Booz Allen Hamilton plans to lay off roughly 7% of its workforce amid a government-wide push to reduce spending on contracts, primarily at civilian agencies.
About 2,500 positions will be eliminated during the first quarter of the company’s new fiscal year that started April 1. Booz Allen employed 35,800 people at the end of the prior fiscal year with 91% of them client-facing, according to its fourth quarter financial release posted Friday.
The civil business is where Booz Allen will undertake the majority of its job cuts as the firm expects revenue from those agencies to decline “in the low double digits” for its 2026 fiscal year, Chief Financial Officer Matt Calderone said Friday during the firm’s fourth quarter earnings call with investors.
Booz Allen is carrying out the layoffs amid a broader “resetting and restructuring” of the civil business, CEO Horacio Rozanski told analysts on the call.
Civil represented approximately 35% of Booz Allen’s overall $12 billion in revenue for fiscal year 2025 and did show a growth rate of 10% from FY 2024.
But four months into the Trump administration, the Department of Government Efficiency has focused much of its push for spending cuts at those agencies.
Slowdowns in activity on five large technology contracts and the end of a large program at the Veterans Affairs Department coincided with one another during the fourth quarter and required a “significant number of employees needing to be redeployed simultaneously,” Rozanski said.
VA is Booz Allen’s single largest customer and accounted for 13% of its FY 2025 revenue, according to the company’s annual 10-K report accompanying its financial release.
“Under normal circumstances and as our history shows, the dynamism of our business typically allows us to move our highly skilled talent quickly to new opportunities. But at a time when procurements are moving much slower than normal, this has been challenging,” Rozanski said.
Civilian agencies, being more conservative in their funding obligations and heightening the scrutiny on where that money goes, and how it goes there, has been an ongoing theme across government since Jan. 20.
In February, leadership at the General Services Administration directed a review of contracts with 10 companies including Booz Allen that the agency deemed as the government’s largest providers of consulting services. DOGE is also a driving force behind GSA’s aggressive posture toward the group of contractors it calls consultants, which has since grown to 19.
During the call with analysts, Rozanski said Booz Allen’s discussions with GSA and Federal Acquisition Service leaders included dialogue on how to increase outcome-based contracting and use more agentic artificial intelligence tools in government procurement.
Agentic AI refers to a class of artificial intelligence that uses autonomy to perform tasks and make certain decisions without human intervention.
Kristine Martin Anderson, Booz Allen’s chief operating officer, said being “willing to convert your contracts to outcome-based” is one of three key aspects that must be true about a company’s strategy to win in today’s environment.
Anderson said the government market’s current picture and at especially civilian agencies is shaped by a “short-term slowdown in the actual burn (spending) rates as they start to position for some of the transformation objectives that they have in bringing new tech in.”
The other two things that need to be true are “the tech needs to be excellent” and a clear blueprint for its future must complement it, according to Anderson.
“You have to have a vision around how that (tech) will evolve in a direction that makes sense to commercial tech leaders that come from outside government,” she said.
FY 2025 in review and a FY 2026 first (out)look
For the company’s full 2025 fiscal year ended March 31, sales of $12 billion were 12.4% higher year-over-year and the organic growth rate was 11.6%. Adjusted EBITDA of $1.3 billion showed an 11.9% year-over-year increase to represent a bottom-line margin of 11%, which was flat compared to the prior year.
The revenue breakdown by customer type is as follows:
- Defense — $5.9 billion, or 49.1%
- Intelligence — $1.8 billion, or 15%
- Civil — $4.2 billion, or 35%
Defense sales rose 14% during FY 2025 and intelligence was up 5%. Calderone said the company anticipates “strong organic growth” for both areas of its business in FY 2026.
Rozanski said the company is shaping that outlook for the defense business around Trump administration priorities such as the planned Golden Dome missile defense system, space systems modernization and increased monitoring of the U.S.’ southern border.
“What they’re trying to do there is primarily inject technology, a lot of commercial technology, Agentic AI,” Rozanski said. “The discussion has really moved away from whether AI was important to national security to how fast can we implement AI in national security.”
Partnerships with commercial tech providers remain high on Booz Allen’s agenda, through which the company layers on its own creations to address issues unique in government.
“Even edge cloud solutions that have been created for the commercial markets assume a degree of connectivity,” Rozanski said. “That doesn’t happen in space, and doesn’t happen under water and doesn’t happen in EW (electronic warfare) challenged environments, and we have built our own tech to put on top of their stack to solve those kinds of problems.”
Booz Allen’s initial guidance for fiscal year 2026 estimates revenue of $12 billion-to-$12.5 billion, which puts the growth range forecast at 0%-to-4%, and adjusted EBITDA margin holding flat at roughly 11%.
The firm ended its FY 2025 on a total backlog of $37 billion with the funded portion at $4.4 billion and a 12-month book-to-bill ratio of 1.39x, a figure that represents the rate of backlog growth versus drawdowns to book sales.
