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Carlyle Group May Buy Major CIA Contractor- Booz Allen Hamilton

Carlyle Group May Buy Major CIA Contractor- Booz Allen Hamilton

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Carlyle Group May Buy Major CIA Contractor:Booz Allen Hamilton
by Tim Shorrock,Special to CorpWatchMarch 8th, 2008 
The Carlyle Group, one of the world’s
largest private equity funds, may soonacquire the $2 billion governmentcontracting business of consulting giantBooz Allen Hamilton, one of the biggestsuppliers of technology and personnel to
the U.S. government’s spy agencies.
Carlyle manages more than $75 billion inassets and has bought and sold a longstring of military contractors since theearly 1990s. But in recent years it hassignificantly reduced its investments inthat industry. If it goes ahead with thewidely reported plan to buy Booz Allen, itwill re-emerge as the owner of one of 
America’s largest private intelligence armies.Reports of a potential Carlyle acquisition of Booz Allen’s government u
nit began
circulating among U.S. military contractors in December 2007, after Booz Allen’s
senior partners and board members
a group of 300 vice presidents who own theprivately-held firm
gathered at company headquarters in McLean, Virginia, foran extraordinary two-day meeting.According to a December 15 letter to Booz Allen employees from CEO Ralph W.
Shrader that was released by the firm, the vice presidents signed off on a “new
strategic dire
ction” that would involve separating the company’s commercial and
government units and operating them as separate companies. That was widelyseen, both inside and outside the company, as a sign that a sale of one or both of the units was imminent. Shrader said the company hoped to come to a resolutionof the issues involved by March 31, 2008.In January 2008, major newspapers
each quoting unnamed people close to thesituation
reported that discussions between Booz Allen and Carlyle about the sale of the government unit were underway. According to the
Wall Street Journal 
the deal will be “centered on Booz Allen’s influence in defense and intelligence
contracting. If an agreement is reached the sale price will likely be around $2
billion.” Christopher Ullman, Carlyle’s chief spokesman, could neither confirm nor deny
that a deal was in the works, and declined to comment to CorpWatch about thereports. Because
of Carlyle’s long experience in the defense sector, he added,
Cartoon by Khalil Bendib
such companies “would be a priority for us when the price is right and it’s the rightfit for us.” George Farrar, a 
Booz Allen spokesman,
said his company “has refusedto discuss particulars of any ongoing discussions” and would not comment beyondwhat Shrader wrote in his December 15 missive to Booz Allen’s workforce.
Who Is Booz Allen Hamilton?
 In 2006, Booz Allen Hamilton, a privately held company based in McLean, Virginia, had a global staff of 18,000 and annual revenues of $3.7 billion. Its work for U.S.government agencies accounts for more than 50 percent of its business. NotablyBooz Allen is a key adviser and prime contractor to all of the major U.S.intelligence agencies
the Central Intelligence Agency (CIA), the DefenseIntelligence Agency (DIA), the National Geospatial-Intelligence Agency (NGA), theNational Reconnaissance Office (NRO), the National Security Agency (NSA), and
 as well as the Department of Homeland Security (DHS), the NationalCounterterrorism
Center, the Department of Defense and most of the Pentagon’s
combatant commands.
Shadow Intelligence Agency
Booz Allen prides itself on the long-term personal relationships it hasforged between its personnel and
their government clients. “We stay
for a
lifetime,” Mark J. Gerencser,
the senior vice president in charge
of Booz Allen’s government
contracting division, remarked in2006. A quick study of their
biographies posted on Booz Allen’s
Website suggests that this is indeedtrue
the senior management haveshuttled back and forth between thecompany and the government fortheir entire lives.
As the director of Booz Allen’s U.S.
government business, for example,
Gerencser serves in “several broad
based roles,” including “representing industry” to the
Officeof the Secretary of Defense and theJoint Chiefs of Staff, which manage
the Pentagon’s vast intelligence
operations. He is also a member of 
Booz Allen’s leadership team that
sets the strategic direction of the
company, and has run many of thewar games staged by Booz Allen for its government clients.
Just below him in the company’s
intelligence hierarchy is KenWiegand, another senior vicepresident. Weigand came to BoozAllen in 1983 after working for adecade in Air Force intelligence, and
now leads the firm’s work for
national intelligence and lawenforcement agencies and theDepartment of Homeland Security.His specialty, the Website says,includes imagery intelligenceoperations, which are managed by
the NGA, one of Booz Allen’s most
important clients.Senior vice president Joseph W.Mahaffee, a veteran of navalintelligence, is the leader of Booz
Allen’s Maryland procurement office
 business, which puts him in charge
of the company’s contracts with the
NSA in Fort Meade. He focuses on
 “meeting the Information Assurancemission objectives” of the NSA with
various technology services,including systems engineering,software development and
 “advanced telecommunicationsanalysis.” 
Another key Booz Allen figure at the NSA is Marty Hill, who came to thecompany after a 35-year career insignals intelligence and electronicwarfare and previously served as an
expert on “information operationscapabilities and policy” for DonaldRumsfeld’s Pentagon. He leads of 
team of 1,200 professionals
engaged in all aspects of “signalsintelligence” including technical
analysis, systems development and

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