Booz Allen Hamilton weighs splitting government, commercial operations

Booz Allen Hamilton, one of the government's largest contractors, is considering options for its future that could include sale of the company or separation of its commercial and government operations.

Ralph Shrader, chairman and chief executive officer of the privately held company, sent an e-mail to employees worldwide Saturday, announcing that the firm's senior partners and board members had met Thursday and Friday to discuss "a new strategic direction that could lead to our commercial and U.S. government businesses operating as separate firms in the future."

"Our global commercial consulting practices and our U.S. government business have very different needs for operating and people models, regulatory requirements and capital funding…. we believe that, going forward, the long-term success of our two major businesses -- and our clients and people -- could be enhanced by complete focus on their distinct markets," Shrader wrote in the e-mail.

He said company leaders have begun a discussion process to explore options and will continue to do so over the coming weeks. He assured employees that if leaders settle on a particular path, their recommendation would be brought to the firm's board for a vote and employees would again be notified. The company aims to make a decision by the end of its fiscal year, March 31, 2008.

Booz Allen Hamilton, based in McLean, Va., is a technology and management consulting firm which does business with a wide variety of federal agencies. The company ranked 24th on Government Executive's Top 200 Federal Contractors list this year, and also ranked in the top 30 for defense, technology, homeland security and GSA contracting.

Booz Allen Hamilton did more than $1.8 billion of business with the government in 2007, more than $1.2 billion of it with the Defense Department. The company, with 18,914 employees worldwide and 11,300 in the Washington area, earns about $4 billion in revenue a year, according to a report in The Washington Post.

"Let me assure you that our major businesses are all performing well, and any strategic step would be taken from a standpoint of strength to position all parts of the firm for future growth and success," Shrader wrote in his e-mail.