanski: Time will tell. A lot of technology companies need us and want us to help them scale. So we may have the ability to repurpose and reallocate some of our workforce. Over 70% of our workforce is technologists.

WSJ: Have you met with Elon Musk or President Trump as part of your conversations with the administration?

Rozanski: I should not talk about who I have and have not met with, but we're engaging. I will talk to anybody who will talk to me. There's a natural skepticism about this industry: Is it on the side of change, or is it going to resist change? A lot of my argument is Booz Allen is on the side of change.

WSJ: Is Booz too concentrated in government work?

Rozanski: About three-quarters of the work we do is national security-oriented. The consequence is that it limits some other things we would want to do, or we could do, serving governments around the world and even serving commercial clients.

WSJ: Are there conversations at the board level to broaden your work?

Rozanski: At any time, all options are on the table. We need to find better ways to offer that to a broader set of customers in a way that does not limit our ability to serve the U.S. government the way the government needs to be served.

WSJ: What's the toughest request the administration has made of you so far?

Rozanski: The self-examination. It's not easy to take a look at every contract and say: Could this be done by someone else? Could this be done by the government? That's been a challenging, but very valid, request.

WSJ: A year from now -- after this cost review -- how different will Booz Allen look?

Rozanski: I really, sincerely hope DOGE is successful, not just in identifying the inefficiencies, but also in removing barriers to competition and burdens that add unnecessary cost. We really are fast becoming the company that brings dual-use technology to the government. I do believe that there's a path for us to increase the size of the portfolio outside of direct federal government work.

WSJ: One argument is that cuts to the federal workforce will ultimately benefit contractors like Booz Allen. Do you agree?

Rozanski: If we're replacing one person for one person, that is not to the benefit of the government. If we are actually bringing technology in to make people more effective and more efficient, to make things happen faster, to deliver better national security, that is the answer. And in that, Booz Allen has a lot of opportunity.

Write to Chip Cutter at chip.cutter@wsj.com

(END) Dow Jones Newswires

April 03, 2025 05:30 ET (09:30 GMT)

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