Document
false--03-31FY2020000144364612000000.70.81.040.230.010.016000000006000000001599248251613339731400278531387199210.01000.02000.00250.01259000000200000200000P12YP5YP3YP3Y158120000000000001P10YP5YP4Y0.75P3YP5YP1YP3Y9.7178.55P10Y198969722261405211000001200000900000 0001443646 2019-04-01 2020-03-31 0001443646 2019-09-30 0001443646 2020-05-20 0001443646 2020-03-31 0001443646 2019-03-31 0001443646 2018-04-01 2019-03-31 0001443646 2017-04-01 2018-03-31 0001443646 2017-03-31 0001443646 2018-03-31 0001443646 us-gaap:TreasuryStockMember 2018-03-31 0001443646 us-gaap:AdditionalPaidInCapitalMember 2017-03-31 0001443646 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2017-04-01 2018-03-31 0001443646 us-gaap:RetainedEarningsMember 2017-04-01 2018-03-31 0001443646 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2018-04-01 2019-03-31 0001443646 us-gaap:TreasuryStockMember 2019-03-31 0001443646 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001443646 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2019-04-01 2020-03-31 0001443646 us-gaap:RetainedEarningsMember 2017-04-01 0001443646 us-gaap:RetainedEarningsMember 2019-04-01 2020-03-31 0001443646 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001443646 us-gaap:TreasuryStockMember 2020-03-31 0001443646 us-gaap:TreasuryStockMember 2019-04-01 2020-03-31 0001443646 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2018-03-31 0001443646 us-gaap:AdditionalPaidInCapitalMember 2017-04-01 2018-03-31 0001443646 us-gaap:RetainedEarningsMember 2018-04-01 2019-03-31 0001443646 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001443646 2017-04-01 0001443646 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2019-03-31 0001443646 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-04-01 0001443646 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2020-03-31 0001443646 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001443646 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-04-01 2018-03-31 0001443646 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001443646 us-gaap:TreasuryStockMember 2017-03-31 0001443646 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2019-03-31 0001443646 us-gaap:RetainedEarningsMember 2019-03-31 0001443646 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2017-03-31 0001443646 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2020-03-31 0001443646 us-gaap:RetainedEarningsMember 2020-03-31 0001443646 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2019-03-31 0001443646 us-gaap:TreasuryStockMember 2018-04-01 2019-03-31 0001443646 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001443646 us-gaap:RetainedEarningsMember 2017-03-31 0001443646 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-03-31 0001443646 us-gaap:RetainedEarningsMember 2018-03-31 0001443646 us-gaap:TreasuryStockMember 2017-04-01 2018-03-31 0001443646 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2020-03-31 0001443646 2019-04-01 0001443646 us-gaap:AccountingStandardsUpdate201802Member 2019-04-01 0001443646 srt:MaximumMember us-gaap:CustomerRelationshipsMember 2019-04-01 2020-03-31 0001443646 us-gaap:ComputerEquipmentMember 2019-04-01 2020-03-31 0001443646 srt:MinimumMember us-gaap:CustomerRelationshipsMember 2019-04-01 2020-03-31 0001443646 srt:MinimumMember us-gaap:FurnitureAndFixturesMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember us-gaap:FurnitureAndFixturesMember 2019-04-01 2020-03-31 0001443646 srt:MinimumMember us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2019-04-01 2020-03-31 0001443646 2020-04-01 2019-04-01 2020-03-31 0001443646 us-gaap:SalesChannelDirectlyToConsumerMember 2018-04-01 2019-03-31 0001443646 us-gaap:SalesChannelThroughIntermediaryMember 2018-04-01 2019-03-31 0001443646 us-gaap:SalesChannelDirectlyToConsumerMember 2019-04-01 2020-03-31 0001443646 us-gaap:SalesChannelDirectlyToConsumerMember 2017-04-01 2018-03-31 0001443646 us-gaap:SalesChannelThroughIntermediaryMember 2019-04-01 2020-03-31 0001443646 us-gaap:SalesChannelThroughIntermediaryMember 2017-04-01 2018-03-31 0001443646 bah:IntelligenceClientsMember country:US 2018-04-01 2019-03-31 0001443646 bah:IntelligenceClientsMember country:US 2017-04-01 2018-03-31 0001443646 bah:DefenseClientsMember country:US 2017-04-01 2018-03-31 0001443646 country:US 2018-04-01 2019-03-31 0001443646 bah:CivilClientsMember country:US 2019-04-01 2020-03-31 0001443646 bah:GlobalCommercialClientsMember 2019-04-01 2020-03-31 0001443646 country:US 2017-04-01 2018-03-31 0001443646 bah:GlobalCommercialClientsMember 2018-04-01 2019-03-31 0001443646 bah:DefenseClientsMember country:US 2019-04-01 2020-03-31 0001443646 bah:CivilClientsMember country:US 2017-04-01 2018-03-31 0001443646 bah:DefenseClientsMember country:US 2018-04-01 2019-03-31 0001443646 country:US 2019-04-01 2020-03-31 0001443646 bah:IntelligenceClientsMember country:US 2019-04-01 2020-03-31 0001443646 bah:GlobalCommercialClientsMember 2017-04-01 2018-03-31 0001443646 bah:CivilClientsMember country:US 2018-04-01 2019-03-31 0001443646 us-gaap:FixedPriceContractMember 2018-04-01 2019-03-31 0001443646 us-gaap:TimeAndMaterialsContractMember 2017-04-01 2018-03-31 0001443646 us-gaap:FixedPriceContractMember 2017-04-01 2018-03-31 0001443646 bah:CostReimbursableContractMember 2019-04-01 2020-03-31 0001443646 bah:CostReimbursableContractMember 2017-04-01 2018-03-31 0001443646 us-gaap:TimeAndMaterialsContractMember 2019-04-01 2020-03-31 0001443646 us-gaap:TimeAndMaterialsContractMember 2018-04-01 2019-03-31 0001443646 us-gaap:FixedPriceContractMember 2019-04-01 2020-03-31 0001443646 bah:CostReimbursableContractMember 2018-04-01 2019-03-31 0001443646 2020-04-01 2020-03-31 0001443646 us-gaap:RestrictedStockMember 2017-04-01 2018-03-31 0001443646 us-gaap:RestrictedStockMember 2019-04-01 2020-03-31 0001443646 us-gaap:RestrictedStockMember 2018-04-01 2019-03-31 0001443646 us-gaap:EmployeeStockOptionMember 2017-04-01 2018-03-31 0001443646 us-gaap:EmployeeStockOptionMember 2018-04-01 2019-03-31 0001443646 us-gaap:EmployeeStockOptionMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember us-gaap:OrderOrProductionBacklogMember 2019-04-01 2020-03-31 0001443646 srt:MinimumMember us-gaap:OrderOrProductionBacklogMember 2019-04-01 2020-03-31 0001443646 srt:MinimumMember us-gaap:ComputerSoftwareIntangibleAssetMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember us-gaap:ComputerSoftwareIntangibleAssetMember 2019-04-01 2020-03-31 0001443646 us-gaap:ComputerSoftwareIntangibleAssetMember 2020-03-31 0001443646 us-gaap:OrderOrProductionBacklogMember 2019-03-31 0001443646 us-gaap:TradeNamesMember 2019-03-31 0001443646 us-gaap:OrderOrProductionBacklogMember 2020-03-31 0001443646 us-gaap:TradeNamesMember 2020-03-31 0001443646 us-gaap:ComputerSoftwareIntangibleAssetMember 2019-03-31 0001443646 us-gaap:FurnitureAndFixturesMember 2019-03-31 0001443646 us-gaap:LeaseholdImprovementsMember 2019-03-31 0001443646 us-gaap:FurnitureAndFixturesMember 2020-03-31 0001443646 us-gaap:LeaseholdImprovementsMember 2020-03-31 0001443646 us-gaap:ComputerEquipmentMember 2020-03-31 0001443646 us-gaap:ComputerEquipmentMember 2019-03-31 0001443646 us-gaap:UnfavorableRegulatoryActionMember 2020-03-31 0001443646 us-gaap:UnfavorableRegulatoryActionMember 2019-03-31 0001443646 2008-07-31 2008-07-31 0001443646 2019-12-18 2019-12-18 0001443646 2009-12-11 2009-12-11 0001443646 2008-07-31 0001443646 bah:TrancheBLoansMember us-gaap:SecuredDebtMember 2020-03-31 0001443646 bah:TrancheALoansMember us-gaap:SecuredDebtMember 2020-03-31 0001443646 bah:TrancheALoansMember us-gaap:SecuredDebtMember 2019-03-31 0001443646 bah:RevolverMember 2019-03-31 0001443646 bah:TrancheBLoansMember us-gaap:SecuredDebtMember 2019-03-31 0001443646 bah:SeniorNotesDue2025Member us-gaap:SeniorNotesMember 2020-03-31 0001443646 bah:RevolverMember 2020-03-31 0001443646 bah:SeniorNotesDue2025Member us-gaap:SeniorNotesMember 2019-03-31 0001443646 us-gaap:SeniorNotesMember 2020-03-31 0001443646 bah:TrancheBLoansMember 2020-03-31 0001443646 bah:TrancheALoansMember 2020-03-31 0001443646 bah:SeniorNotesDue2025Member us-gaap:DebtInstrumentRedemptionPeriodThreeMember us-gaap:SeniorNotesMember 2019-04-01 2020-03-31 0001443646 bah:TrancheBLoansMember us-gaap:SecuredDebtMember 2019-11-26 0001443646 bah:OvernightFederalFundsRateMember 2019-04-01 2020-03-31 0001443646 bah:TrancheBLoansMember bah:AlternativeBaseRateABRMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember us-gaap:SecuredDebtMember 2019-04-01 2020-03-31 0001443646 bah:SeniorNotesDue2025Member us-gaap:SeniorNotesMember 2019-04-01 2020-03-31 0001443646 us-gaap:LondonInterbankOfferedRateLIBORMember 2019-04-01 2020-03-31 0001443646 bah:SeniorNotesDue2025Member us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:SeniorNotesMember 2019-04-01 2020-03-31 0001443646 bah:TrancheBLoansMember us-gaap:SecuredDebtMember 2019-11-25 0001443646 bah:TrancheBLoansMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-11-25 2019-11-25 0001443646 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember us-gaap:SecuredDebtMember 2019-04-01 2020-03-31 0001443646 bah:TrancheBLoansMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember bah:TrancheALoansMember bah:AlternativeBaseRateABRMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember bah:TrancheALoansMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-04-01 2020-03-31 0001443646 bah:SeniorNotesDue2025Member us-gaap:SeniorNotesMember 2017-04-25 0001443646 us-gaap:RevolvingCreditFacilityMember 2020-03-31 0001443646 us-gaap:LetterOfCreditMember 2020-03-31 0001443646 bah:TrancheBLoansMember us-gaap:BaseRateMember 2019-11-25 2019-11-25 0001443646 us-gaap:RevolvingCreditFacilityMember 2018-04-01 2019-03-31 0001443646 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0001443646 bah:TrancheBLoansMember 2018-04-01 2019-03-31 0001443646 bah:TrancheBLoansMember 2020-01-01 2020-03-31 0001443646 bah:SeniorNotesDue2025Member us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:SeniorNotesMember 2019-04-01 2020-03-31 0001443646 bah:TrancheBLoansMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-11-26 2019-11-26 0001443646 bah:TrancheALoansMember 2018-04-01 2019-03-31 0001443646 srt:MinimumMember bah:TrancheALoansMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-04-01 2020-03-31 0001443646 bah:TrancheALoansMember 2020-01-01 2020-03-31 0001443646 srt:MinimumMember bah:TrancheALoansMember bah:AlternativeBaseRateABRMember 2019-04-01 2020-03-31 0001443646 us-gaap:RevolvingCreditFacilityMember 2019-04-01 2020-03-31 0001443646 bah:TrancheBLoansMember us-gaap:BaseRateMember 2019-11-26 2019-11-26 0001443646 srt:MinimumMember us-gaap:SecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-04-01 2020-03-31 0001443646 bah:TrancheALoansMember us-gaap:SecuredDebtMember 2019-04-01 2020-03-31 0001443646 bah:TrancheBLoansMember us-gaap:SecuredDebtMember 2019-04-01 2020-03-31 0001443646 us-gaap:SeniorNotesMember 2019-04-01 2020-03-31 0001443646 us-gaap:SeniorNotesMember 2017-04-01 2018-03-31 0001443646 bah:TrancheBLoansMember us-gaap:SecuredDebtMember 2017-04-01 2018-03-31 0001443646 us-gaap:RevolvingCreditFacilityMember 2018-04-01 2019-03-31 0001443646 us-gaap:RevolvingCreditFacilityMember 2017-04-01 2018-03-31 0001443646 us-gaap:RevolvingCreditFacilityMember 2019-04-01 2020-03-31 0001443646 bah:TrancheALoansMember us-gaap:SecuredDebtMember 2018-04-01 2019-03-31 0001443646 bah:TrancheBLoansMember us-gaap:SecuredDebtMember 2018-04-01 2019-03-31 0001443646 bah:TrancheALoansMember us-gaap:SecuredDebtMember 2017-04-01 2018-03-31 0001443646 us-gaap:SeniorNotesMember 2018-04-01 2019-03-31 0001443646 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-04-01 2020-03-31 0001443646 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember bah:AlternativeBaseRateABRMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember bah:AlternativeBaseRateABRMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-04-01 2020-03-31 0001443646 us-gaap:RevolvingCreditFacilityMember 2019-03-31 0001443646 bah:ForwardStartingFloatingToFixedInterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0001443646 us-gaap:OtherCurrentAssetsMember 2019-03-31 0001443646 us-gaap:OtherNoncurrentAssetsMember 2019-03-31 0001443646 bah:ForwardStartingFloatingToFixedInterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-10-01 2018-12-31 0001443646 bah:ForwardStartingFloatingToFixedInterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-04-01 2020-03-31 0001443646 us-gaap:OtherNoncurrentLiabilitiesMember 2020-03-31 0001443646 us-gaap:OtherCurrentLiabilitiesMember 2020-03-31 0001443646 us-gaap:OtherCurrentLiabilitiesMember 2019-03-31 0001443646 us-gaap:OtherNoncurrentLiabilitiesMember 2019-03-31 0001443646 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-04-01 2019-03-31 0001443646 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-04-01 2018-03-31 0001443646 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-04-01 2020-03-31 0001443646 bah:TaxYears20132015Member 2019-04-01 2020-03-31 0001443646 us-gaap:StateAndLocalJurisdictionMember 2020-03-31 0001443646 us-gaap:DomesticCountryMember 2020-03-31 0001443646 bah:TaxYears20162019Member 2019-04-01 2020-03-31 0001443646 us-gaap:ForeignCountryMember 2020-03-31 0001443646 bah:OfficerMedicalPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-04-01 2020-03-31 0001443646 bah:OfficerMedicalPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-04-01 2019-03-31 0001443646 bah:OfficerMedicalPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-04-01 2018-03-31 0001443646 bah:OfficerMedicalPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-03-31 0001443646 bah:OfficerMedicalPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-03-31 0001443646 bah:OfficerMedicalPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2020-03-31 0001443646 bah:OfficerMedicalPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-03-31 0001443646 bah:RetiredOfficersBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-04-01 2018-03-31 0001443646 bah:RetiredOfficersBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-04-01 2019-03-31 0001443646 bah:RetiredVicePresidentsBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-04-01 2019-03-31 0001443646 bah:RetiredVicePresidentsBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-04-01 2020-03-31 0001443646 bah:RetiredVicePresidentsBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-04-01 2018-03-31 0001443646 bah:RetiredOfficersBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-04-01 2020-03-31 0001443646 srt:OfficerMember bah:RetiredVicePresidentsBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-04-01 2020-03-31 0001443646 bah:RetiredVicePresidentsBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-03-31 0001443646 bah:RetiredOfficersBonusPlanandRetiredVicePresidentBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-03-31 0001443646 srt:OfficerMember bah:RetiredOfficersBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-04-01 2018-03-31 0001443646 srt:OfficerMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-03-31 0001443646 srt:OfficerMember bah:RetiredOfficersBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-04-01 2019-03-31 0001443646 bah:RetiredOfficersBonusPlanandRetiredVicePresidentBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2020-03-31 0001443646 us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember 2019-04-01 2020-03-31 0001443646 srt:OfficerMember bah:RetiredOfficersBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-04-01 2020-03-31 0001443646 bah:RetiredVicePresidentsBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2020-03-31 0001443646 srt:OfficerMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2020-03-31 0001443646 bah:RetiredVicePresidentsBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-03-31 0001443646 srt:OfficerMember bah:RetiredVicePresidentsBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-04-01 2018-03-31 0001443646 srt:OfficerMember bah:RetiredVicePresidentsBonusPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-04-01 2019-03-31 0001443646 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-04-01 2019-03-31 0001443646 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-03-31 0001443646 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-03-31 0001443646 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-03-31 0001443646 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0001443646 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-04-01 2019-03-31 0001443646 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-04-01 2020-03-31 0001443646 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2019-04-01 2020-03-31 0001443646 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-04-01 2019-03-31 0001443646 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2018-04-01 2019-03-31 0001443646 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2017-04-01 2018-03-31 0001443646 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2017-04-01 2018-03-31 0001443646 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-04-01 2018-03-31 0001443646 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-04-01 2018-03-31 0001443646 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-03-31 0001443646 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-03-31 0001443646 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-03-31 0001443646 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-03-31 0001443646 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-04-01 2020-03-31 0001443646 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2020-03-31 0001443646 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-04-01 2020-03-31 0001443646 bah:DividendequivalentMember 2018-04-01 2019-03-31 0001443646 bah:DividendequivalentMember 2017-04-01 2018-03-31 0001443646 bah:DividendequivalentMember 2019-04-01 2020-03-31 0001443646 us-gaap:CommonClassAMember 2018-04-01 2019-03-31 0001443646 us-gaap:CommonClassAMember 2019-05-23 0001443646 us-gaap:CommonClassAMember 2019-04-01 2020-03-31 0001443646 us-gaap:CommonClassAMember 2019-03-31 0001443646 us-gaap:CommonClassAMember 2020-03-31 0001443646 bah:AmendedAndRestatedEquityIncentivePlanMember 2019-04-01 2020-03-31 0001443646 bah:AmendedAndRestatedEquityIncentivePlanMember 2019-03-31 0001443646 bah:AmendedAndRestatedEquityIncentivePlanMember 2020-03-31 0001443646 us-gaap:EmployeeStockOptionMember bah:AmendedAndRestatedEquityIncentivePlanMember 2020-03-31 0001443646 us-gaap:EmployeeStockOptionMember bah:AmendedAndRestatedEquityIncentivePlanMember 2019-04-01 2020-03-31 0001443646 us-gaap:RestrictedStockMember bah:AnnualIncentivePlanMember us-gaap:CommonClassAMember 2017-04-01 2018-03-31 0001443646 us-gaap:EmployeeStockOptionMember bah:AmendedAndRestatedEquityIncentivePlanMember 2018-04-01 2019-03-31 0001443646 us-gaap:RestrictedStockMember bah:AnnualIncentivePlanMember us-gaap:CommonClassAMember 2018-04-01 2019-03-31 0001443646 us-gaap:RestrictedStockMember bah:AnnualIncentivePlanMember us-gaap:CommonClassAMember 2019-04-01 2020-03-31 0001443646 us-gaap:EmployeeStockOptionMember bah:AmendedAndRestatedEquityIncentivePlanMember 2017-04-01 2018-03-31 0001443646 us-gaap:EmployeeStockOptionMember bah:AmendedAndRestatedEquityIncentivePlanMember 2019-03-31 0001443646 us-gaap:EmployeeStockOptionMember 2018-04-01 2019-03-31 0001443646 us-gaap:EmployeeStockOptionMember 2017-04-01 2018-03-31 0001443646 us-gaap:EmployeeStockOptionMember 2019-04-01 2020-03-31 0001443646 srt:MinimumMember us-gaap:EmployeeStockOptionMember 2019-04-01 2020-03-31 0001443646 bah:OrdinaryCashDividendMember 2020-01-01 2020-03-31 0001443646 us-gaap:RestrictedStockMember bah:AmendedAndRestatedEquityIncentivePlanMember us-gaap:CommonClassAMember 2018-04-01 2019-03-31 0001443646 srt:MaximumMember us-gaap:EmployeeStockOptionMember 2019-04-01 2020-03-31 0001443646 srt:MinimumMember 2020-03-31 0001443646 bah:SpecialCashDividendMember 2012-07-30 2012-07-30 0001443646 us-gaap:RestrictedStockMember bah:AmendedAndRestatedEquityIncentivePlanMember us-gaap:CommonClassAMember 2019-04-01 2020-03-31 0001443646 srt:DirectorMember us-gaap:RestrictedStockMember bah:AmendedAndRestatedEquityIncentivePlanMember us-gaap:CommonClassAMember 2019-04-01 2020-03-31 0001443646 bah:SpecialCashDividendMember us-gaap:EmployeeStockOptionMember bah:AmendedAndRestatedEquityIncentivePlanMember 2012-07-30 0001443646 us-gaap:CommonClassAMember 2010-11-01 2020-03-31 0001443646 us-gaap:RestrictedStockUnitsRSUMember bah:AmendedAndRestatedEquityIncentivePlanMember us-gaap:CommonClassAMember 2019-04-01 2020-03-31 0001443646 srt:MaximumMember 2020-03-31 0001443646 bah:OrdinaryCashDividendMember 2019-10-01 2019-12-31 0001443646 bah:OrdinaryCashDividendMember 2019-04-01 2019-06-30 0001443646 us-gaap:RestrictedStockMember bah:AnnualIncentivePlanMember us-gaap:CommonClassAMember 2020-03-31 0001443646 us-gaap:RestrictedStockMember bah:AnnualIncentivePlanMember us-gaap:CommonClassAMember 2019-03-31 0001443646 us-gaap:GeneralAndAdministrativeExpenseMember 2019-04-01 2020-03-31 0001443646 us-gaap:CostOfSalesMember 2019-04-01 2020-03-31 0001443646 us-gaap:GeneralAndAdministrativeExpenseMember 2017-04-01 2018-03-31 0001443646 us-gaap:GeneralAndAdministrativeExpenseMember 2018-04-01 2019-03-31 0001443646 us-gaap:CostOfSalesMember 2018-04-01 2019-03-31 0001443646 us-gaap:CostOfSalesMember 2017-04-01 2018-03-31 0001443646 bah:AmendedAndRestatedEquityIncentivePlanMember us-gaap:EmployeeStockOptionMember 2019-04-01 2020-03-31 0001443646 bah:OrdinaryCashDividendMember 2019-07-01 2019-09-30 0001443646 bah:AnnualIncentivePlanMember 2010-10-01 2010-10-01 0001443646 srt:OfficerMember us-gaap:RestrictedStockMember bah:AnnualIncentivePlanMember us-gaap:CommonClassAMember 2019-04-01 2020-03-31 0001443646 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001443646 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001443646 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001443646 us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001443646 us-gaap:FairValueInputsLevel3Member us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:FairValueMeasurementsRecurringMember 2017-03-31 0001443646 us-gaap:FairValueInputsLevel3Member us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001443646 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001443646 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001443646 us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001443646 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001443646 us-gaap:FairValueInputsLevel3Member us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001443646 bah:PledgeObligationMember srt:AffiliatedEntityMember 2017-03-31 0001443646 bah:ServicesPerformedUnderSubcontractorMember srt:AffiliatedEntityMember 2019-04-01 2020-03-31 0001443646 srt:AffiliatedEntityMember 2020-03-31 0001443646 bah:ServicesPerformedUnderSubcontractorMember srt:AffiliatedEntityMember 2018-04-01 2019-03-31 0001443646 bah:ServicesPerformedUnderSubcontractorMember srt:AffiliatedEntityMember 2020-03-31 0001443646 bah:FormerStockholderLitigationMember 2014-09-24 0001443646 us-gaap:FinancialStandbyLetterOfCreditMember 2020-03-31 0001443646 bah:FormerStockholderLitigationMember 2010-09-07 0001443646 us-gaap:FinancialStandbyLetterOfCreditMember 2015-03-31 0001443646 us-gaap:GovernmentContractsConcentrationRiskMember 2018-04-01 2019-03-31 0001443646 us-gaap:FinancialStandbyLetterOfCreditMember 2019-04-01 2020-03-31 0001443646 us-gaap:FinancialStandbyLetterOfCreditMember 2019-03-31 0001443646 bah:FormerStockholderLitigationMember 2010-07-02 0001443646 bah:FormerStockholderLitigationMember 2008-07-03 2009-12-15 0001443646 us-gaap:GovernmentContractsConcentrationRiskMember 2017-04-01 2018-03-31 0001443646 bah:FormerStockholderLitigationMember 2010-04-01 2017-03-31 0001443646 bah:FormerStockholderLitigationMember 2015-04-16 2015-04-16 0001443646 us-gaap:GovernmentContractsConcentrationRiskMember 2019-04-01 2020-03-31 0001443646 us-gaap:FinancialStandbyLetterOfCreditMember 2018-04-01 2019-03-31 0001443646 bah:UnitedStatesCourtofAppealsfortheSecondCircuitMember bah:FormerStockholderLitigationMember 2010-09-07 0001443646 bah:UnitedStatesCourtofAppealsfortheNinthCircuitMember bah:FormerStockholderLitigationMember 2017-01-09 2017-01-09 0001443646 bah:UnitedStatesDistrictCourtForTheEasternDistrictOfVirginiaStyledLangleyV.BoozAllenHamiltonHoldingCorp.Member 2017-09-05 2017-09-05 0001443646 2018-04-01 2018-06-30 0001443646 2018-07-01 2018-09-30 0001443646 2018-10-01 2018-12-31 0001443646 2019-01-01 2019-03-31 0001443646 2019-07-01 2019-09-30 0001443646 2019-04-01 2019-06-30 0001443646 2019-10-01 2019-12-31 0001443646 2020-01-01 2020-03-31 0001443646 bah:SECSchedule1209ValuationAllowanceAccountsReceivableMember 2018-04-01 2019-03-31 0001443646 bah:SECSchedule1209ValuationAllowanceAccountsReceivableMember 2018-03-31 0001443646 bah:SECSchedule1209ValuationAllowanceAccountsReceivableMember 2019-03-31 0001443646 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2018-03-31 0001443646 bah:SECSchedule1209ValuationAllowanceAccountsReceivableMember 2019-04-01 2020-03-31 0001443646 bah:SECSchedule1209ValuationAllowanceAccountsReceivableMember 2020-03-31 0001443646 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2019-03-31 0001443646 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2017-04-01 2018-03-31 0001443646 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2017-03-31 0001443646 bah:SECSchedule1209ValuationAllowanceAccountsReceivableMember 2017-03-31 0001443646 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2019-04-01 2020-03-31 0001443646 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2020-03-31 0001443646 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2018-04-01 2019-03-31 0001443646 bah:SECSchedule1209ValuationAllowanceAccountsReceivableMember 2017-04-01 2018-03-31 0001443646 us-gaap:RestrictedStockMember us-gaap:CommonClassAMember us-gaap:SubsequentEventMember 2020-04-01 2020-06-30 0001443646 us-gaap:SubsequentEventMember 2020-05-26 2020-05-26 iso4217:USD iso4217:USD xbrli:shares xbrli:pure bah:segment bah:employee xbrli:shares bah:plaintiff bah:claim bah:vote bah:director bah:agreement bah:financial_institution



 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________ 
FORM 10-K
 ___________________________________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2020
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File No. 001-34972
 ___________________________________
Booz Allen Hamilton Holding Corporation
(Exact name of registrant as specified in its charter)
 ___________________________________
Delaware
 
26-2634160
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
8283 Greensboro Drive,
 McLean,
Virginia
 
22102
(Address of principal executive offices)
 
(Zip Code)
(703) 902-5000
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Class A Common Stock
BAH
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None.
__________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes      No  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes      No  
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer
  
  
Accelerated filer
  
 
 
 
 
Non-accelerated filer
  
  
Smaller reporting company
  
 
 
 
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  





As of September 30, 2019, the market value of the voting and non-voting common equity held by non-affiliates based on the closing price as of that day was $9,760,433,437.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Shares Outstanding
as of May 20, 2020
Class A Common Stock
137,938,100

 
 
 
 
 
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement for its Annual Meeting of Stockholders scheduled for July 29, 2020 are incorporated by reference into Part III.





TABLE OF CONTENTS
 
 
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 1B.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
Item 7.
 
 
 
Item 7A.
 
 
 
Item 8.
 
 
 
Item 9.
 
 
 
Item 9A.
 
 
 
Item 9B.
 
 
 
 
 
 
Item 10.
 
 
 
Item 11.
 
 
 
Item 12.
 
 
 
Item 13.
 
 
 
Item 14.
 
 
 
Item 15.
 
 
 
Item 16.






INTRODUCTORY NOTE
Unless the context otherwise indicates or requires, as used in this Annual Report on Form 10-K for the fiscal year ended March 31, 2020, references to: (i) “we,” “us,” “our” or our “company” refer to Booz Allen Hamilton Holding Corporation, its consolidated subsidiaries and predecessors; (ii) “Booz Allen Holding” refers to Booz Allen Hamilton Holding Corporation exclusive of its subsidiaries; (iii) “Booz Allen Investor” refers to Booz Allen Hamilton Investor Corporation, a wholly-owned subsidiary of Booz Allen Holding; (iv) “Booz Allen Hamilton” and "Booz Allen" refer to Booz Allen Hamilton Inc., our primary operating company and a wholly-owned subsidiary of Booz Allen Holding; and (v) “fiscal,” when used in reference to any twelve-month period ended March 31, refers to our fiscal years ended March 31. Unless otherwise indicated, information contained in this Annual Report is as of March 31, 2020. We have made rounding adjustments to reach some of the figures included in this Annual Report and, unless otherwise indicated, percentages presented in this Annual Report are approximate.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained or incorporated in this Annual Report include forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “forecasts,” “expects,” “intends,” “plans,” “anticipates,” “projects,” “outlook,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “preliminary,” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. These forward-looking statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. These risks and other factors include:
any issue that compromises our relationships with the U.S. government or damages our professional reputation, including negative publicity concerning government contractors in general or us in particular;
changes in U.S. government spending, including a continuation of efforts by the U.S. government to decrease spending for management support service contracts, and mission priorities that shift expenditures away from agencies or programs that we support;
efforts by Congress and other U.S. government bodies to reduce U.S. government spending and address budgetary constraints and the U.S. deficit, as well as associated uncertainty around the timing, extent, nature and effect of such efforts;
delayed funding of our contracts due to uncertainty relating to funding of the U.S. government and a possible failure of Congressional efforts to approve such funding and to craft a long-term agreement on the U.S. government’s ability to incur indebtedness in excess of its current limits, or changes in the pattern or timing of government funding and spending;
U.S. government shutdowns as a result of the failure by elected officials to fund the government;
failure to comply with numerous laws and regulations, including, but not limited to, the Federal Acquisition Regulation ("FAR"), the False Claims Act, the Defense Federal Acquisition Regulation Supplement and FAR Cost Accounting Standards and Cost Principles;
the effects of the COVID-19 outbreak, and other pandemics or widespread health epidemics, including disruptions to our workforce and the impact on government spending and demand for our solutions;
our ability to compete effectively in the competitive bidding process and delays or losses of contract awards caused by competitors’ protests of major contract awards received by us;
variable purchasing patterns under U.S. government GSA schedules, blanket purchase agreements and indefinite delivery, indefinite quantity, or IDIQ contracts;
the loss of General Services Administration Multiple Award schedule contracts, or GSA schedules, or our position as prime contractor on government-wide acquisition contract vehicles, or GWACs;
changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time, and resources for our contracts;
changes in estimates used in recognizing revenue;
our ability to realize the full value of and replenish our backlog, generate revenue under certain of our contracts, and the timing of our receipt of revenue under contracts included in backlog;
internal system or service failures and security breaches, including, but not limited to, those resulting from external or internal cyber attacks on our network and internal systems;
risks related to the potential implementation and operation of new financial management systems;

1




an inability to attract, train, or retain employees with the requisite skills and experience;
an inability to timely hire, assimilate and effectively utilize our employees, ensure that employees obtain and maintain necessary security clearances and/or effectively manage our cost structure;
the loss of members of senior management or failure to develop new leaders;
misconduct or other improper activities from our employees or subcontractors, including the improper use or release of our clients’ sensitive or classified information;
increased competition from other companies in our industry;
failure to maintain strong relationships with other contractors; or the failure of contractors with which we have entered into a sub- or prime-contractor relationship to meet their obligations to us or our clients;
inherent uncertainties and potential adverse developments in legal or regulatory proceedings, including litigation, audits, reviews, and investigations, which may result in materially adverse judgments, settlements, withheld payments, penalties, or other unfavorable outcomes including debarment, as well as disputes over the availability of insurance or indemnification;
failure to comply with special U.S. government laws and regulations relating to our international operations;
risks associated with increased competition, new relationships, clients, capabilities, and service offerings in our U.S. and international businesses;
risks related to changes to our operating structure, capabilities, or strategy intended to address client needs, grow our business or respond to market developments;
the adoption by the U.S. government of new laws, rules, and regulations, such as those relating to organizational conflicts of interest issues or limits;
risks related to completed and future acquisitions, including our ability to realize the expected benefits from such acquisitions;
the incurrence of additional tax liabilities, including as a result of changes in tax laws or management judgments involving complex tax matters;
risks inherent in the government contracting environment;
continued efforts to change how the U.S. government reimburses compensation related costs and other expenses or otherwise limit such reimbursements and an increased risk of compensation being deemed unreasonable and unallowable or payments being withheld as a result of U.S. government audit, review, or investigation;
increased insourcing by various U.S. government agencies due to changes in the definition of “inherently governmental” work, including proposals to limit contractor access to sensitive or classified information and work assignments;
the size of our addressable markets and the amount of U.S. government spending on private contractors;
risks related to our indebtedness and credit facilities which contain financial and operating covenants;
the impact of changes in accounting rules and regulations, or interpretations thereof, that may affect the way we recognize and report our financial results, including changes in accounting rules governing recognition of revenue; and
other risks and factors listed under “Item 1A. Risk Factors” and elsewhere in this Annual Report.
In light of these risks, uncertainties, and other factors, the forward-looking statements might not prove to be accurate and you should not place undue reliance upon them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.


2




PART I
 
Overview
For more than 100 years, business, government, and military leaders have turned to Booz Allen Hamilton to solve their most complex problems. A values-driven organization with a guiding purpose to empower people to change the world, we remain focused on providing long-term solutions to our clients’ emerging and ever-changing challenges. Our people are passionate about their service to our clients and their missions and the communities in which we live and work. This is our heritage, and it is as true today as when the Company was founded in 1914.
A collaborative culture is an integral part of our unique operating model, which encourages our people to bring a diversity of ideas and talent to every client engagement. Building on our legacy of passionate client service and guided by our comprehensive Vision 2020 strategy, we blend deep expertise in management consulting with advanced technical capabilities to deliver powerful solutions. By investing in markets, capabilities, and talent and building new business models, including ventures, partnerships, and product offerings, we believe we are creating sustainable quality growth for the Company.
Through our dedication to our clients' missions, and a commitment to evolving our business to address their needs, we have longstanding relationships with our clients, some more than 75 years. We support critical missions for a diverse base of federal government clients, including nearly all of the U.S. government’s cabinet-level departments, as well as increasingly for top-tier commercial and international clients. We support our federal government clients by helping them tackle their most complex and pressing challenges such as protecting soldiers in combat and supporting their families, advancing cyber capabilities, keeping our national infrastructure secure, enabling and enhancing digital services, transforming the healthcare system, and improving governmental efficiency to achieve better outcomes. We serve commercial clients across industries including aerospace, financial services, health and life sciences, energy, and transportation. Our international clients are primarily in Europe, the Middle East and Southeast Asia.
History and Corporate Structure
We were founded in 1914 by Edwin Booz, one of the pioneers of management consulting. In 1940, we began serving the U.S. government by advising the Secretary of the Navy in preparation for World War II. As the needs of our clients have grown more complex, we have expanded beyond our management consulting foundation to develop deep expertise in the fields of analytics, digital solutions, engineering and cyber.
We are organized and operate as a corporation, but sometimes use the term “partner” to refer to our Chief Executive Officer and our Senior and Executive Vice Presidents. The use of the term “partner” reflects our collaborative culture and is not meant to imply that we operate our Company as, or have any intention to create a legal entity that is, a partnership.
Booz Allen Holding was incorporated in Delaware in May 2008 to serve as the top-level holding company for the consolidated Booz Allen Hamilton U.S. government consulting business. On July 31, 2008, Booz Allen Hamilton completed the separation of its U.S. government consulting business from its legacy commercial and international consulting business, the spin-off of the commercial and international business, and the sale of 100% of its outstanding common stock to Booz Allen Holding, or the Carlyle Acquisition, which was majority owned by The Carlyle Group and certain of its affiliated investment funds, or Carlyle. Our Company is a corporation that is the successor to the U.S. government consulting business of Booz Allen Hamilton following the separation. Between 2013 and 2016, we registered the offering and sale of common stock by Carlyle, and on December 6, 2016, Carlyle disposed of its remaining shares of the Company's Class A Common Stock in a registered secondary offering.
Our Institution and Operating Model
We operate as a single profit/loss center with a single bonus pool for leadership. Our operating model encourages collaboration allowing us to bring a mix of the best talent to every client engagement. Our partnership-style culture provides the operational flexibility necessary to quickly mobilize people and capabilities to react to market changes faster than our competitors. As a result, we can go to market as a whole firm rather than as a collection of individual competing business units or profit centers. Our operating model also encourages and enables continuous investment in the right markets, capabilities, and talent to position the Company for further growth by anticipating what government and commercial clients will need next.
Across all markets, we address our clients’ complex and evolving needs by deploying multifaceted teams with a combination of deep mission understanding, market-leading functional capabilities, consulting talent, and true technical and engineering expertise. These client-facing teams, which are fundamental to our differentiated value proposition, better position us to create market-relevant growth strategies and plan for and meet current, future, and prospective market needs. They also help us identify and deliver against diverse client needs in a more agile manner. Our significant win rates during fiscal 2020 on new and re-competed contracts of 61% and 90%, respectively, as compared to 60% and 83%, respectively, in fiscal 2019 demonstrate the strength of this approach.

3






Our People
Our ability to deliver lasting value and results to our clients has always been, and continues to be, a product of the strong character, expertise and tremendous passion of our people. Our approximately 27,200 employees work to solve hard problems by making our clients’ missions their own, combining decades of consulting and domain expertise with functional expertise in areas such as analytics, digital solutions, engineering, and cybersecurity. Our talented people are supported by a culture of innovation, diversity, and inclusion.
Our people at a glance:
81 partners
Nearly 29% are veterans, including 18 partners
Approximately 86% hold bachelor’s degrees; approximately 40% hold master’s degrees; and approximately 3% hold doctoral degrees
Approximately 66% hold security clearances
We attract and retain the best people by providing them with opportunities to grow, build skills, and be appreciated for their contributions as they work on our clients’ toughest challenges. We continuously invest in elements of our employee value proposition to ensure we remain an employer of choice in a highly competitive talent marketplace. This value proposition creates a virtuous circle in which our employees know they are making a difference while growing their careers, which furthers their commitment to Booz Allen and makes them ambassadors for future talent. Booz Allen has always recognized the importance of our people and culture, and we continue to build on that strong legacy as we support our employees to meet their full potential.
We also foster the spirit of innovation through events, partnerships, programs, and tools that facilitate collaboration to tackle a common challenge or pitch new products and capabilities. It is the diversity of our employees that fuels this innovation and enhances the way we work by bringing a wealth of experiences and expertise to any challenge. We celebrate difference in all forms, building an environment of diversity and inclusion regardless of ethnicity, religion, gender, sexual orientation, age or disability.
The importance we place on our people continues to receive external recognition. Ethisphere, a global leader in defining and advancing ethical business practices, has recognized Booz Allen as one of the World’s Most Ethical Companies in 2020. For the tenth consecutive year, Booz Allen has received a perfect score on the Corporate Equality Index (CEI), a national benchmarking survey on corporate policies and practices related to LGBTQ workplace equality administered by the Human Rights Campaign Foundation. In addition, for the fifth consecutive year, Booz Allen received a perfect score on the 2019 Disability Equality Index (DEI), and has been named a DEI "Best Place to Work for Disability Inclusion." Fortune named us as one of the World’s Most Admired Companies for the ninth consecutive year and Forbes selected us as one of the Best Employers for Diversity, a Best Management Consulting Firm, and a Best Employer for New Grads in 2019. We have also been honored with industry awards that showcase our employer brand, including Washington Business Journal’s “Business of Pride”, Mental Health America’s “Corporate Excellence Award”, U.S. Small Business Association’s Dwight D. Eisenhower “Award for Excellence”, "Top-Rated Workplace" and #13 ranked "Top-Rated Workplaces for Work-Life Balance" by Indeed, “Top 10 Military Spouse Friendly Employers” by MilitarySpouse, "Best for Vets" by Military Times, "Working Mother Top 100", #10 ranked "Best Places to Work in IT" by Computer World and #23 ranked "Largest Global Defense Contractor" by DefenseNews.
Beyond their client work, our people and our Company demonstrate passionate service in their commitment to our country, military, and communities. Our social impact strategy connects people, organizations, and communities with transformational innovation and technological solutions that power human potential and wider social impact in a spirit of passionate service. For example, we support a variety of organizations assisting veterans and military families, including supporting training in cyber and science, technology, engineering, and math (STEM) careers, and providing data analytics and other technology solutions in support of operations. Our partners include United Service Organization (USO) of Metropolitan Washington-Baltimore, the Hiring Our Heroes program of the U.S. Chamber of Commerce, and the Elizabeth Dole Foundation.
In the past year, we issued 478 "dollars for doers" volunteer service grants to approximately 390 nonprofit groups and schools to recognize employees who volunteered more than 40 hours per year to each of these organizations. Employees recorded more than 83,000 total hours of service during the year and donated generously through the Booz Allen Cares Employee Giving Campaign. The campaign included matching donations to eligible organizations of our employees’ choice, with the highest number of employees donating to The Booz Allen Employee Resilience Fund, Booz Allen Foundation, The Marine Toys for Tots Foundation, and St. Jude Children’s Research Hospital. We deployed employees to use their technical and

4




consulting skills to help nonprofits solve their biggest problems through pro bono initiatives for organizations such as the Thurgood Marshall College Fund, American Society of Civil Engineers, and Support the Enlisted Project.
Purpose and Values. As one of the first organizations in the United States to adopt a formal code of business ethics, we have always believed that doing what’s right and holding ourselves and others accountable is the only way to do business. Our people exemplify our purpose to "empower people to change the world" and live our values:
Ferocious Integrity: Do right; hold ourselves accountable
Unflinching Courage: Speak truth to power; maintain convictions; bring bold thinking
Passionate Service: Embrace the mission; build community through generosity; make meaningful connections; listen and act with empathy
Collective Ingenuity: Find the biggest problem and solve it; be resourceful and creative; seek to make the biggest difference; harness the power of diversity; be devoted to the team
Champion’s Heart: Crave being the best; bring joy to the pursuit; learn from failure; compete with passion

Functional Service Offerings
We offer five functional service offerings, which are supported by continued investment and innovation, that drive our capacity to meet market demand today and into the future. We provide a range of technological capabilities that have had an enduring impact for our clients, our people, and the communities where we live and work.
Our functional service offerings are summarized below:
Consulting focuses on the talent and expertise needed to solve client problems and develop mission-oriented solutions for specific domains, business strategies, human capital, and operations through new and innovative approaches. We help clients boost organizational performance, deploy new technologies in smart ways, and change and streamline processes to achieve better outcomes.
Analytics focuses on delivering transformational solutions in the areas of decision analytics (including operations research and cost estimation), automation, and data science (including predictive modeling and machine learning) as well as new or emerging areas such as deep learning and artificial intelligence. We pioneer new approaches to apply analytical technology to clients' problems, draft industry-defining publications, and introduce transformative products such as graphics processing unit (GPU) accelerated deep learning software to the market.
Digital Solutions combines the power of modern systems development techniques and cloud platforms with the power of machine learning to transform customer and mission experiences. We blend in-depth client mission understanding and digital technical expertise with a consultative approach. We develop, design, and implement powerful solutions built on contemporary methodologies and modern architectures. We accelerate clients to open, cloud native environments, where capability can be securely developed and deployed at scale, and effort allocated toward data management challenges is redirected to analysis and insights.
Engineering delivers engineering services and solutions to define, develop, implement, sustain, and modernize complex physical systems. We leverage mature engineering methodologies to solve our clients' most complex problems. We bring a holistic understanding of client needs and technical strategy as well as policy experts to deliver purpose-fit solutions to problems. Our engineering capabilities include external industry standard certifications (e.g., International Organization for Standardization 90001 and AS9100).
Cyber focuses on active prevention, detection, and cost effectiveness. Active prevention includes methods of securing platforms and enterprises against cyber attacks. Detection is the instrumentation of networks to provide lead indicators of penetrations. Cost effectiveness includes our integrated engineering capabilities. Our cyber capabilities are rooted in decades of service to the U.S. federal intelligence community and today afford us the opportunity to maintain technical expertise in network security. With decades of mission intelligence combined with the most advanced tools available, we help clients understand the business value of cyber risk management and prepare for future cybersecurity needs with a lens toward efficiency and effectiveness.
Innovation and Solutions
We are developing transformative solutions that build lasting value for our clients and drive focused innovation to seed next generation businesses in the areas of artificial intelligence, immersive technologies, secure mobility, advanced engineering (such as directed energy), and customer-centric modern digital platforms. We are advancing and creating the infrastructure and mechanics for new and disruptive business models by enabling a vibrant innovation culture, bringing a solutions mindset to our

5




marketplace and sales force, and by building the Company’s presence and brand in the external innovation ecosystem. As a gateway to driving innovation, our solutions combine market-prioritized needs with the Company’s capabilities and products. These solutions enhance future revenue opportunities, monetize the firm's intellectual property, and create differentiated business models and sales channels to drive greater value for our clients.
In addition, we are an essential partner in regional innovation communities all over the country. Through our innovation ecosystem, we are focused on solution co-creation and technology scouting, and are physically co-locating, co-creating, mentoring, incubating, contributing, and investing with organizations in Washington, D.C.; Boston, Massachusetts; Austin, Texas; San Francisco, California; and from Seattle, Washington to San Diego, California (the corridor of venture capitalists and digital powerhouses), with hubs in Herndon, Virginia; Laurel, Maryland; and Charleston, South Carolina. We harness next-generation technologies being created in academic, startup, and big technology firms to imagine and incubate new offerings, solutions, and growth for the Company.
Our Long-Term Growth Strategy
Vision 2020 is a comprehensive strategy to transform Booz Allen and create sustainable quality growth for the Company. Fiscal 2020 was the seventh year of implementing the strategy, but its design reaches back to before the government market began to contract in 2011 and 2012. We anticipated the market downturn and set in place a strategy that would allow us to emerge in a strong position vis-à-vis our competitors. Under Vision 2020, we are:
Moving closer to the center of our clients’ core missions
Increasing the technical content of our work
Attracting and retaining superior talent in diverse areas of expertise
Leveraging innovation to deliver complex, differentiated, end-to-end solutions
Creating a broad network of external partners and alliances
Expanding into the commercial and international markets
The success of our strategy can be seen in:
Backlog growth, which achieved record levels during fiscal 2020 for the second consecutive year
Headcount growth and a corresponding shift in our talent portfolio to more technical expertise in disciplines such as systems development, cyber, and analytics
Accelerating, industry-leading organic revenue growth
Enhanced profitability and margin expansion
To support our success against our Vision 2020 long-term strategy, we are considering and have taken steps in preparation for the implementation of new financial management systems to, among other things, support business growth and facilitate the exploration of new lines of business in the future.

Our Clients
Booz Allen is committed to solving our clients’ toughest challenges, and we work with a diverse base of public and private sector clients across a number of industries, in the U.S. and internationally.
Our clients call us to work on their hardest problems, such as delivering effective healthcare, protecting soldiers in combat and their families, and keeping our national infrastructure secure. We are investing in markets, capabilities, and talent and are building new business models through strategic ventures, partnerships, and product offerings.
Our government clients include substantially all of the cabinet-level departments of the U.S government. We serve commercial clients across industries including financial services, health and life sciences, energy, and transportation to solve their hardest and most sophisticated challenges, including cybersecurity challenges, and have a thriving portfolio of international clients in the Middle East and Southeast Asia.
A Large Addressable Market
We believe that the U.S government is the world’s largest consumer of management and technology consulting services. The U.S. government’s total spending for its fiscal year ended September 30, 2019 was close to $4.4 trillion, excluding authorizations from Overseas Contingency Operations and supplemental funding for the Department of Defense. Of this amount, approximately $1.4 trillion was for discretionary budget authority, including $719 billion for the Department of Defense and intelligence community and $658 billion for civil agencies. Based on data from the Federal Procurement Data

6




System, approximately $595 billion of the U.S. government’s fiscal year 2019 discretionary outlays were non-intelligence agency funding-related products and services procured from private contractors. We estimate that $145.4 billion of the spending directed toward private contractors in U.S. government fiscal year 2019 was for management, technology, and engineering services, with $85.1 billion spent by the Department of Defense and $60.3 billion spent by civil agencies. The agencies of the U.S. intelligence community that we serve represent an additional market. These numbers also exclude a large addressable market for our services and capabilities in the global commercial markets where we have a modest footprint.
Highlights of Booz Allen’s fiscal 2020 are as follows:
We derived 96% of our revenue from contracts where the end client was an agency or department of the U.S. government.
We delivered services under 4,589 contracts and task orders.
We derived 92% of our revenue in fiscal 2020 from engagements for which we acted as the prime contractor.
We derived 13% of our revenue in fiscal 2020 from the Navy Marine Corps, which was the single largest client that we served in that year.
Selected Long-Term Client Relationships
         
Client (1)
Relationship
Length
(Years)
U.S. Navy
75+
U.S. Army
70+
Department of Energy
40+
U.S. Air Force
40+
National Security Agency
35+
Department of Homeland Security
35+
Federal Bureau of Investigation
25+
Department of Health and Human Services
20+
National Reconnaissance Office
20+
A U.S. intelligence agency
20+
Internal Revenue Service
20+
 
(1)
Includes predecessor organizations.
Defense and Intelligence Clients
We help our military services take on new missions, tackle acquisition and budgeting challenges, and address the medical needs of soldiers in combat. We also help our defense and intelligence clients adopt innovative technologies by bringing tools, techniques, and expertise to challenges and applying them in innovative ways.
The men and women we hire have served their country and have the experience and determination to help our defense clients keep our nation safe. Our technologists and innovators work alongside our experts in strategy development, acquisition, and operations to help commanders and their staffs in the field share mission-critical information and make crucial battlefield decisions.
We count among our many defense and intelligence clients all four branches of the U.S. military, the Office of the Secretary of Defense, the Joint Staff and members of the intelligence community. Our key defense clients include the Army, Navy/Marine Corps, Air Force, and Joint Combatant Commands. Our key intelligence clients include U.S. intelligence agencies, such as the National Security Agency, National Geospatial-Intelligence Agency, and National Reconnaissance Office, and military intelligence agencies, such as the Defense Intelligence Agency, Service Intelligence Centers, and Intelligence Surveillance Reconnaissance units.
Revenue generated from defense clients was $3.6 billion, or approximately 47.3% of our revenue in fiscal 2020 as compared to $3.1 billion, or approximately 46.6% of our revenue in fiscal 2019. Revenue generated from defense clients also includes foreign military sales to non-U.S. government clients. Revenue generated from intelligence clients was $1.6 billion, or approximately 21.6% of our revenue in fiscal 2020 as compared to $1.6 billion, or approximately 23.4% of our revenue in fiscal 2019.

7




Civil Clients
Whether ensuring the safety, security, and well-being of citizens, or boosting national competitiveness, we work with leaders in civil government to support their public service missions. We excel at tackling the most complex challenges from reforming financial regulatory oversight and evolving our healthcare system to improving information sharing among law enforcement organizations and supporting green building initiatives.
We work with leaders so they make better decisions and foster better user experiences both inside and outside of their organizations.
Our work spans the full breadth of civil government, including energy and the environment, financial services, health, homeland security, law enforcement, transportation, grants, international development and diplomacy, and benefits and entitlements. Our major civil government clients include the Departments of Homeland Security, Health and Human Services, Veterans Affairs, Treasury, and Justice.
Revenue generated from civil government was $2.0 billion, or approximately 27.1% of our revenue in fiscal 2020 as compared to $1.8 billion, or approximately 26.3% of our revenue in fiscal 2019.
Global Commercial Clients
Global commercial clients are comprised of U.S. commercial and international clients.
For our commercial clients, we combine our consulting heritage with cybersecurity practitioner experience gained from cyber incidents and challenges in the public and private sectors to deliver market-leading cyber defense solutions that include consulting and managed service. We serve commercial clients in a variety of industries including aerospace, financial services, health and life sciences, and energy and transportation.
For our international clients, we work alongside public and private sector leaders to help shape and execute their critical agendas.
Following the 2011 expiration of our non-competition agreement with our spun-off commercial business, we re-entered the Middle East and North Africa (MENA) and Southeast Asia (SEA) markets. We originally established our international offices located in MENA more than six decades ago and our offices in SEA more than three decades ago. Since re-entering these markets, our strategy and technology consultants have empowered our clients in these regions with the knowledge and experience they need to build their own local resources and capabilities.
Revenue generated from global commercial clients was $261.6 million, or approximately 4.0% of our revenue in fiscal 2020 as compared to $261.6 million, or approximately 3.8% of our revenue in fiscal 2019.
Contracts
Booz Allen’s approach has long been to ensure that we have prime or subcontractor positions on a wide range of contracts that allow clients maximum opportunity to access our services. Our diverse contract base provides stability to our business. This diversity shows that more than 79% of our revenue for fiscal 2020 was derived from 3,745 active task orders under indefinite delivery/indefinite quantity (IDIQ) contract vehicles. Our two top IDIQ contract vehicles each represented approximately 11.6% of our revenue in fiscal 2020. Our largest task order under an IDIQ contract vehicle accounted for approximately 2.3% of our revenue in fiscal 2020. Our largest definite contract represented approximately 2.9% of our revenue in fiscal 2020.
The U.S. government procures services through two predominant contracting methods: indefinite contract vehicles and definite contracts. Each of these is described below:
Indefinite contract vehicles provide for the issuance by the client of orders for services or products under the terms of the contract. Indefinite contracts are often referred to as contract vehicles or ordering contracts. IDIQ contracts may be awarded to one contractor (single award) or several contractors (multiple award). Under a multiple award IDIQ contract, there is no guarantee of work as contract holders must compete for individual work orders. IDIQ contracts will often include pre-established labor categories and rates, and the ordering process is streamlined (usually taking less than a month from recognition of a need to an established order with a contractor). IDIQ contracts often have multiyear terms and unfunded ceiling amounts, thereby enabling but not committing the U.S. government to purchase substantial amounts of products and services from one or more contractors in a streamlined procurement process.
Definite contracts call for the performance of specified services or the delivery of specified products. The U.S. government procures services and solutions through single award, definite contracts that specify the scope of services that will be delivered and identify the contractor that will provide the specified services. When an agency recognizes a need for services or products, it develops an acquisition plan, which details how it will procure those services or products. During the acquisition process, the agency may release a request for information to determine if

8




qualified bidders exist, a draft request for a proposal to allow the industry to comment on the scope of work and acquisition strategy, and finally a formal request for a proposal. Following the evaluation of submitted proposals, the agency will award the contract to the winning bidder.
Listed below are our top IDIQ contracts for fiscal 2020 and the number of active task orders under these contracts as of March 31, 2020
 
 
Fiscal
2020 Revenue
 
% of
Total
Revenue
 
Number of
Task Orders
as of
March 31, 2020
 
Expiration Date (1)
 
 
(in millions)
 
 
 
 
 
 
Booz Allen Engineering Services - Alliant
 
$
869.4

 
11.6
%
 
30

 
4/30/2019
One Acquisition Solution for Integrated Services
 
866.0

 
11.6
%
 
74

 
9/2/2024
System Engineering and Analysis/Advanced Technology Support
 
376.4

 
5.0
%
 
32

 
12/31/2019
Defense Systems Technical Area Tasks
 
325.7

 
4.4
%
 
50

 
6/22/2019
Professional Services Schedule
 
320.7

 
4.3
%
 
220

 
9/30/2035
Transformation Twenty-One Total Technology Next Generation
 
257.6

 
3.5
%
 
11

 
3/6/2026
Chief Information officer - Solutions & Partners 3
 
232.9

 
3.1
%
 
21

 
5/31/2022
Information Technology Schedule 70 (Successor)
 
221.6

 
3.0
%
 
93

 
6/28/2036
Information Technology Schedule 70
 
153.3

 
2.1
%
 
24

 
3/22/2019
Booz Allen Engineering Services - Alliant 2
 
106.0

 
1.4
%
 
21

 
6/30/2028
(1) Expiration date applies to the IDIQ vehicle. Task orders awarded under the IDIQ can run past the expiration of the IDIQ itself.
Under their Category Management initiative, the General Services Administration (GSA) has undertaken an effort to improve its professional service schedule offerings. As a result of this initiative, GSA consolidated multiple contract vehicles under the schedule program. The result for Booz Allen has been the consolidation of the scope of six schedules into one professional services schedule contract. The GSA Schedule contracts to be consolidated under the new professional services schedule are: Advertising and Integrated Marketing Solutions (AIMS), Environmental Services (ES), Financial and Business Services (FABS), Logistics Worldwide (LOGWORLD), Mission Oriented Business Integrated Services (MOBIS), and Professional Engineering Services (PES).
Booz Allen’s migration request was accepted in October 2015 and, as a result, our individual schedules included in the GSA’s consolidation will remain in place through the end of the current option period of each individual contract to prevent the interruption of services. The revenue generated under these individual schedules will begin to decrease during this transition period. We anticipate that the decrease in revenue on the individual schedules will be offset by growth under the new professional service schedule. We anticipate this transition will have negligible impact on future revenues.
Listed below for each specified revenue band is the number of task orders, revenue derived from the task orders, and average duration of the task orders as of March 31, 2020. The table includes revenue earned during fiscal 2020 under all task orders that were active during fiscal 2020 under these IDIQ contracts and the number of active task orders on which this revenue was earned. Average duration reflected in the table below is calculated based on the inception date of the task order, which may be prior to the beginning of fiscal 2020, and the completion date which may have been prior or subsequent to March 31, 2020. As a result, the actual average remaining duration for task orders included in this table may be less than the average duration shown in the table, and task orders included in the table may have been complete on March 31, 2020. 

9




Segmentation of Task Order by Revenue
Fiscal 2020
 
Number of Task
Orders Active During Fiscal 2020
 
Fiscal 2020 Revenue (in millions)
 
% of Total
Revenue
 
Average
Duration
(Years)
 
 
 
 
 
 
 
 
 
Less than $1 million
 
2,932

 
$
488.5

 
7
%
 
1.5

Between $1 million and $3 million
 
440

 
779.6

 
10
%
 
2.0

Between $3 million and $5 million
 
131

 
503.2

 
7
%
 
2.4

Between $5 million and $10 million
 
127

 
893.5

 
12
%
 
2.5

Greater than $10 million
 
115

 
3,222.8

 
43
%
 
3.0

Total
 
3,745

 
5,887.6

 
79
%
 
1.6

Listed below are our top definite contracts for fiscal 2020 and revenue recognized under these contracts. Classified contracts that cannot be named are noted generically in the table:
 
 
Fiscal
2020 Revenue
 
% of
Total
Revenue
 
Expiration
Date
 
 
(in millions)
 
 
 
 
Classified Contract
 
$
217.4

 
2.9
%
 
9/30/2021
Classified Contract
 
65.1

 
0.9
%
 
3/7/2023
Transition Assistance Program Support Services
 
63.6

 
0.9
%
 
5/16/2022
Classified Contract
 
61.2

 
0.8
%
 
6/30/2025
Classified Contract
 
43.4

 
0.6
%
 
5/26/2021
Classified Contract
 
40.3

 
0.5
%
 
9/30/2020
Classified Contract
 
33.9

 
0.5
%
 
9/17/2020
Recreation One Stop Support Services
 
23.4

 
0.3
%
 
9/30/2027
Classified Contract
 
21.2

 
0.3
%
 
8/31/2021
Classified Contract
 
21.0

 
0.3
%
 
4/30/2020
Backlog
We define backlog to include the following three components:
Funded Backlog. Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts.
Unfunded Backlog. Unfunded backlog represents the revenue value of orders (including optional orders) for services under existing contracts for which funding has not been appropriated or otherwise authorized.
Priced Options. Priced contract options represent 100% of the revenue value of all future contract option periods under existing contracts that may be exercised at our clients’ option and for which funding has not been appropriated or otherwise authorized.
Our backlog does not include contracts that have been awarded but are currently under protest and also does not include any task orders under IDIQ contracts except to the extent that task orders have been awarded to us under those contracts.
The following table summarizes the value of our contract backlog as of the respective dates presented: 
 
 
As of March 31,
 
 
2020
 
2019
 
 
(In millions)
Funded
 
$
3,415

 
$
3,436

Unfunded
 
4,518

 
3,687

Priced options
 
12,796

 
12,198

Total backlog
 
$
20,729

 
$
19,321

We may never realize all of the revenue that is included in our total backlog, and there is a higher degree of risk in this regard with respect to unfunded backlog and priced options. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors and Trends Affecting Our Results of Operations — Sources of Revenue—

10




Contract Backlog” for additional disclosure regarding our backlog. See also “Item 1A. Risk Factors—Risks Related to Our Business—We may not realize the full value of our backlog, which may result in lower than expected revenue.”
Competition
The government services market is highly fragmented and competition within the government professional services industry has intensified as a result of market pressure and consolidation activity. In addition to professional service companies like ours that focus principally on the provision of services to the U.S. government, other companies active in our markets include large defense contractors; diversified consulting, technology, and outsourcing service providers; and small businesses.
Changing government policies and market dynamics are impacting the competitive landscape. In the past, the government’s focus on organizational conflicts of interest has driven divestitures, which have changed the competitive landscape. More recently, there has been increasing pressure from government clients to utilize small businesses, in large part because of a push by both past and present administrations to bolster the economy by helping small business owners. Finally, as a result of the foregoing factors and the drive in our markets to quickly build competencies in growth areas and achieve economies of scale, we believe that consolidation activity among market participants will continue.
In the course of doing business, we compete and collaborate with companies of all types and sizes. We strive to maintain positive and productive relationships with these organizations. Some of them hire us as a subcontractor, and we hire some of them to work with us as our subcontractors. Our major competitors include: (1) contractors focused principally on the provision of services to the U.S. government, (2) large defense contractors that provide both products and services to the U.S. government, and (3) diversified service providers. We compete based on our technical expertise and client knowledge, our ability to successfully recruit and retain appropriately skilled and experienced talent, our ability to deliver cost-effective multifaceted services in a timely manner, our reputation and relationship with our clients, our past performance, security clearances, and the size and scale of our Company. In addition, to maintain our competitive position, we routinely review our operating structure, capabilities, and strategy to determine whether we are effectively meeting the needs of existing clients, effectively responding to developments in our markets, and successfully building a platform intended to provide the foundation for the future growth of our business.
Patents and Proprietary Information
Our management and technology consulting services business utilizes a variety of proprietary rights in delivering products and services to our clients. We claim a proprietary interest in certain service offerings, products, software tools, methodologies, and know-how and also have certain licenses to third-party intellectual property that may be significant to our business. While we have several patents issued and pending in the United States and in certain foreign countries, we do not consider our overall business to be materially dependent on the protection of such patents. In addition, we have a number of trade secrets that contribute to our success and competitive position, and we endeavor to protect this proprietary information. While protecting trade secrets and proprietary information is important, we are not materially dependent on any specific trade secret or group of trade secrets.
We rely on a combination of nondisclosure agreements and other contractual arrangements, as well as copyright, trademark, patent, and trade secret laws to protect our proprietary information. We also enter into proprietary information and intellectual property agreements with employees, which require them to disclose any inventions created during employment, to convey such rights to inventions to us, and to restrict any disclosure of proprietary information. We have a variety of proprietary marks registered in the United States and certain foreign countries, including "Booz Allen Hamilton." Generally, registered trademarks have perpetual life, provided that they are renewed on a timely basis and continue to be used properly as trademarks. We have registered trademarks related to our name and logo in the United States, with the earliest renewal in February 2021, while the earliest renewal for our trademarks outside of the United States is December 2020.
For our work under U.S. government funded contracts and subcontracts, the U.S. government obtains certain rights to data, software and related information developed under such contracts or subcontracts. These rights generally allow the U.S. government to disclose such data, software, and related information to third parties, which may include our competitors in some instances. In the case of our work as a subcontractor, our prime contractor may also have certain rights to data, information, and products we develop under the subcontract.
Booz Allen Hamilton and other trademarks or service marks of Booz Allen Hamilton Inc. appearing in this Annual Report are the trademarks or registered trademarks of Booz Allen Hamilton Inc. Trade names, trademarks, and service marks of other companies appearing in this Annual Report are the property of their respective owners.

11




Regulation
As a contractor to the U.S. government, as well as state and local governments, we are heavily regulated in most fields in which we operate. We deal with numerous U.S. government agencies and entities, and, when working with these and other entities, we must comply with and are affected by unique laws and regulations relating to the formation, administration, and performance of public government contracts. Some significant laws and regulations that affect us include the following:
the FAR, and agency regulations supplemental to the FAR, which regulate the formation, administration, and performance of U.S. government contracts. For example, FAR 52.203-13 requires contractors to establish a Code of Business Ethics and Conduct, implement a comprehensive internal control system, and report to the government when the contractor has credible evidence that a principal, employee, agent, or subcontractor, in connection with a government contract, has violated certain federal criminal laws, violated the civil False Claims Act, or has received a significant overpayment;
the False Claims Act, which imposes civil and criminal liability for violations, including substantial monetary penalties, for, among other things, presenting false or fraudulent claims for payments or approval;
the False Statements Act, which imposes civil and criminal liability for making false statements to the U.S. government;
the Truthful Cost or Pricing Data Statute (formerly known as the Truth in Negotiations Act), which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders;
the Procurement Integrity Act, which regulates access to competitor bid and proposal information and certain internal government procurement sensitive information, and our ability to provide compensation to certain former government procurement officials;
laws and regulations restricting the ability of a contractor to provide gifts or gratuities to employees of the U.S. government;
post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the U.S. government and deploy former employees of the U.S. government;
laws, regulations, and executive orders restricting the handling, use and dissemination of information classified for national security purposes or determined to be “controlled unclassified information” or “for official use only” and the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work;
laws, regulations, and executive orders, regulating the handling, use, and dissemination of personally identifiable information in the course of performing a U.S. government contract;
international trade compliance laws, regulations and executive orders that prohibit business with certain sanctioned entities and require authorization for certain exports or imports in order to protect national security and global stability;
laws, regulations, and executive orders governing organizational conflicts of interest that may restrict our ability to compete for certain U.S. government contracts because of the work that we currently perform for the U.S. government or may require that we take measures such as firewalling off certain employees or restricting their future work activities due to the current work that they perform under a U.S. government contract;
laws, regulations and executive orders that impose requirements on us to ensure compliance with requirements and protect the government from risks related to our supply chain;
laws, regulations and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a government contract;
the Contractor Business Systems rule, which authorizes Department of Defense agencies to withhold a portion of our payments if we are determined to have a significant deficiency in our accounting, cost estimating, purchasing, earned value management, material management and accounting, and/or property management system; and
the Cost Accounting Standards and Cost Principles, which impose accounting and allowability requirements that govern our right to reimbursement under certain cost-based U.S. government contracts and require consistency of accounting practices over time.
Given the magnitude of our revenue derived from contracts with the Department of Defense, the Defense Contract Audit Agency, or DCAA, is our cognizant government audit agency. The DCAA audits the adequacy of our internal control systems

12




and policies including, among other areas, compensation. The Defense Contract Management Agency (DCMA), as our cognizant government contract management agency, may determine that a portion of our employee compensation is unallowable based on the findings and recommendations in the DCAA's audits. In addition, the DCMA directly reviews the adequacy of certain other business systems, such as our purchasing system. See “Item 1A. Risk Factors — Risk Related to Our Industry — Our work with government clients exposes us to additional risks inherent in the government contracting environment, which could reduce our revenue, disrupt our business, or otherwise materially adversely affect our results of operations.” We are also subject to audit by Inspectors General of other U.S. government agencies.
The U.S. government may revise its procurement practices or adopt new contract rules and regulations at any time. To help ensure compliance with these laws and regulations, all of our employees are required to attend ethics training at least annually, and to participate in other compliance training relevant to their position. Internationally, we are subject to special U.S. government laws and regulations (such as the Foreign Corrupt Practices Act), local government regulations and procurement policies and practices, including regulations relating to import-export control, investments, exchange controls, and repatriation of earnings, as well as varying currency, political, and economic risks.
U.S. government contracts are, by their terms, subject to termination by the U.S. government either for its convenience or default by the contractor. In addition, U.S. government contracts are conditioned upon the continuing availability of Congressional appropriations. Congress usually appropriates funds for a given program on a September 30 fiscal year basis, even though contract performance could take many years. As is common in the industry, our Company is subject to business risks, including changes in governmental appropriations, national defense policies, service modernization plans, and availability of funds. Any of these factors could materially adversely affect our Company’s business with the U.S. government in the future.
The U.S. government has a broad range of actions that it can instigate to enforce its procurement law and policies. These include proposing a contractor, certain of its operations or individual employees for debarment or suspending or debarring a contractor, certain of its operations or individual employees from future government business. In addition to criminal, civil and administrative actions by the U.S. government, under the False Claims Act, an individual alleging fraud related to payments under a U.S. government contract or program may file a qui tam lawsuit on behalf of the government against us; if successful in obtaining a judgment or settlement, the individual filing the suit may receive up to 30% of the amount recovered by the government.
See “Item 1A. Risk Factors—Risks Related to Our Business—We are required to comply with numerous laws and regulations, some of which are highly complex, and our failure to comply could result in fines or civil or criminal penalties or suspension or debarment by the U.S. government that could result in our inability to continue to work on or receive U.S. government contracts, which could materially and adversely affect our results of operations.”
Available Information
We file annual, quarterly, and current reports and other information with the Securities and Exchange Commission (SEC). The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC, including us. You may also access, free of charge, our reports filed with the SEC (for example, our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K and any amendments to those forms) through the “Investors” portion of our website (www.boozallen.com). Reports filed with or furnished to the SEC will be available as soon as reasonably practicable after they are filed with or furnished to the SEC. Our website is included in this Annual Report as an inactive textual reference only. The information found on our website is not part of this or any other report filed with or furnished to the SEC.
Item 1A.
Risk Factors
You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this Annual Report, including our consolidated financial statements and related notes. The risks described below are not the only ones facing us. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition, and results of operations. This Annual Report also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below.
Risks Related to Our Business
We depend on contracts with U.S. government agencies for substantially all of our revenue. If our relationships with such agencies are harmed, our future revenue and operating profits would decline.
The U.S. government is our primary client, with revenue from contracts and task orders, either as a prime or a subcontractor, with U.S. government agencies accounting for 96% of our revenue for fiscal 2020. Our belief is that the

13




successful future growth of our business will continue to depend primarily on our ability to be awarded work under U.S. government contracts, as we expect this will be the primary source of substantially all of our revenue in the foreseeable future. For this reason, any issue that compromises our relationship with the U.S. government generally or any U.S. government agency that we serve would cause our revenue to decline. Among the key factors in maintaining our relationship with U.S. government agencies is our performance on contracts and task orders, the strength of our professional reputation, compliance with applicable laws and regulations, and the strength of our relationships with client personnel. In addition, the mishandling or the perception of mishandling of sensitive information, such as our failure to maintain the confidentiality of the existence of our business relationships with certain of our clients, including as a result of misconduct or other improper activities by our employees or subcontractors, or a failure to maintain adequate protection against security breaches, including those resulting from cyber attacks, could harm our relationship with U.S. government agencies. See "—Our employees or subcontractors may engage in misconduct or other improper activities, which could harm our ability to conduct business with U.S. government." Our relationship with the U.S. government could also be damaged as a result of an agency’s dissatisfaction with work performed by us, a subcontractor, or other third parties who provide services or products for a specific project for any reason, including due to perceived or actual deficiencies in the performance or quality of our work, and we may incur additional costs to address any such situation and the profitability of that work might be impaired. Further, negative publicity concerning government contractors in general or us in particular may harm our reputation with federal government contractors. To the extent our reputation or relationships with U.S. government agencies is impaired, our revenue and operating profits could materially decline.
U.S. government spending and mission priorities could change in a manner that adversely affects our future revenue and limits our growth prospects.
Our business depends upon continued U.S. government expenditures on defense, intelligence, and civil programs for which we provide support. These expenditures have not remained constant over time, have been reduced in certain periods and have been affected by the U.S. government’s efforts to improve efficiency and reduce costs affecting U.S. government programs generally. Our business, prospects, financial condition, or operating results could be materially harmed, among other causes, by the following:
budgetary constraints, including Congressionally mandated automatic spending cuts, affecting U.S. government spending generally, or specific agencies in particular, and changes in available funding;
a shift in expenditures away from agencies or programs that we support;
reduced U.S. government outsourcing of functions that we are currently contracted to provide, including as a result of increased insourcing by various U.S. government agencies due to changes in the definition of “inherently governmental” work, including proposals to limit contractor access to sensitive or classified information and work assignments;
changes or delays in U.S. government programs that we support or related requirements;
U.S. government shutdowns due to, among other reasons, a failure by elected officials to fund the government and other potential delays in the appropriations process;
U.S. government agencies awarding contracts on a technically acceptable/lowest cost basis in order to reduce expenditures;
delays in the payment of our invoices by government payment offices;
an inability by the U.S. government to fund its operations as a result of a failure to increase the U.S. government’s debt ceiling, a credit downgrade of U.S. government obligations or for any other reason; and
changes in the political climate and general economic conditions, including a slowdown of the economy or unstable economic conditions and responses to the COVID-19 outbreak or other conditions, such as emergency spending, that reduce funds available for other government priorities.
In addition, any disruption in the functioning of U.S. government agencies, including as a result of U.S. government closures and shutdowns, terrorism, war, international conflicts, natural disasters, public health crises (such as the COVID-19 outbreak), destruction of U.S. government facilities, and other potential calamities could have a negative impact on our operations and cause us to lose revenue or incur additional costs due to, among other things, our inability to deploy our staff to client locations or facilities as a result of such disruptions.
The U.S. government budget deficits, the national debt, and prevailing economic conditions, and actions taken to address them, could negatively affect U.S. government expenditures on defense, intelligence, and civil programs for which we provide support. The Department of Defense is one of our significant clients and cost cutting, including through consolidation and elimination of duplicative organizations and insourcing, has become a major initiative for the Department of Defense. A

14




reduction in the amount of, or delays or cancellations of funding for, services that we are contracted to provide as a result of any of these related initiatives, legislation or otherwise could have a material adverse effect on our business and results of operations. In addition, government agencies have reduced management support services spending in recent years. If federal awards for management support services continue to decline, our revenue and operating profits may materially decline and could have a material and adverse effect on our business and results of operations.
These or other factors could cause our defense, intelligence, or civil clients to decrease the number of new contracts awarded generally and fail to award us new contracts, reduce their purchases under our existing contracts, exercise their right to terminate our contracts, or not exercise options to renew our contracts, any of which could cause a material decline in our revenue.
We are required to comply with numerous laws and regulations, some of which are highly complex, and our failure to comply could result in fines or civil or criminal penalties or suspension or debarment by the U.S. government that could result in our inability to continue to work on or receive U.S. government contracts, which could materially and adversely affect our results of operations.
As a U.S. government contractor, we must comply with laws and regulations relating to the formation, administration, and performance of U.S. government contracts, which affect how we do business with our clients. Such laws and regulations may potentially impose added costs on our business and our failure to comply with them may lead to civil or criminal penalties, termination of our U.S. government contracts, and/or suspension or debarment from contracting with federal agencies. Some significant laws and regulations that affect us include:
the FAR, and agency regulations supplemental to the FAR, which regulate the formation, administration, and performance of U.S. government contracts. For example, the FAR 52.203-13 requires contractors to establish a Code of Business Ethics and Conduct, implement a comprehensive internal control system, and report to the government when the contractor has credible evidence that a principal, employee, agent, or subcontractor, in connection with a government contract, has violated certain federal criminal laws, violated the civil False Claims Act, or has received a significant overpayment;
the False Claims Act, which imposes civil and criminal liability for violations, including substantial monetary penalties, for, among other things, presenting false or fraudulent claims for payments or approval;
the False Statements Act, which imposes civil and criminal liability for making false statements to the U.S. government;
the Truthful Cost or Pricing Data Statute (formerly known as the Truth in Negotiations Act), which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders;
the Procurement Integrity Act, which regulates access to competitor bid and proposal information and certain internal government procurement sensitive information, and our ability to provide compensation to certain former government procurement officials;
laws and regulations restricting the ability of a contractor to provide gifts or gratuities to employees of the U.S. government;
post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the U.S. government and deploy former employees of the U.S. government;
laws, regulations, and executive orders restricting the handling, use and dissemination of information classified for national security purposes or determined to be “controlled unclassified information” or “for official use only” and the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work;
laws, regulations, and executive orders regulating the handling, use, and dissemination of personally identifiable information in the course of performing a U.S. government contract;
international trade compliance laws, regulations and executive orders that prohibit business with certain sanctioned entities and require authorization for certain exports or imports in order to protect national security and global stability;
laws, regulations, and executive orders governing organizational conflicts of interest that may restrict our ability to compete for certain U.S. government contracts because of the work that we currently perform for the U.S. government or may require that we take measures such as firewalling off certain employees or restricting their future work activities due to the current work that they perform under a U.S. government contract;

15




laws, regulations and executive orders that impose requirements on us to ensure compliance with requirements and protect the government from risks related to our supply chain;
laws, regulations and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a government contract;
the Contractor Business Systems rule, which authorizes Department of Defense agencies to withhold a portion of our payments if we are determined to have a significant deficiency in our accounting, cost estimating, purchasing, earned value management, material management and accounting, and/or property management system; and
the FAR Cost Accounting Standards and Cost Principles, which impose accounting and allowability requirements that govern our right to reimbursement under certain cost-based U.S. government contracts and require consistency of accounting practices over time.
In addition, the U.S. government adopts new laws, rules, and regulations from time to time that could have a material impact on our results of operations. Adverse developments in legal or regulatory proceedings on matters relating to, among other things, cost accounting practices and compliance, contract interpretations and statute of limitations, could also result in materially adverse judgments, settlements, withheld payments, penalties, or other unfavorable outcomes.
Our performance under our U.S. government contracts and our compliance with the terms of those contracts and applicable laws and regulations are subject to periodic audit, review, and investigation by various agencies of the U.S. government and the current environment has led to increased regulatory scrutiny and sanctions for non-compliance by such agencies generally. In addition, from time to time we report potential or actual violations of applicable laws and regulations to the relevant governmental authority. Any such report of a potential or actual violation of applicable laws or regulations could lead to an audit, review, or investigation by the relevant agencies of the U.S. government. If such an audit, review, or investigation uncovers a violation of a law or regulation, or improper or illegal activities relating to our U.S. government contracts, we may be subject to civil or criminal penalties or administrative sanctions, including the termination of contracts, forfeiture of profits, the triggering of price reduction clauses, withholding of payments, suspension of payments, fines and suspension, or debarment from contracting with U.S. government agencies. Such penalties and sanctions are not uncommon in the industry and there is inherent uncertainty as to the outcome of any particular audit, review, or investigation. If we incur a material penalty or administrative sanction or otherwise suffer harm to our reputation, our profitability, cash position, and future prospects could be materially and adversely affected.
Further, if the U.S. government were to initiate suspension or debarment proceedings against us or if we are indicted for or convicted of illegal activities relating to our U.S. government contracts following an audit, review, or investigation, we may lose our ability to be awarded contracts in the future or receive renewals of existing contracts for a period of time which could materially and adversely affect our results of operations or financial condition. We could also suffer harm to our reputation if allegations of impropriety were made against us, which would impair our ability to win awards of contracts in the future or receive renewals of existing contracts. See "Item 1. Business — Regulation."

16




The effects of a pandemic or widespread health epidemic such as the coronavirus outbreak could have a material adverse effect on our business and results of operations.
On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus COVID-19 first identified in Wuhan, China as a pandemic, and on March 13, 2020, the President of the U.S. declared that the COVID-19 outbreak constituted a national emergency. This outbreak has continued to spread across the globe and is continuing to impact worldwide economic activity and financial markets. In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, we have taken precautionary measures intended to minimize the risk of the virus to our employees, our clients and the communities in which we operate, which could negatively impact our business. We have implemented a mandatory telework policy for those employees whose assignments and clients permit working remotely and suspended non-essential travel worldwide for our employees. While we have a distributed workforce and our employees are accustomed to working remotely or working with other remote employees, our workforce is not fully remote and we may be unable to address technological or other challenges inherent in a remote working environment. Many of our employees are unable to work remotely because of unique client requirements. Some of our employees, clients and subcontractors are located in foreign countries, which may be impacted differently from the United States, including through more severe or prolonged restrictions on working or traveling. Although we continue to monitor the situation in each of the jurisdictions in which we operate and may adjust our current policies as more information and public health guidance become available, temporarily suspending travel and doing business in person could challenge our ability to enter into or perform under contracts in a timely manner, slow down our recruiting efforts, or create operational or other challenges, any of which could harm our business and results of operations. Although the Company has business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective or that such measures will not adversely affect our operations or long-term plans. In addition, when local conditions and regulations ultimately permit the return of employees to business generally, our workforce may not be able to return to work in person immediately, if at all, including as a result of transportation, childcare and ongoing health issues, which could negatively affect our business.
More generally, the COVID-19 outbreak could continue to adversely affect economies and financial markets globally, potentially leading to an economic downturn, which could decrease government spending and adversely affect demand for our solutions and harm our business and results of operations. While the U.S. and local government agencies have enacted several emergency relief programs designed to combat the economic impact of the outbreak, the long-term effect of such spending is inherently uncertain and could result in future budgetary restrictions.
In addition, COVID-19 may disrupt the operations of our suppliers, vendors, service providers and subcontractors for an indefinite period of time, including as a result of travel restrictions, business shutdowns or lack of access to financial markets, all of which could negatively impact our business and results of operations. Any inability to develop alternative sources of supply on a cost-effective and timely basis could materially impair our ability to manufacture and deliver products, systems and services to our clients. We are also subject to federal and state laws and regulations enacted in response to the outbreak, such as the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), which contains a provision that allows U.S. government contractors to seek specified reimbursement for certain employees who are unable to perform their contract requirements at their designated work locations due to facility closures or restrictions as a result of COVID-19 and cannot perform such work remotely. The legislation enables but does not mandate reimbursement for such costs and agency guidance has imposed certain restrictions. Further, the relief contemplated under the provision does not extend past September 30, 2020. As a result, we believe that some of our costs for certain employees who are unable to perform their contract requirements due to government restrictions will not be reimbursed. In addition, we expect that approximately $6 million per month for the fee on certain contracts involving such employees may not be reimbursed or may exceed reimbursements.
We expect COVID-19 to continue to negatively impact our business and results of operation and are unable to predict how long or with what degree of severity that impact will continue. The duration and extent of the COVID-19 outbreak will depend on future developments outside of our control, including the availability of effective treatments or a widely accessible vaccine and the evolutionary development of the COVID-19 or related viruses, which are highly uncertain and cannot be predicted.
We derive a majority of our revenue from contracts awarded through a competitive bidding process, and our revenue and profitability may be adversely affected if we are unable to compete effectively in the process or if there are delays caused by our competitors protesting major contract awards received by us.
We derive a majority of our revenue from U.S. government contracts awarded through competitive bidding processes. We do not expect this to change for the foreseeable future. Our failure to compete effectively in this procurement environment would have a material adverse effect on our revenue and profitability.
The competitive bidding process involves risk and significant costs to businesses operating in this environment, including:

17




the necessity to expend resources, make financial commitments (such as procuring leased premises) and bid on engagements in advance of the completion of their design, which may result in unforeseen difficulties in execution, cost overruns and, in the case of an unsuccessful competition, the loss of committed costs;
the substantial cost and managerial time and effort spent to prepare bids and proposals for contracts that may not be awarded to us;
the ability to accurately estimate the resources and costs that will be required to service any contract we are awarded;
the expense and delay that may arise if our competitors protest or challenge contract awards made to us pursuant to competitive bidding, and the risk that any such protest or challenge could result in the resubmission of bids on modified specifications, or in termination, reduction, or modification of the awarded contract; and
any opportunity cost of not bidding and winning other contracts we might have otherwise pursued.
In circumstances where contracts are held by other companies and are scheduled to expire, we still may not be provided the opportunity to bid on those contracts if the U.S. government determines to extend the existing contract. If we are unable to win particular contracts that are awarded through the competitive bidding process, we may not be able to operate in the market for services that are provided under those contracts for the duration of those contracts to the extent that there is no additional demand for such services. An inability to consistently win new contract awards over any extended period would have a material adverse effect on our business and results of operations.
The current competitive environment has resulted in an increase in the number of bid protests from unsuccessful bidders on new program awards. It can take many months for the relevant U.S. government agency to resolve protests by one or more of our competitors of contract awards we receive. Bid protests may result in significant expense to us, contract modification or loss of an awarded contract as a result of the award being overturned. Even where we do not lose the awarded contract, the resulting delay in the startup and funding of the work under these contracts may cause our actual results to differ materially and adversely from those anticipated.
A significant majority of our revenue is derived from task orders under indefinite delivery/indefinite quantity, or IDIQ, contract vehicles where we perform in either a prime or subcontract position.
We believe that one of the key elements of our success is our position as the holder of 3,745 active task orders under IDIQ contract vehicles as of March 31, 2020.
IDIQ contracts provide for the issuance by the client of orders for services or products under the contract, and often contain multi-year terms and unfunded ceiling amounts, which allow but do not commit the U.S. government to purchase products and services from contractors. Our ability to generate revenue under each of these types of contracts depends upon our ability to be awarded task orders for specific services by the client. IDIQ contracts may be awarded to one contractor (single award) or several contractors (multiple award). Multiple contractors must compete under multiple award IDIQ contracts for task orders to provide particular services, and contractors earn revenue only to the extent that they successfully compete for these task orders. A failure to be awarded task orders under such contracts would have a material adverse effect on our results of operations and financial condition.
In addition, our ability to maintain our existing business and win new business depends on our ability to maintain our prime and subcontractor positions on these contracts. The loss, without replacement, of certain of these contract vehicles could have a material adverse effect on our ability to win new business and our operating results. If the U.S. government elects to use a contract vehicle that we do not hold, we will not be able to compete for work under that contract vehicle as a prime contractor.
Our earnings and profitability may vary based on the mix of our contracts and may be adversely affected by our failure to accurately estimate or otherwise recover the expenses, time, and resources for our contracts.
We enter into three general types of U.S. government contracts for our services: cost-reimbursable, time-and-materials, and fixed-price. Each of these types of contracts, to varying degrees, involves the risk that we could underestimate our cost of fulfilling the contract, which may reduce the profit we earn or lead to a financial loss on the contract and adversely affect our operating results.
Under cost-reimbursable contracts, we are reimbursed for allowable costs up to a ceiling and paid a fee, which may be fixed or performance-based. If our actual costs exceed the contract ceiling or are not allowable under the terms of the contract or applicable regulations, we may not be able to recover those costs. In particular, there is increasing focus by the U.S. government on the extent to which government contractors, including us, are able to receive reimbursement for employee compensation, including the adoption of interim rules by federal agencies implementing a section of the Bipartisan Budget Act of 2013, as amended, that substantially decreased the level of allowable compensation cost for executive-level employees and

18




further applied the newly reduced limitation to all employees. In addition, there is an increased risk of compensation being deemed unallowable or payments being withheld as a result of U.S. government audit, review or investigation.
Under time-and-materials contracts, we are reimbursed for labor at negotiated hourly billing rates and for certain allowable expenses. We assume financial risk on time-and-materials contracts because our costs of performance may exceed these negotiated hourly rates.
Under fixed-price contracts, we perform specific tasks for a predetermined price. Compared to time-and-materials and cost-reimbursable contracts, fixed-price contracts generally offer higher margin opportunities because we receive the benefits of any cost savings, but involve greater financial risk because we bear the impact of any cost overruns. The U.S. government has generally indicated that it intends to increase its use of fixed price contract procurements. Because we assume the risk for cost overruns and contingent losses on fixed-price contracts, an increase in the percentage of fixed-price contracts in our contract mix would increase our risk of suffering losses.
Additionally, our profits could be adversely affected if our costs under any of these contracts exceed the assumptions we used in bidding for the contract. For example, we may miscalculate the costs, resources, or time needed to complete projects or meet contractual milestones as a result of delays on a particular project, including delays in designs, engineering information, or materials provided by the customer or a third party, delays or difficulties in equipment and material delivery, schedule changes, and other factors, some of which are beyond our control. We have recorded provisions in our consolidated financial statements for losses on our contracts, as required under accounting principles generally accepted in the United States, or GAAP, but our contract loss provisions may not be adequate to cover all actual losses that we may incur in the future.
Our professional reputation and relationships with U.S. government agencies are critical to our business, and any harm to our reputation or relationships could decrease the amount of business the U.S. government does with us, which could have a material adverse effect on our future revenue and growth prospects.
We depend on our contracts with U.S. government agencies for substantially all of our revenue and if our reputation or relationships with these agencies were harmed, our future revenue and growth prospects would be materially and adversely affected. Our reputation and relationship with the U.S. government is a key factor in maintaining and growing revenue under contracts with the U.S. government. In addition, a significant portion of our business relates to designing, developing, and implementing advanced defense and technology systems and products, including cybersecurity products and services. Negative press reports regarding poor contract performance, employee misconduct, information security breaches, engagements in or perceived connections to politically or socially sensitive activities, or other aspects of our business, or regarding government contractors generally, could harm our reputation. In addition, to the extent our performance under a contract does not meet a U.S. government agency’s expectations, the client might seek to terminate the contract prior to its scheduled expiration date, provide a negative assessment of our performance to government-maintained contractor past-performance data repositories, fail to award us additional business under existing contracts or otherwise, and direct future business to our competitors. If our reputation or relationships with these agencies are negatively affected, or if we are suspended or debarred from contracting with government agencies for any reason, such actions would decrease the amount of business that the U.S. government does with us, which would have a material adverse effect on our future revenue and growth prospects.
We use estimates in recognizing revenue and if we make changes to estimates used in recognizing revenue, our profitability may be adversely affected.
Revenue from our fixed-price contracts is primarily recognized using the percentage-of-completion method with progress toward completion of a particular contract based on actual costs incurred relative to total estimated costs to be incurred over the life of the contract. Revenue from our cost-reimbursable-plus-award-fee contracts are based on our estimation of award fees over the life of the contract. Estimating costs at completion and award fees on our long-term contracts is complex and involves significant judgment. Adjustments to original estimates are often required as work progresses, experience is gained, and additional information becomes known, even though the scope of the work required under the contract may not change. Any adjustment as a result of a change in estimate is recognized as events become known.
In the event updated estimates indicate that we will experience a loss on the contract, we recognize the estimated loss at the time it is determined. Additional information may subsequently indicate that the loss is more or less than initially recognized, which requires further adjustments in our consolidated financial statements. Changes in the underlying assumptions, circumstances, or estimates could result in adjustments that could have a material adverse effect on our future results of operations.
We may not realize the full value of our backlog, which may result in lower than expected revenue.
Our backlog does not include contracts that have been awarded but are currently under protest and also does not include any task orders under IDIQ contracts, except to the extent that task orders have been awarded to us under those contracts. For

19




additional disclosure regarding our backlog, please see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors and Trends Affecting Our Results of Operations - Sources of Revenue - Contract Backlog."
We historically have not realized all of the revenue included in our total backlog, and we may not realize all of the revenue included in our total backlog in the future. There is a higher degree of risk in this regard with respect to unfunded backlog and priced options. In addition, there can be no assurance that our backlog will result in actual revenue in any particular period. This is because the actual receipt, timing, and amount of revenue under contracts included in backlog are subject to various contingencies, including congressional appropriations, many of which are beyond our control. The actual receipt of revenue from contracts included in backlog may never occur or may be delayed because: a program schedule could change or the program could be canceled; a contract’s funding or scope could be reduced, modified, delayed, de-obligated or terminated early, including as a result of a lack of appropriated funds or cost cutting initiatives and other efforts to reduce U.S. government spending and/or the automatic federal defense spending cuts required by sequestration; in the case of funded backlog, the period of performance for the contract has expired or the U.S. government has exercised its unilateral right to cancel multi-year contracts and related orders or terminate existing contracts for convenience or default; in the case of unfunded backlog, funding may not be available; or, in the case of priced options, our clients may not exercise their options. In addition, consulting staff headcount growth is the primary means by which we are able to recognize revenue growth. Any inability to hire additional appropriately qualified personnel or failure to timely and effectively deploy such additional personnel against funded backlog could negatively affect our ability to grow our revenue. We may also not recognize revenue on funded backlog due to, among other reasons, the tardy submissions of invoices by our subcontractors and the expiration of the relevant appropriated funding in accordance with a predetermined expiration date such as the end of the U.S. government's fiscal year. The amount of our funded backlog is also subject to change, due to, among other factors: changes in congressional appropriations that reflect changes in U.S. government policies or priorities resulting from various military, political, economic or international developments; changes in the use of U.S. government contracting vehicles, and the provisions therein used to procure our services; and adjustments to the scope of services under, or cancellation of contracts, by the U.S. government at any time. Furthermore, even if our backlog results in revenue, the contracts may not be profitable.
A delay in the completion of the U.S. government’s budget process could result in a reduction in our backlog and have a material adverse effect on our revenue and operating results.
To the extent the U.S. Congress is unable to approve the annual federal budget on a timely basis, and enacts a continuing resolution, funding for new projects may not be available and funding on contracts we are already performing may be delayed. Any such delays would likely result in new business initiatives being delayed or canceled and a reduction in our backlog, and could have a material adverse effect on our revenue and operating results. In addition, a failure to complete the budget process and fund government operations pursuant to a continuing resolution may result in a U.S. government shutdown, which could result in us incurring substantial costs without reimbursement under our contracts and the delay or cancellation of key programs or the delay of contract payments and may have a material adverse effect on our revenue and operating results. In addition, when supplemental appropriations are required to operate the U.S. government or fund specific programs and the passage of legislation needed to approve any supplemental appropriation bill is delayed, the overall funding environment for our business could be adversely affected.
Systems that we develop, integrate, maintain, or otherwise support could experience security breaches which may damage our reputation with our clients and hinder future contract win rates.
We develop, integrate, maintain, or otherwise support systems and provide services that include managing and protecting information involved in intelligence, national security, and other sensitive or classified government functions. Our systems also store and process sensitive information for commercial clients, including personally identifiable, health and financial information. The cyber and security threats that our clients face have grown more frequent and sophisticated. A security breach in one of these systems could cause serious harm to our business, damage our reputation, and prevent us from being eligible for further work on sensitive systems for U.S. government or commercial clients or hinder future contract win rates. Work for non-U.S. government and commercial clients involving the protection of information systems or that store clients' information could also be harmed due to associated security breaches. Damage to our reputation or limitations on our eligibility for additional work or any liability resulting from a security breach in one of the systems we develop, install, maintain, or otherwise support could have a material adverse effect on our results of operations.
Certain services we provide and technologies we develop are designed to detect and monitor threats to our clients and may expose our staff to financial loss or physical or reputational harm.
We help our clients detect, monitor and mitigate threats to their people, information and facilities. These threats may originate from nation states, terrorist or criminal actors, activist hackers or others who seek to harm our clients. Successful attacks on our clients may cause reputational harm to us and our clients, as well as liability to our clients or third parties. In addition, if we are associated with our clients in this regard, our staff, information and facilities may be targeted by a similar group of threat actors and may be at risk for financial loss, or physical or reputational harm.

20




Internal system or service failures, or those of our vendors, including as a result of cyber or other security threats, could disrupt our business and impair our ability to effectively provide our services to our clients, which could damage our reputation and have a material adverse effect on our business and results of operations.
We create, implement, and maintain information technology and engineering systems and also use vendors to provide services that are often critical to our clients' operations, some of which involve sensitive information and may be conducted in war zones or other hazardous environments, or include information whose confidentiality is protected by law. As a result, we are subject to systems or service failures, not only resulting from our own failures or the failures of third-party service providers, natural disasters, power shortages, or terrorist attacks, but also from continuous exposure to constantly evolving cyber and other security threats, including computer viruses and malware, attacks by computer hackers or physical break-ins. There has been an increase in the frequency and sophistication of the cyber and security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us because, as a cybersecurity services contractor, we hold classified, controlled unclassified and other sensitive information. As a result, we and our vendors face a heightened risk of a security breach or disruption resulting from an attack by computer hackers, foreign governments, and cyber terrorists. While we put in place policies, controls, and technologies to help detect and protect against such attacks, we cannot guarantee that future incidents will not occur, and if an incident does occur, we may not be able to successfully mitigate the impact. We have been the target of these types of attacks in the past and future attacks are likely to occur. If successful, these types of attacks on our network or other systems or service failures could have a material adverse effect on our business and results of operations, due to, among other things, the loss of client or proprietary data, interruptions or delays in our clients' businesses, and damage to our reputation. In addition, the failure or disruption of our systems, communications, vendors, or utilities could cause us to interrupt or suspend our operations, which could have a material adverse effect on our business and results of operations. In addition, if our employees inadvertently do not adhere to appropriate information security protocols, our protocols are inadequate, or our employees intentionally avoid these protocols, our or our clients' sensitive information may be released thereby causing significant negative impacts to our reputation and exposing us or our clients to liability.
If our or our vendors' systems, services, or other applications have significant defects or errors, are successfully attacked by cyber and other security threats, suffer delivery delays, or otherwise fail to meet our clients’ expectations, we may:
lose revenue due to adverse client reaction;
be required to provide additional services to a client at no charge;
incur additional costs related to remediation, monitoring and increasing our cybersecurity;
lose revenue due to the deployment of internal staff for remediation efforts instead of client assignments;
receive negative publicity, which could damage our reputation and adversely affect our ability to attract or retain clients;
be unable to successfully market services that are reliant on the creation and maintaining of secure information technology systems to U.S. government, international, and commercial clients;
suffer claims by clients or impacted third parties for substantial damages, particularly as a result of any successful network or systems breach and exfiltration of client and/or third party information; or
incur significant costs, including fines from government regulators related to complying with applicable federal or state law, including laws pertaining to the security and protection of personal information.
In addition to any costs resulting from contract performance or required corrective action, these failures may result in increased costs or loss of revenue if they result in clients postponing subsequently scheduled work or canceling or failing to renew contracts.
The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. Additionally, some cyber technologies and techniques that we utilize or develop may raise potential liabilities related to legal compliance intellectual property and civil liberties, including privacy concerns, which may not be fully insured or indemnified. We may not be able to obtain and maintain insurance coverage on reasonable terms or in sufficient amounts to cover one or more large claims, or the insurer may disclaim coverage as to some types of future claims. The successful assertion of any large claim against us could seriously harm our business. Even if not successful, these claims could result in significant legal and other costs, may be a distraction to our management, and may harm our client relationships. In certain new business areas, we may not be able to obtain sufficient insurance and may decide not to accept or solicit business in these areas.
Implementation of various data privacy and cybersecurity laws, regulations and standards could require significant investment into ongoing compliance activities, trigger potential liability, and limit our ability to use personal data.

21




Any failure by us, our vendors or other business partners to comply with international, federal, or state laws regarding data privacy or cybersecurity could result in regulatory actions or lawsuits against us, legal liability, fines, damages and other costs. We may also incur substantial expenses in implementing and maintaining compliance with such laws. For example, the General Data Protection Regulation (“GDPR”) has created new compliance obligations for companies that process data in the EU, which require investment into ongoing data protection activities and documentation requirements, and creates the potential for significantly increased fines for noncompliance. In addition, the California Consumer Protection Privacy Act of 2018 (“CCPA”), which took effect on January 1, 2020, provides new consumer privacy rights to natural persons residing in California. It is possible that the CCPA or similar laws will be deemed applicable to some aspects of our business, which would impose new compliance obligations and require additional investment into data protection activities. Any obligations that may be imposed on us under CCPA or similar laws may be different from or in addition to those required by GDPR, which may cause additional expense for compliance across various jurisdictions. GDPR, California law, and the laws of other U.S. states also impose obligations to maintain a cybersecurity program at a certain level of quality, as well as obligations to give notice to affected individuals and to certain regulators in the event of a data breach.
In addition, as a contractor supporting defense and national security clients, we are also subject to certain additional regulatory compliance requirements relating to data privacy and cybersecurity. Under the Defense Federal Acquisition Regulation Supplement and other federal regulations, our networks and IT systems are required to comply with the security and privacy controls in National Institute of Standards and Technology Special Publications. To the extent that we do not comply with the applicable security and control requirements, unauthorized access or disclosure of sensitive information could potentially result in a contract termination, which could have a material adverse effect on our business and financial results and lead to reputational harm. We are also subject to the Department of Defense Cybersecurity Maturity Model Certification ("CMMC") requirements, which will require all contractors to receive specific third-party certifications relating to specified cybersecurity standards in order to be eligible for contract awards. The Department of Defense expects that all new contracts will be required to comply with the CMMC by 2026, with initial requests for information beginning in June 2020 and requests for proposal beginning in September 2020. We are in the process of evaluating our readiness and preparing for the CMMC, but to the extent we are unable to achieve certification in advance of contract awards that specify the requirement, we will be unable to bid on such contract awards or on follow-on awards for existing work with the Department of Defense, depending on the level of standard as required for each solicitation, which could adversely impact our revenue and profitability. In addition, any obligations that may be imposed on us under the CMMC may be different from or in addition to those otherwise required by applicable laws and regulations, which may cause additional expense for compliance.
The potential implementation and operation of new financial management systems may have an adverse effect on our business and results of operations.
We, from time to time, modernize and upgrade our management systems. In particular, we are considering and have taken steps in preparation for the implementation of new financial management systems that would be designed to enhance our financial systems and cost accounting practices in order to modernize our financial infrastructure through minimizing manual processes, increasing automation, and providing enhanced business analytics. Preparing for implementation and operation of the new systems requires significant investment of human and financial resources. Should we implement the new systems, we would also expect to incur additional expenses and experience certain one-time impacts to profitability related to the roll-out and operation of the new financial systems, including costs related to training. In addition, any significant difficulties in the implementation or operation could have a material adverse effect on our ability to fulfill and invoice customer orders, apply cash receipts, place purchase orders with suppliers, and make cash disbursements, and could negatively impact data processing and electronic communications among business locations, which may have a material adverse effect on our business, consolidated financial condition or results of operations. We also face the challenge of supporting our legacy systems and implementing necessary upgrades to those systems to support routine government and financial audits while and after we implement our new systems.

22




We may fail to attract, train and retain skilled and qualified employees, which may impair our ability to generate revenue, effectively serve our clients, and execute our growth strategy.
Our business depends in large part upon our ability to attract and retain sufficient numbers of highly qualified individuals who may have advanced degrees in areas such as information technology as well as appropriate security clearances. We compete for such qualified personnel with other U.S. government contractors, the U.S. government, and private industry, and such competition is intense. Personnel with the requisite skills, qualifications, or security clearance may be in short supply or generally unavailable. Our ability to attract and retain skilled and qualified employees may also be impacted by our engagements in, or perceived connections to, politically or socially sensitive activities. In addition, our ability to recruit, hire, and internally deploy former employees of the U.S. government is subject to complex laws and regulations, which may serve as an impediment to our ability to attract such former employees, and failure to comply with these laws and regulations may expose us and our employees to civil or criminal penalties. If we are unable to recruit and retain a sufficient number of qualified employees, or fail to deploy such employees, our ability to maintain and grow our business and to effectively serve our clients could be limited and our future revenue and results of operations could be materially and adversely affected. Furthermore, to the extent that we are unable to make necessary permanent hires to appropriately serve our clients, we could be required to engage larger numbers of contracted personnel, which could reduce our profit margins.
If we are able to attract sufficient numbers of qualified new hires, training and retention costs may place significant demands on our resources. In addition, to the extent that we experience attrition in our employee ranks, we may realize only a limited or no return on such invested resources, and we would have to expend additional resources to hire and train replacement employees. The loss of services of key personnel could also impair our ability to perform required services under some of our contracts and to retain such contracts, as well as our ability to win new business.
We may fail to obtain and maintain necessary security clearances which may adversely affect our ability to perform on certain contracts.
Many U.S. government programs require contractor employees and facilities to have security clearances. Depending on the level of required clearance, security clearances can be difficult and time-consuming to obtain. If we or our employees are unable to obtain or retain necessary security clearances in a timely manner, we may not be able to win new business, and our existing clients could terminate their contracts with us or decide not to renew them. To the extent we are not able to obtain and maintain facility security clearances or engage employees with the required security clearances for a particular contract, we may not be able to bid on or win new contracts, or effectively rebid on expiring contracts, as well as lose existing contracts, which may adversely affect our operating results and inhibit the execution of our growth strategy.
Our profitability could suffer if we are not able to timely and effectively utilize our employees or manage our cost structure.
The cost of providing our services, including the degree to which our employees are utilized, affects our profitability. The degree to which we are able to utilize our employees in a timely manner or at all is affected by a number of factors, including:
our ability to transition employees from completed projects to new assignments and to hire, assimilate, and deploy new employees;
our ability to forecast demand for our services and to maintain and deploy headcount that is aligned with demand, including employees with the right mix of skills and experience to support our projects;
our employees’ inability to obtain or retain necessary security clearances;
our ability to manage attrition; and
our need to devote time and resources to training, business development, and other non-chargeable activities.
If our employees are under-utilized, our profit margin and profitability could suffer. Additionally, if our employees are over-utilized, it could have a material adverse effect on employee engagement and attrition, which would in turn have a material adverse impact on our business.
Our profitability is also affected by the extent to which we are able to effectively manage our overall cost structure for operating expenses, such as wages and benefits, overhead and capital and other investment-related expenditures. If we are unable to effectively manage our costs and expense and achieve efficiencies, our competitiveness and profitability may be adversely affected.

23




We may lose one or more members of our senior management team or fail to develop new leaders, which could cause the disruption of the management of our business.
We believe that the future success of our business and our ability to operate profitably depends on the continued contributions of the members of our senior management and the continued development of new members of senior management. We rely on our senior management to generate business and execute programs successfully. In addition, the relationships and reputation that many members of our senior management team have established and maintain with our clients are important to our business and our ability to identify new business opportunities. The loss of any member of our senior management or our failure to continue to develop new members could impair our ability to identify and secure new contracts, to maintain good client relations, and to otherwise manage our business.
Our employees or subcontractors may engage in misconduct or other improper activities, which could harm our ability to conduct business with the U.S. government.
We are exposed to the risk that employee or subcontractor fraud or other misconduct could occur. Misconduct by employees or subcontractors could include intentional or unintentional failures to comply with U.S. government procurement regulations, engaging in other unauthorized activities, or falsifying time records. Employee or subcontractor misconduct could also involve the improper use of our clients’ sensitive or classified information, or the inadvertent or intentional disclosure of our or our clients' sensitive information in violation of our contractual, statutory, or regulatory obligations. It is not always possible to deter employee or subcontractor misconduct, and the precautions we take to prevent and detect this activity may not be effective in controlling unknown or unmanaged risks or losses, which could materially harm our business. As a result of such misconduct, our employees could lose their security clearance and we could face fines and civil or criminal penalties, loss of facility clearance accreditation, and suspension, proposed debarment or debarment from bidding for or performing under contracts with the U.S. government, as well as reputational harm, which would materially and adversely affect our results of operations and financial condition.
We face intense competition from many competitors, which could cause us to lose business, lower prices and suffer employee departures.
Our business operates in a highly competitive industry, and we generally compete with a wide variety of U.S. government contractors, including large defense contractors, diversified service providers, and small businesses. We also face competition from entrants into our markets including companies divested by large prime contractors in response to increasing scrutiny of organizational conflicts of interest issues. There is also a significant industry trend towards consolidation, which may result in the emergence of companies that are better able to compete against us. Some of these companies possess greater financial resources and larger technical staffs, and others have smaller and more specialized staffs. These competitors could, among other things:
divert sales from us by winning very large-scale government contracts, a risk that is enhanced by the recent trend in government procurement practices to bundle services into larger contracts;
force us to charge lower prices in order to win or maintain contracts;
seek to hire our employees; or
adversely affect our relationships with current clients, including our ability to continue to win competitively awarded engagements where we are the incumbent.
If we lose business to our competitors or are forced to lower our prices or suffer employee departures, our revenue and our operating profits could decline. In addition, we may face competition from our subcontractors who, from time to time, seek to obtain prime contractor status on contracts for which they currently serve as a subcontractor to us. If one or more of our current subcontractors are awarded prime contractor status on such contracts in the future, it could divert sales from us and could force us to charge lower prices, which could have a material adverse effect on our revenue and profitability.
Our failure to maintain strong relationships with other contractors, or the failure of contractors with which we have entered into a sub- or prime contractor relationship to meet their obligations to us or our clients, could have a material adverse effect on our business and results of operations.
Maintaining strong relationships with other U.S. government contractors, who may also be our competitors, is important to our business and our failure to do so could have a material adverse effect on our business, prospects, financial condition, and operating results. To the extent that we fail to maintain good relations with our subcontractors or other prime contractors due to either perceived or actual performance failures or other conduct, they may refuse to hire us as a subcontractor in the future or to work with us as our subcontractor. In addition, other contractors may choose not to use us as a subcontractor or choose not to perform work for us as a subcontractor for any number of additional reasons, including because they choose to establish relationships with our competitors or because they choose to directly offer services that compete with our business.

24




As a prime contractor, we often rely on other companies to perform some of the work under a contract, and we expect to continue to depend on relationships with other contractors for portions of our delivery of services and revenue in the foreseeable future. If our subcontractors fail to perform their contractual obligations, our operating results and future growth prospects could be impaired. There is a risk that we may have disputes with our subcontractors arising from, among other things, the quality and timeliness of work performed by the subcontractor, client concerns about the subcontractor, our failure to extend existing task orders or issue new task orders under a subcontract, or our hiring of a subcontractor’s personnel. In addition, if any of our subcontractors fail to deliver the agreed-upon supplies or perform the agreed-upon services on a timely basis, our ability to fulfill our obligations as a prime contractor may be jeopardized. Material losses could arise in future periods and subcontractor performance deficiencies could result in a client terminating a contract for default. A termination for default could expose us to liability and have an adverse effect on our ability to compete for future contracts and orders.
As a subcontractor, we often lack control over fulfillment of a contract, and poor performance on the contract could tarnish our reputation, even when we perform as required, and could cause other contractors to choose not to hire us as a subcontractor in the future. If the U.S. government terminates or reduces other prime contractors’ programs or does not award them new contracts, subcontracting opportunities available to us could decrease, which would have a material adverse effect on our financial condition and results of operations. In addition, as a subcontractor, we may be unable to collect payments owed to us by the prime contractor, even if we have performed our obligations under the contract, as a result of, among other things, the prime contractor’s inability to fulfill the contact. Due to certain common provisions in subcontracts in certain countries, we could also experience delays in receiving payment if the prime contractor experiences payment delays, which could have an adverse effect on our financial condition and results of operations.
Adverse judgments or settlements in legal disputes could result in materially adverse monetary damages or injunctive relief and damage our reputation.
We are subject to, and may become a party to, a variety of litigation or other claims and suits that arise from time to time in the ordinary course of our business. For example, our performance under U.S. government contracts and compliance with the terms of those contracts and applicable laws and regulations are subject to continuous audit, review, and investigation by the U.S. government which may include such investigative techniques as subpoenas or civil investigative demands. As more fully described under "Item 3. Legal Proceedings", the U.S. Department of Justice (the "DOJ") is conducting a civil and criminal investigation of the Company, and the Company has also been in contact with other regulatory agencies and bodies, including the Securities and Exchange Commission, which notified the Company that it is conducting an investigation that the Company believes relates to matters that are also the subject of the DOJ's investigation. The Company may receive additional regulatory or governmental inquiries related to the matters that are the subject of the DOJ's investigation. The total cost associated with these matters will depend on many factors, including the duration of these matters and any related finding. Given the nature of our business, these audits, reviews, and investigations may focus, among other areas, on various aspects of procurement integrity, labor time reporting, sensitive and/or classified information access and control, executive compensation, and post government employment restrictions. In addition, from time to time, we are also involved in legal proceedings and investigations arising in the ordinary course of business, including those relating to employment matters, (such as matters involving alleged violations of civil rights, wage and hour, and worker’s compensation laws), relationships with clients and contractors, intellectual property disputes, and other business matters. Any such claims, proceedings or investigations may be time-consuming, costly, divert management resources, or otherwise have a material adverse effect on our result of operations.
The results of litigation and other legal proceedings, including the other claims described under "Item 3. Legal Proceedings," are inherently uncertain and adverse judgments or settlements in some or all of these legal disputes may result in materially adverse monetary damages or injunctive relief against us. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or obtain adequate insurance in the future. The litigation and other legal proceedings described under “Item 3. Legal Proceedings” are subject to future developments and management’s view of these matters may change in the future.
We face certain significant risk exposures and potential liabilities that may not be adequately covered by indemnity or insurance.
A significant portion of our business relates to designing, developing, and implementing advanced defense and technology systems and products, including cybersecurity products and services. New technologies may be untested or unproven. We maintain insurance policies that mitigate against risk and potential liabilities related to our operations, including data breaches. This insurance is maintained in amounts that we believe are reasonable. However, our insurance coverage may not be adequate to cover those claims or liabilities, and we may be forced to bear significant costs from an accident or incident. The amount of the insurance coverage we maintain or indemnification to which we may be contractually or otherwise entitled may not be adequate to cover all claims or liabilities. Accordingly, we may be forced to bear substantial costs resulting from risks and uncertainties of our business which would negatively impact our results of operations, financial condition or liquidity.

25




Failure to adequately protect, maintain, or enforce our rights in our intellectual property may adversely limit our competitive position.
We rely upon a combination of nondisclosure agreements and other contractual arrangements, as well as copyright, trademark, patent, and trade secret laws to protect our proprietary information. We also enter into proprietary information and intellectual property agreements with employees, which require them to disclose any inventions created during employment, to convey such rights to inventions to us, and to restrict any disclosure of proprietary information. Trade secrets are generally difficult to protect. Although our employees are subject to confidentiality obligations, this protection may be inadequate to deter or prevent misappropriation of our confidential information and/or the infringement of our patents and copyrights. Further, we may be unable to detect unauthorized use of our intellectual property or otherwise take appropriate steps to enforce our rights. Failure to adequately protect, maintain, or enforce our intellectual property rights may adversely limit our competitive position.
Assertions by third parties of infringement, misappropriation or other violations by us of their intellectual property rights could result in significant costs and substantially harm our business and operating results.
In recent years, there has been significant litigation involving intellectual property rights in technology industries. We may face from time to time, allegations that we or a supplier or customer have violated the rights of third parties, including patent, trademark, and other intellectual property rights. If, with respect to any claim against us for violation of third-party intellectual property rights, we are unable to prevail in the litigation or retain or obtain sufficient rights or develop non-infringing intellectual property or otherwise alter our business practices on a timely or cost-efficient basis, our business and competitive position may be adversely affected.
Any infringement, misappropriation or related claims, whether or not meritorious, are time consuming, divert technical and management personnel, and are costly to resolve. As a result of any such dispute, we may have to develop non-infringing technology, pay damages, enter into royalty or licensing agreements, cease utilizing certain products or services, or take other actions to resolve the claims. These actions, if required, may be costly or unavailable on terms acceptable to us.
Our focus on new growth areas for our business entails risks, including those associated with new relationships, clients, talent needs, capabilities, service offerings, and maintaining our collaborative culture and core values.
We are focused on growing our presence in our addressable markets by: expanding our relationships with existing clients, developing new clients by leveraging our core competencies, further developing our existing capabilities and service offerings, creating new capabilities and service offerings to address our clients' emerging needs, and undertaking business development efforts focused on identifying near-term developments and long-term trends that may pose significant challenges for our clients. These efforts entail inherent risks associated with innovation and competition from other participants in those areas, potential failure to help our clients respond to the challenges they face, our ability to comply with uncertain evolving legal standards applicable to certain of our service offerings, including those in the cybersecurity area, and, with respect to potential international growth, risks associated with operating in foreign jurisdictions, such as compliance with applicable foreign and U.S. laws and regulations that may impose different and, occasionally, conflicting or contradictory requirements, and the economic, legal, and political conditions in the foreign jurisdictions in which we operate, including the GDPR. See "—Implementation of various data privacy and cybersecurity laws could require significant investment into ongoing compliance activities, trigger potential liability under such laws, and limit our ability to use personal data." As we attempt to develop new relationships, clients, capabilities, and service offerings, these efforts could harm our results of operations due to, among other things, a diversion of our focus and resources and actual costs, opportunity costs of pursuing these opportunities in lieu of others and a failure to reach a profitable return on our investments in new technologies, capabilities, and businesses, including expenses on research and development investments, and these efforts could ultimately be unsuccessful. Additionally, the possibility exists that our competitors might develop new capabilities or service offerings that might cause our existing capabilities and service offerings to become obsolete. If we fail in our new capabilities development efforts or our capabilities or services fail to achieve market acceptance more rapidly than our competitors, our ability to procure new contracts could be negatively impacted, which would negatively impact our results of operations and financial condition.
Our ability to grow our business by leveraging our operating model to efficiently and effectively deploy our people across our client base is also largely dependent on our ability to maintain our collaborative culture. To the extent that we are unable to maintain our culture for any reason, including our effort to focus on new growth areas or acquire new businesses with different corporate cultures, we may be unable to grow our business. Any such failure could have a material adverse effect on our business and results of operations.
In addition, with the growth of our U.S. and international operations, we are now providing client services and undertaking business development efforts in numerous and disparate geographic locations both domestically and internationally. Our ability to effectively serve our clients is dependent upon our ability to successfully leverage our operating model across all of these and any future locations, maintain effective management controls over all of our locations to ensure, among other things, compliance with applicable laws, rules and regulations, and instill our core values in all of our personnel at

26




each of these and any future locations. Any inability to ensure any of the foregoing could have a material adverse effect on our business and results of operations.
We are subject to risks associated with operating internationally.
Our business operations are subject to a variety of risks associated with conducting business internationally, including:
Changes in or interpretations of laws or policies that may adversely affect the performance of our services;
Political instability in foreign countries;
Imposition of inconsistent or contradictory laws or regulations;
Reliance on the U.S. or other governments to authorize us to export products, technology, and services to clients and other business partners;
Conducting business in places where laws, business practices, and customs are unfamiliar or unknown; and
Imposition of limitations on or increase of withholding and other taxes on payments by foreign subsidiaries or joint ventures;
Volatility in foreign currencies if the United Kingdom exits from the European Union, particularly in countries where the Company has substantial activities; and
Imposition of tariffs or embargoes, export controls and other trade restrictions, including the recent tariffs imposed by the U.S. and China and the possibility of additional tariffs or other trade restrictions relating to trade.
In addition, we are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by business entities for the purpose of obtaining or retaining business. We have operations and deal with governmental clients in countries known to experience corruption, including certain emerging countries in the Middle East and Southeast Asia. Our activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees, consultants or contractors that could be in violation of various laws including the FCPA and other anti-corruption laws, even though these parties are not always subject to our control. Our international operations also involve activities involving the transmittal of information, which may include personal data, that may expose us to data privacy laws in the jurisdictions in which we operate. If our data protection practices become subject to new or different restrictions, and to the extent such practices are not compliant with the laws of the countries in which we process data, we could face increased compliance expenses and face penalties for violating such laws or be excluded from those markets altogether, in which case our operations could be adversely affected. We are also subject to import-export control regulations restricting the use and dissemination of information classified for national security purposes and the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work.
If we were to fail to comply with the FCPA, other anti-corruption laws, applicable import-export control regulations, data privacy laws, or other applicable rules and regulations, we could be subject to substantial civil and criminal penalties, including fines for our company and incarceration for responsible employees and managers, suspension or debarment, and the possible loss of export or import privileges which could have a material adverse effect on our business and results of operations.
Changes to our operating structure, capabilities or strategy intended to address our clients’ needs, respond to developments in our markets and grow our business may not be successful.
We routinely review our operating structure, capabilities and strategy to determine whether we are effectively meeting the needs of existing clients, effectively responding to developments in our markets and successfully building platforms intended to provide the foundation for the future growth of our business. The outcome of any such review is difficult to predict and the extent of changes to our business following such a review, if any, are dependent in part upon the nature and extent of the review.
The implementation of changes to our operating structure, capabilities, strategy or any other aspect of our business following an internal review, may materially alter various aspects of our business or our business model as an entirety and there can be no assurance that any such changes will be successful or that they will not ultimately have a negative effect on our business and results of operations.

27




Many of our contracts with the U.S. government are classified or subject to other security restrictions, which may limit investor insight into portions of our business.
We derive a substantial portion of our revenue from contracts with the U.S. government that are classified or subject to security restrictions that preclude the dissemination of certain information. In addition, a significant number of our employees have security clearances which preclude them from providing information regarding certain of our clients and services provided to such clients to other of our employees without security clearances and investors. Because we are limited in our ability to provide information about these contracts and services, the various risks associated with these contracts or services or any dispute or claims relating to such contracts or services, you may not have important information concerning our business, which will limit your insight into a substantial portion of our business and therefore may be less able to fully evaluate the risks related to that portion of our business.
If we cannot collect our receivables or if payment is delayed, our business may be adversely affected by our inability to generate cash flow, provide working capital, or continue our business operations.
We depend on the timely collection of our receivables to generate cash flow, provide working capital, and continue our business operations. If the U.S. or any other government or any prime contractor for whom we are a subcontractor fails to pay or delays the payment of invoices for any reason, our business and financial condition may be materially and adversely affected. The U.S. or any other government may delay or fail to pay invoices for a number of reasons, including lack of appropriated funds, lack of an approved budget, lack of revised or final settled billing rates as a result of open audit years or as a result of audit findings by government regulatory agencies. Some prime contractors for whom we are a subcontractor have significantly fewer financial resources than we do, which may increase the risk that we may not be paid in full or that payment may be delayed.
Recent efforts by the U.S. government to revise its organizational conflict of interest rules could limit our ability to successfully compete for new contracts or task orders, which would adversely affect our results of operations.
Recent efforts by the U.S. government to reform its procurement practices have focused, among other areas, on the separation of certain types of work to facilitate objectivity and avoid or mitigate organizational conflicts of interest and the strengthening of regulations governing organizational conflicts of interest. Organizational conflicts of interest may arise from circumstances in which a contractor has:
impaired objectivity during performance;
unfair access to non-public information; or
the ability to set the “ground rules” for another procurement for which the contractor competes.
A focus on organizational conflicts of interest issues has resulted in legislation and a proposed regulation aimed at increasing organizational conflicts of interest requirements, including, among other things, separating sellers of products and providers of advisory services in major defense acquisition programs. In addition, the U.S. government is working to adopt a FAR rule to address organizational conflicts of interest issues that will apply to all government contractors, including us, in Department of Defense and other procurements. A future FAR rule may also increase the restrictions in current organizational conflicts of interest regulations and rules. To the extent that proposed and future organizational conflicts of interest laws, regulations, and rules, limit our ability to successfully compete for new contracts or task orders with the U.S. government, either because of organizational conflicts of interest issues arising from our business, or because companies with which we are affiliated, or with which we otherwise conduct business, create organizational conflicts of interest issues for us, our results of operations could be materially and adversely affected.
We may consummate acquisitions, investments, joint ventures and divestitures, which involve numerous risks and uncertainties.
As part of our operating strategy, we selectively pursue acquisitions, investments, partnerships and joint ventures. These transactions pose many risks, including:
we may not be able to identify suitable acquisition and investment candidates at prices we consider attractive;
we may not be able to compete successfully for identified acquisition and investment candidates, complete acquisitions and investments, or accurately estimate the financial effect of acquisitions and investments on our business;
future acquisitions and investments may require us to issue common stock or spend significant cash, resulting in dilution of ownership or additional debt leverage;
we may have difficulty retaining an acquired company’s key employees or clients;
we may have difficulty integrating personnel from the acquired company with our people and our core values;

28




we may have difficulty integrating acquired businesses and investments, resulting in unforeseen difficulties, such as incompatible accounting, information management, or other control systems, and greater expenses than expected;
acquisitions and investments may disrupt our business or distract our management from other responsibilities;
as a result of an acquisition or investment, we may incur additional debt and we may need to record write-downs from future impairments of intangible assets, each of which could reduce our future reported earnings; and
we may not be able to effectively influence the operations of our joint ventures or partnerships, or we may be exposed to certain liabilities if our partners do not fulfill their obligations.
In connection with any acquisition or investment that we make, there may be liabilities that we fail to discover or that we inadequately assess, and we may fail to discover any failure of a target company to have fulfilled its contractual obligations to the U.S. government or other clients. Acquired entities and investments may not operate profitably or result in improved operating performance. Additionally, we may not realize anticipated synergies, business growth opportunities, cost savings, and other benefits, which could have a material adverse effect on our business and results of operations.
In addition, we may divest businesses, including businesses that are no longer a part of our ongoing strategic plan. These divestitures similarly require significant investment of time and resources, may disrupt our business, distract management from other responsibilities and may result in losses on disposal or continued financial involvement in the divested business, including through indemnification, guarantees or other financial arrangements, which could adversely affect our financial results. In addition, we may be unable to complete strategic divestitures on satisfactory terms and conditions, including non-competition arrangements, or within expected time frames.
Goodwill represents a significant asset on our balance sheet, and changes in future business conditions could cause these investments to become impaired, requiring substantial write-downs that would reduce our operating income.
As of March 31, 2020, the value of our goodwill was $1.6 billion. The amount of our recorded goodwill may substantially increase in the future as a result of any acquisitions that we make. We evaluate the recoverability of recorded goodwill amounts annually, or when evidence of potential impairment exists. Impairment analysis is based on several factors requiring judgment and the use of estimates, which are inherently uncertain and based on assumptions that may prove to be inaccurate. Additionally, material changes in our financial outlook, as well as events outside of our control, such as deteriorating market conditions for companies in our industry, may indicate a potential impairment. When there is an impairment, we are required to write down the recorded amount of goodwill, which is reflected as a charge against operating income. Such non-cash impairment charges could have a material adverse effect on our results of operations in the period in which they are recognized.
Changes in tax law or judgments by management related to complex tax matters could adversely impact our results of operations.
We are subject to taxation in the U.S. and certain other foreign jurisdictions. Any future changes in applicable federal, state and local, or foreign tax laws and regulations or their interpretation or application, including those that could have a retroactive effect, could result in the Company incurring additional tax liabilities in the future. In particular, we will continue to assess the effect of the Tax Cuts and Jobs Act (the "2017 Tax Act") on our business as it relates to taxes on low taxed intangible foreign income as well as deduction for foreign derived intangible income. For additional information regarding the 2017 Tax Act, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations".
Additionally, we recognize liabilities for uncertainty in income taxes when it is more likely than not that a tax position will not be sustained on examination and settlement with various taxing authorities. We regularly assess the adequacy of our uncertain tax positions and other reserves, which requires a significant amount of judgment. Although we accrue for uncertain tax positions and other reserves, the results of regulatory audits and negotiations with taxing and customs authorities may be in excess of our accruals, resulting in the payment of additional taxes, duties, penalties and interest. As a result, any final determination of tax audits or related litigation may be materially different than our current provisional amounts, which could materially affect our tax obligations and effective tax rate. For example, during fiscal 2020, we recorded additional uncertain tax positions of approximately $45.0 million related to research and development credits that we have claimed, or will soon claim. Any increase to the liability we established as of March 31, 2020 for these uncertain tax positions as a result of audits by taxing authorities, changes in tax laws and regulations or otherwise relating to this, or any other, tax matter could have a material effect on our results of operations. For a description of our related accounting policies, refer to Note 2 and Note 14 to our accompanying consolidated financial statements.

29




Risks Related to Our Industry
Our U.S. government contracts may be terminated by the government at any time and may contain other provisions permitting the government to discontinue contract performance, and if lost contracts are not replaced, our operating results may differ materially and adversely from those anticipated.
U.S. government contracts contain provisions and are subject to laws and regulations that provide government clients with rights and remedies not typically found in commercial contracts. These rights and remedies allow government clients, among other things, to:
terminate existing contracts, with short notice, for convenience as well as for default;
reduce orders under or otherwise modify contracts;
for contracts subject to the Truthful Cost or Pricing Data Statute, reduce the contract price or cost where it was increased because a contractor or subcontractor furnished cost or pricing data during negotiations that was not complete, accurate or current;
for some contracts, (i) demand a refund, make a forward price adjustment, or terminate a contract for default if a contractor provided inaccurate or incomplete data during the contract negotiation process and (ii) reduce the contract price under certain triggering circumstances, including the revision of price lists or other documents upon which the contract award was predicated;
terminate our facility security clearances and thereby prevent us from receiving classified contracts;
cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable;
decline to exercise an option to renew a multi-year contract or issue task orders in connection with IDIQ contracts;
claim rights in solutions, systems, and technology produced by us, appropriate such work-product for their continued use without continuing to contract for our services and disclose such work-product to third parties, including other U.S. government agencies and our competitors, which could harm our competitive position;
prohibit future procurement awards with a particular agency due to a finding of organizational conflicts of interest based upon prior related work performed for the agency that would give a contractor an unfair advantage over competing contractors, or the existence of conflicting roles that might bias a contractor’s judgment;
subject the award of contracts to protest by competitors, which may require the contracting federal agency or department to suspend our performance pending the outcome of the protest and may also result in a requirement to resubmit offers for the contract or in the termination, reduction, or modification of the awarded contract;
suspend or debar us from doing business with the U.S. government; and
control or prohibit the export of our services.
Recent and potential future budget cuts and recent efforts to decrease federal awards for management support services, may cause agencies with which we currently have contracts to terminate, reduce the number of task orders under or fail to renew such contracts. If a U.S. government client were to unexpectedly terminate, cancel, or decline to exercise an option to renew with respect to one or more of our significant contracts, or suspend or debar us from doing business with the U.S. government, our revenue and operating results would be materially harmed.
Our work with government clients exposes us to additional risks inherent in the government contracting environment, which could reduce our revenue, disrupt our business, or otherwise materially adversely affect our results of operation.
U.S. government agencies routinely audit, review, and investigate government contracts and government contractors’ administrative processes and systems. These agencies review our performance on contracts, pricing practices, cost accounting practices, and compliance with applicable policies, laws, regulations and standards, including applicable government cost accounting standards, as well as our contract costs, including allocated indirect costs. The DCAA audits and the DCMA reviews, among other areas, the adequacy of our internal control systems and policies, including our Defense Federal Acquisition Regulation Supplement ("DFARS") required business systems, which are comprised of our purchasing, property, estimating, earned value, accounting and material management and accounting systems. These internal control systems could focus on significant elements of costs, such as executive compensation. Determination of a significant internal control deficiency by a government agency could result in increased payment withholding that might adversely affect our cash flow. In particular, over time the DCMA has increased and may continue to increase the proportion of executive compensation that it deems unallowable and the size of the executive population whose compensation is disallowed, which will continue to materially and adversely affect our results of operations or financial condition including the requirement to carry an increased

30




level of reserves. We recognize as revenue, net of reserves, executive compensation that we determine, based on management's estimates, to be allowable; management's estimates in this regard are based on a number of factors that may change over time, including executive compensation survey data, our and other government contractors' experiences with the DCAA audit practices in our industry and relevant decisions of courts and boards of contract appeals. Any costs found to be unallowable under a contract will not be reimbursed, and any such costs already reimbursed must be refunded. Further, the amount of any such refund may exceed the provision of claimed indirect costs, which is based on management's estimates and assumptions that are inherently uncertain and may not cover actual losses. For example, DCAA audits may result in, and have historically resulted in, the Company's inability to retain certain claimed indirect costs, including executive and employee compensation, due to differing views of the allowability and reasonableness of such costs. As of March 31, 2020, years subsequent to the Company's fiscal year 2011 remained subject to audit and final resolution. The Company recognized a liability of $224.6 million for estimated adjustments to claimed indirect costs based on its historical DCAA audit results, including the final resolution of such audits with the DCMA. Determining the provision for claimed indirect costs is complex and subject to management's estimate of adjustments to claimed indirect costs based on the number of years that remain open to audit and expected final resolution by U.S. government agencies. As a result, significant changes in estimates could have a material effect on the Company's results of operations. Furthermore, the disallowance of any costs previously charged could directly and negatively affect our current results of operations for the relevant prior fiscal periods, and we could be required to repay any such disallowed amounts. Each of these results could materially and adversely affect our results of operations or financial condition.
Moreover, if any of the administrative processes and business systems, some of which are currently certified as effective, are found not to comply with government imposed requirements, we may be subjected to increased government scrutiny and approval that could delay or otherwise adversely affect our ability to compete for or perform contracts or to be paid timely. Unfavorable U.S. government audit, review, or investigation results could subject us to civil or criminal penalties or administrative sanctions, require us to retroactively and prospectively adjust previously agreed to billing or pricing rates for our work, and could harm our reputation and relationships with our clients and impair our ability to be awarded new contracts, which could affect our future sales and profitability by preventing us, by operation of law or in practice, from receiving new government contracts for some period of time. In addition, if our invoicing system were found to be inadequate following an audit by the DCAA, our ability to directly invoice U.S. government payment offices could be eliminated. As a result, we would be required to submit each invoice to the DCAA for approval prior to payment, which could materially increase our accounts receivable days sales outstanding and adversely affect our cash flow. In addition, proposed regulatory changes, if adopted, would require the Department of Defense’s contracting officers to impose contractual withholdings at no less than certain minimum levels based on assessments of a contractor’s business systems. If a government investigation uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeitures of profits, withholding of payments, suspension of payments, fines, and suspension or debarment from doing business with the U.S. government. We could also suffer serious reputational harm if allegations of impropriety were made against us.
In addition, we are currently considering and have taken steps in preparation for the implementation of new financial management systems, which would likely involve certain changes to our cost accounting practices. This may negatively impact our profitability. In particular, changes to our cost accounting practices could require us to estimate changes in costs for certain contracts at the time of implementation and make payments in connection with such estimates that could be material and not recoverable. To the extent we are unable to fully mitigate the costs associated with changes to our cost accounting practices if we implement the new systems, our business and financial results may be adversely affected.
The U.S. government may revise its procurement, contract or other practices in a manner adverse to us.
The U.S. government may:
revise its procurement practices or adopt new contract laws, rules, and regulations, such as cost accounting standards, organizational conflicts of interest, and other rules governing inherently governmental functions at any time;
reduce, delay, or cancel procurement programs resulting from U.S. government efforts to improve procurement practices and efficiency;
limit the creation of new government-wide or agency-specific multiple award contracts;
face restrictions or pressure from government employees and their unions regarding the amount of services the U.S. government may obtain from private contractors;
award contracts on a technically acceptable/lowest cost basis in order to reduce expenditures, and we may not be the lowest cost provider of services;
adopt new socio-economic requirements, including setting aside procurement opportunities to small, disadvantaged businesses;

31




change the basis upon which it reimburses our compensation and other expenses or otherwise limit such reimbursements; and
at its option, terminate or decline to renew our contracts.
In addition, any new contracting methods could be costly or administratively difficult for us to implement and could adversely affect our future revenue and profit margin. In addition, changes to the procurement system could cause delays in the procurement decision-making process. Any such changes to the U.S. government’s procurement practices or the adoption of new contracting rules or practices could impair our ability to obtain new or re-compete contracts and any such changes or increased associated costs could materially and adversely affect our results of operations.
The U.S. government may prefer minority-owned, small and small disadvantaged businesses; therefore, we may have fewer opportunities to bid for.
As a result of the Small Business Administration set-aside program, the U.S. government may decide to restrict certain procurements only to bidders that qualify as minority-owned, small, or small disadvantaged businesses. As a result, we would not be eligible to perform as a prime contractor on those programs and would be restricted to a maximum of 49% of the work as a subcontractor on those programs. An increase in the amount of procurements under the Small Business Administration set-aside program may impact our ability to bid on new procurements as a prime contractor or restrict our ability to re-compete on incumbent work that is placed in the set-aside program.
Risks Related to Our Indebtedness
We have substantial indebtedness and may incur substantial additional indebtedness, which could adversely affect our financial health and our ability to obtain financing in the future as well as to react to changes in our business.
As of March 31, 2020, we had total indebtedness of approximately $2.2 billion and $399.1 million of availability under our revolving credit facility (the “Revolving Credit Facility”). We are able to, and may, incur additional indebtedness in the future, subject to the limitations contained in the agreements governing our indebtedness. Our substantial indebtedness could have important consequences to holders of our common stock, including:
making it more difficult for us to satisfy our obligations with respect to our Secured Credit Facility, consisting of a $1,364 million term loan facility (“Term Loan A”), a $388 million term loan facility (“Term Loan B” and, together with Term Loan A, the “Term Loans”), a $500 million Revolving Credit Facility, with a sublimit for letters of credit of $100 million, our $350 million in aggregate principal amount of 5.125% Senior Notes due 2025 (the “Senior Notes”) and our other debt;
limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;
requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;
increasing our vulnerability to general adverse economic and industry conditions
exposing us to the risk of increased interest rates as certain of our borrowings, including under the Secured Credit Facility, are at variable rates of interest;
limiting our flexibility in planning for and reacting to changes in the industry in which we compete;
placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt and more favorable terms and thereby affecting our ability to compete; and
increasing our cost of borrowing.
Although the Secured Credit Facility and the indenture governing the Senior Notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. In addition, the Revolving Credit Facility provides for commitments of $500 million, which as of March 31, 2020, had availability of $399.1 million. Additionally, the used portion as it pertains to open standby letters of credit and bank guarantees totaled $0.9 million. Furthermore, subject to specified conditions, without the consent of the then-existing lenders (but subject to the receipt of commitments), the indebtedness under the Secured Credit Facility may be increased by up to (i) the greater of (x) $627 million and (y) 100% of consolidated EBITDA of Booz Allen Hamilton, as of the end of the most recently ended four quarter period for which financial statements have been delivered pursuant to the Credit Agreement, plus (ii) the aggregate principal amount under which the pro forma consolidated net secured leverage ratio is equal to or less than 3.50:1.00. If new debt is added to our current debt levels, the related risks that we and the

32




guarantors now face would increase and we may not be able to meet all our debt obligations, including the repayment of the Senior Notes.
We may not be able to generate sufficient cash to service our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or refinance our debt obligations will depend on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory and other factors beyond our control. We might not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. For information regarding the risks to our business that could impair our ability to satisfy our obligations under our indebtedness, see “— Risks Related to Our Business.”
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.
The agreements governing our indebtedness restrict our ability to dispose of assets and use the proceeds from those dispositions and also restrict our ability to raise debt to be used to repay other indebtedness when it becomes due.
We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. In addition, under the Secured Credit Facility, we are subject to mandatory prepayments of our Term Loans from a portion of our excess cash flows, which may be stepped down upon the achievement of specified first lien leverage ratios. To the extent that we are required to prepay any amounts under our Term Loans, we may have insufficient cash to make required principal and interest payments on other indebtedness.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial condition and results of operations and our ability to satisfy our obligations under our indebtedness.
If we cannot make scheduled payments on our debt, we would be in default and the following events could occur: lenders under our Secured Credit Facility and holders of the Senior Notes could declare all outstanding principal and interest to be due and payable; lenders under the Revolving Credit Facility could terminate their commitments to provide loans; and lenders could foreclose against the assets securing their loans. All of these events could force us into bankruptcy or liquidation and result in investors' losing some or all of the value of their investment.
The terms of the agreements governing our indebtedness restrict our current and future operations, particularly our ability to respond to changes or to take certain actions, which could harm our long-term interests.
The Secured Credit Facility and the indenture governing the Senior Notes contain covenants that, among other things, impose significant operating and financial restrictions on us and limit our ability to engage in actions that may be in our long-term best interest, including restrictions on our ability to:
incur additional indebtedness, guarantee indebtedness or issue disqualified stock or preferred stock;
pay dividends on or make other distributions in respect of, or repurchase or redeem, our capital stock;
prepay, redeem or repurchase subordinated indebtedness;
make loans and investments;
sell or otherwise dispose of assets;
incur liens securing indebtedness;
enter into transactions with affiliates;
enter into agreements restricting our subsidiaries’ ability to pay dividends to us or the guarantors or make other intercompany transfers;
consolidate, merge or sell all or substantially all of our or any guarantor’s assets;
designate our subsidiaries as unrestricted subsidiaries; and
enter into certain lines of business.
These covenants are subject to a number of important exceptions and qualifications. In addition, the restrictive

33




covenants in the Secured Credit Facility require us to maintain a consolidated net total leverage ratio and a consolidated net interest coverage ratio that will each be tested at the end of each fiscal quarter. Our ability to satisfy such financial ratio tests may be affected by events beyond our control.
A breach of the covenants under the agreements governing our indebtedness could result in an event of default under those agreements. Such a default may allow certain creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the Secured Credit Facility would also permit the lenders under the Revolving Credit Facility to terminate all other commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under the Secured Credit Facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event the lenders accelerate the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness.
As a result of all of these restrictions, we may be:
limited in how we conduct our business;
unable to raise additional debt or equity financing to operate during general economic or business downturns; or
unable to compete effectively or to take advantage of new business opportunities.
These restrictions might hinder our ability to grow in accordance with our strategy.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
Borrowings under the Secured Credit Facility are at variable rates of interest and expose us to interest rate risk. While interest rates are currently at historically low levels, if interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.
Based on Term Loans outstanding as of March 31, 2020 and assuming all revolving loans are fully drawn, and after considering interest rate swaps that fixed the interest rate on $1 billion of principal of our variable rate debt each quarter point change in interest rates would result in a $3.1 million change in our projected annual interest expense on our indebtedness under the Secured Credit Facility. We have entered into interest rate swaps and may in the future enter into additional interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce future interest rate volatility of our variable rate indebtedness. However, due to risks for hedging gains and losses and cash settlement costs, we may not elect to maintain such interest rate swaps, and any swaps may not fully mitigate our interest rate risk.
In addition, a transition away from the London Interbank Offering Rate (“LIBOR”) as a benchmark for establishing the applicable interest rate may affect the cost of servicing our debt under the Secured Credit Facility and the Revolving Credit Facility. As of March 31, 2020, we had $2.2 billion outstanding under the Secured Credit Facility and $399.1 million of availability under the Revolving Credit Facility, each of which incurs interest based on LIBOR. The Financial Conduct Authority of the United Kingdom has announced that it plans to phase out LIBOR by the end of calendar year 2021. Although these borrowing arrangements provide for alternative base rates, such alternative base rates may or may not be related to LIBOR, and the consequences of the phase out of LIBOR cannot be entirely predicted at this time. For example, if any alternative base rate or means of calculating interest with respect to our outstanding variable rate indebtedness leads to an increase in the interest rates charged, it could result in an increase in the cost of such indebtedness, impact our ability to refinance some or all of our existing indebtedness or otherwise have a material adverse impact on our business, financial condition and results of operations.
 
A downgrade, suspension or withdrawal of the rating assigned by a rating agency to us or our indebtedness could make it more difficult for us to obtain additional debt financing in the future.
Our indebtedness has been rated by nationally recognized rating agencies and may in the future be rated by additional rating agencies. We cannot assure you that any rating assigned to us or our indebtedness will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant. Any downgrade, suspension or withdrawal of a rating by a rating agency (or any anticipated downgrade, suspension or withdrawal) could make it more difficult or more expensive for us to obtain additional debt financing in the future.
Risks Related to Our Common Stock
Booz Allen Holding is a holding company with no operations of its own, and it depends on its subsidiaries for cash to fund all of its operations and expenses, including to make future dividend payments, if any.

34




The operations of Booz Allen Holding are conducted almost entirely through its subsidiaries and its ability to generate cash to meet its debt service obligations or to pay dividends is highly dependent on the earnings and the receipt of funds from its subsidiaries via dividends or intercompany loans. Further, the Secured Credit Facility and indenture governing the Senior Notes significantly restricts the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock.
Our financial results may vary significantly from period to period as a result of a number of factors many of which are outside our control, which could cause the market price of our Class A Common Stock to fluctuate.
Our financial results may vary significantly from period to period in the future as a result of many external factors that are outside of our control. Factors that may affect our financial results and that could cause the market price of our outstanding securities, including our Class A Common Stock, to fluctuate include those listed in this “Risk Factors” section and others such as:
any cause of reduction or delay in U.S. government funding;
fluctuations in revenue earned on existing contracts;
commencement, completion, or termination of contracts during a particular period;
a potential decline in our overall profit margins if our other direct costs and subcontract revenue grow at a faster rate than labor-related revenue;
strategic decisions by us or our competitors, such as changes to business strategy, strategic investments, acquisitions, divestitures, spin offs, and joint ventures;
a change in our contract mix to less profitable contracts;
changes in policy or budgetary measures that adversely affect U.S. government contracts in general;
variable purchasing patterns under U.S. government GSA schedules, blanket purchase agreements, which are agreements that fulfill repetitive needs under GSA schedules, and IDIQ contracts;
changes in demand for our services and solutions;
fluctuations in the degree to which we are able to utilize our professionals;
seasonality associated with the U.S. government’s fiscal year;
an inability to utilize existing or future tax benefits for any reason, including a change in law;
alterations to contract requirements; and
adverse judgments or settlements in legal disputes.
We cannot assure you that we will pay special or regular dividends on our stock in the future.
Our board of directors (the "Board") has authorized and declared a regular quarterly dividend for each quarter in the last several years. The Board has also authorized and declared special cash dividends from time to time. The declaration of any future dividends and the establishment of the per share amount, record dates and payment dates for any such future dividends are subject to the discretion of the Board taking into account future earnings, cash flows, financial requirements and other factors. There can be no assurance that the Board will declare any dividends in the future. To the extent that expectations by market participants regarding the potential payment, or amount, of any special or regular dividend prove to be incorrect, the price of our common stock may be materially and negatively affected and investors that bought shares of our common stock based on those expectations may suffer a loss on their investment. Further, to the extent that we declare a regular or special dividend at a time when market participants hold no such expectations or the amount of any such dividend exceeds current expectations, the price of our common stock may increase and investors that sold shares of our common stock prior to the record date for any such dividend may forego potential gains on their investment.

35




Fulfilling our obligations incident to being a public company, including with respect to the requirements of and related rules under the Sarbanes Oxley Act of 2002, is expensive and time consuming and any delays or difficulty in satisfying these obligations could have a material adverse effect on our future results of operations and our stock price.
As a public company, the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC, as well as the New York Stock Exchange rules, require us to implement various corporate governance practices and adhere to a variety of reporting requirements and complex accounting rules. Compliance with these public company obligations requires us to devote significant management time and place significant additional demands on our finance, accounting and legal staff and on our management systems, including our financial, accounting, and information systems. Other expenses associated with being a public company include increased auditing, accounting, and legal fees and expenses, investor relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees, listing fees, as well as other expenses.
In particular, the Sarbanes-Oxley Act of 2002 requires us to document and test the effectiveness of our internal control over financial reporting in accordance with an established internal control framework, and to report on our conclusions as to the effectiveness of our internal controls. It also requires an independent registered public accounting firm to test our internal control over financial reporting and report on the effectiveness of such controls. In addition, we are required under the Exchange Act to maintain disclosure controls and procedures and internal control over financial reporting. Because of inherent limitations in any internal control environment, there can be no assurance that all control issues and instances of fraud, errors or misstatements, if any, within our company have been or will be detected on a timely basis. Such deficiencies could result in the correction or restatement of financial statements of one or more periods. Any failure to maintain effective controls or implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. We also rely on third parties for certain calculations and other information that support our accounting and financial reporting, which includes reports from such organizations on their controls and systems that are used to generate this information. Any failure by such third parties to provide us with accurate or timely information or implement and maintain effective controls may cause us to fail to meet our reporting obligations as a publicly traded company. In addition, if we implement new financial management systems, we could experience deficiencies in its operation that could have an adverse effect on the effectiveness of our internal control over financial reporting.
If we are unable to conclude that we have effective internal control over financial reporting, or if our independent registered public accounting firm is unable to provide us with an unqualified report regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our consolidated financial statements, which could result in a decrease in the value of our common stock. Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially subject us to sanctions or investigations by the SEC, the New York Stock Exchange, or other regulatory authorities.
Provisions in our organizational documents and in the Delaware General Corporation Law may prevent takeover attempts that could be beneficial to our stockholders.
Our amended and restated certificate of incorporation and amended and restated bylaws include a number of provisions that may have the effect of delaying, deterring, preventing, or rendering more difficult a change in control of Booz Allen Holding that our stockholders might consider in their best interests. These provisions include:
establishment of a classified Board, with staggered terms;
granting to the Board the sole power to set the number of directors and to fill any vacancy on the Board;
limitations on the ability of stockholders to remove directors;
granting to the Board the ability to designate and issue one or more series of preferred stock without stockholder approval, the terms of which may be determined at the sole discretion of the Board;
a prohibition on stockholders from calling special meetings of stockholders;
the establishment of advance notice requirements for stockholder proposals and nominations for election to the Board at stockholder meetings;
requiring approval of two-thirds of stockholders to amend the bylaws; and
prohibiting our stockholders from acting by written consent.
In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which imposes additional requirements regarding mergers and other business combinations. These provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if the provisions are viewed as discouraging takeover attempts in the future.

36




Our amended and restated certificate of incorporation and amended and restated by-laws may also make it difficult for stockholders to replace or remove our management. These provisions may facilitate management entrenchment that may delay, deter, render more difficult, or prevent a change in our control, which may not be in the best interests of our stockholders.
The market for our Class A Common Stock may be adversely affected by the performance of other companies in the government services market.
In addition to factors that may affect our financial results and operations, the price of our Class A Common Stock may be impacted by the financial performance and outlook of other companies in the government services market. While certain factors may affect all participants in the markets in which we operate, such as U.S. government spending conditions and changes in rules and regulations applicable to government contractors, the market for our Class A Common Stock may be adversely affected by financial results or negative events only affecting other market participants or financial results of such participants. While such events or results may not impact or be indicative of our current or future performance, the price of our securities may nonetheless be adversely affected as a result thereof.

Item 1B.
Unresolved Staff Comments
None.

Item 2.
Properties
We do not own any facilities or real estate. Our corporate headquarters is located at 8283 Greensboro Drive, McLean, Virginia 22102. We lease other operating offices and facilities throughout North America, and a limited number of overseas locations. Our principal offices outside of McLean, Virginia include: Annapolis Junction, Maryland; Bethesda, Maryland; Laurel, Maryland; San Diego, California; Herndon, Virginia; Charleston, South Carolina; Arlington, Virginia; Alexandria, Virginia; and Washington, D.C. We have a number of Sensitive Compartmented Information Facilities, which are enclosed areas within buildings that are used to perform classified work for the U.S. Intelligence Community. Many of our employees are located in facilities provided by the U.S. government. The total square footage of our leased offices and facilities is approximately 2.50 million square feet. We believe our facilities meet our current needs.

Item 3.
Legal Proceedings
The Company is involved in legal proceedings and investigations arising in the ordinary course of business, including those relating to employment matters, relationships with clients and contractors, intellectual property disputes, and other business matters. These legal proceedings seek various remedies, including claims for monetary damages in varying amounts, none of which are considered material, or are unspecified as to amount. Although the outcome of any such matter is inherently uncertain and may be materially adverse, based on current information, we do not expect any of the currently ongoing audits, reviews, investigations, or litigation to have a material adverse effect on our financial condition and results of operations. As of March 31, 2020 and 2019, there were no material amounts accrued in the consolidated financial statements related to these proceedings.
On June 7, 2017, Booz Allen Hamilton Inc. was informed that the U.S. Department of Justice (DOJ) is conducting a civil and criminal investigation of the Company. In connection with the investigation, the DOJ has requested information from the Company relating to certain elements of the Company's cost accounting and indirect cost charging practices with the U.S. government. Since learning of the investigation, the Company has engaged a law firm experienced in these matters to represent the Company in connection with this matter and respond to the government's requests. As is commonly the case with this type of matter, the Company has also been in contact with other regulatory agencies and bodies, including the SEC, which notified the Company that it is conducting an investigation that the Company believes relates to the matters that are also the subject of the DOJ's investigation. The Company may receive additional regulatory or governmental inquiries related to the matters that are the subject of the DOJ's investigation. In accordance with the Company's practice, the Company is cooperating with all relevant government parties. The total cost associated with these matters will depend on many factors, including the duration of these matters and any related findings. At this stage, the Company is not able to reasonably estimate the expected amount or range of cost or any loss associated with these matters.
On June 19, 2017, a purported stockholder of the Company filed a putative class action lawsuit in the United States District Court for the Eastern District of Virginia styled Langley v. Booz Allen Hamilton Holding Corp., No. 17-cv-00696 naming the Company, its Chief Executive Officer and its Chief Financial Officer as defendants purportedly on behalf of all purchasers of the Company's securities from May 19, 2016 through June 15, 2017. On September 5, 2017, the court named two lead plaintiffs, and on October 20, 2017, the lead plaintiffs filed a consolidated amended complaint. The complaint asserts claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, alleging misrepresentations or omissions by the Company purporting to relate to matters that are the subject of the DOJ investigation

37




described above. The plaintiffs seek to recover from the Company and the individual defendants an unspecified amount of damages. The Company believes the suit lacks merit and intends to defend against the lawsuit. Motions to dismiss were argued on January 12, 2018, and on February 8, 2018, the court dismissed the amended complaint in its entirety without prejudice. At this stage of the lawsuit, the Company is not able to reasonably estimate the expected amount or range of cost or any loss associated with the lawsuit.
On November 13, 2017, a Verified Shareholder Derivative Complaint was filed in the United States District Court for the District of Delaware styled Celine Thum v. Rozanski et al., C.A. No. 17-cv-01638, naming the Company as a nominal defendant and numerous current and former officers and directors as defendants. The complaint asserts claims for breach of fiduciary duties, unjust enrichment, waste of corporate assets, abuse of control, gross mismanagement, and violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act, purportedly relating to matters that are the subject of the DOJ investigation described above. The parties have stipulated to a stay of the proceedings pending the outcome of the securities litigation (described above), which the court so ordered on January 24, 2018. As a status conference on October 31, 2019, the court ordered the parties to meet and confer and submit a status report by November 29, 2019. On December 12, 2019, the court ordered that the stay remain in effect. At this stage of the lawsuit, the Company is not able to reasonably estimate the expected amount or range of cost or any loss associated with the lawsuit.

Item 4.
Mine Safety Disclosures
None.
Information about our Executive Officers
The following table sets forth information about our executive officers as of the date hereof:
Name
 
Age
 
Position
Horacio D. Rozanski
 
52
 
President and Chief Executive Officer
Lloyd W. Howell, Jr.
 
53
 
Executive Vice President, Chief Financial Officer and Treasurer
Kristine Martin Anderson
 
51
 
Executive Vice President
Karen M. Dahut
 
56
 
Executive Vice President
Judith Dotson
 
56
 
Executive Vice President
Nancy J. Laben
 
58
 
Executive Vice President, Chief Legal Officer and Secretary
Gary D. Labovich
 
60
 
Executive Vice President
Susan L. Penfield
 
58
 
Executive Vice President and Chief Innovation Officer
Elizabeth M. Thompson
 
65
 
Executive Vice President and Chief People Officer
Laura S. Adams
 
47
 
Vice President, Corporate Controller and Chief Accounting Officer
Horacio D. Rozanski is our President and Chief Executive Officer and served as our Chief Operating Officer until January 1, 2015. Mr. Rozanski served as the Chief Strategy and Talent Officer in 2010 and, prior to that, Chief Personnel Officer of our Company from 2002 through 2010. Mr. Rozanski joined our Company in 1992 and became an Executive Vice President in 2009, our President on January 1, 2014 and our Chief Executive Officer on January 1, 2015. He serves on the boards of directors of the United States Holocaust Memorial Museum's Committee on Conscience and the Children's National Medical Center and as Vice Chair of the Corporate Fund for the John F. Kennedy Center for the Performing Arts.
Lloyd W. Howell, Jr. is an Executive Vice President of our Company and our Chief Financial Officer and Treasurer since July 1, 2016. Mr. Howell previously served as the group leader for our Civil Commercial Group. Mr. Howell joined our Company in 1988, left in 1991, rejoined in 1995 and became an Executive Vice President in 2005. He served as chairman of our Ethics & Compliance Committee for over seven years, until April 2014. Mr. Howell serves on the boards of directors of Integra Life Sciences, and the Partnership for Public Service. Mr. Howell also serves on the board of overseers for the School of Engineering and Applied Science and as a Trustee at the University of Pennsylvania.
Kristine Martin Anderson is an Executive Vice President and is the group leader for the Company's Civilian Services Group after leading the Company's civil health business since April 2015. Prior to joining Booz Allen in 2006, she was vice president for operations and strategy at CareScience, a software solutions Company. Ms. Anderson currently serves on the eHealth Initiative's board of directors. In addition, she serves on the Cost and Resource Use Standing Committee of the National Quality Forum.
Karen M. Dahut is an Executive Vice President and is the group leader for the Company's Global Defense Group.  Ms. Dahut joined our Company in 2002 and became a Senior Vice President in 2004. Ms. Dahut led the Company's Strategic

38




Innovations Group from 2012 to April 2016 and the Civil Commercial Group from 2016 to March 2018. Previously, she also led the Company's Analytics business and its US Navy and Marine Corps business. Ms. Dahut is a board member of the Tech Data Corporation and serves on its Audit and CyberTechnology Committees. She also serves on the board of the Northern Virginia Technology Council and the Smithsonian National Air and Space Museum.
Judith Dotson is an Executive Vice President and is the group leader for the Company's National Security Group. Ms. Dotson joined our Company in 1989 and became a Senior Vice President in 2004. Ms. Dotson led the Company's Finance, Economic Development, and Energy business from 2014 to March 2017 and the Joint Combatant Command business from 2017 to March 2020. Previously, she led the firm's Enterprise Integration Capability Development Team, the Defense System Development Capability Team, and the Environment & Energy Technology Team. Ms. Dotson served on the board of directors for the Nature Generation, a not-for-profit that inspires and empowers environmental stewardship in youth.
Nancy J. Laben is an Executive Vice President of our Company and our Chief Legal Officer. She also served as the Secretary until August 2019. Ms. Laben joined our Company in September 2013. She oversees the Legal functions, Ethics & Compliance and Corporate Affairs. Before joining our Company, Ms. Laben served as General Counsel of AECOM Technology Corporation from June 2010 to August 2013, where she was responsible for all legal support. Prior to June 2010, Ms. Laben served as Deputy General Counsel at Accenture plc beginning in 1989. Prior to Accenture, Ms. Laben served in the law department at IBM Corporation.
Gary Labovich is an Executive Vice President and leads the modernization of our management systems as the Next Generation Modernization Lead. He joined Booz Allen in July 2004. Mr. Labovich has led the Company's systems delivery and digital businesses as well as the delivery of the Company's financial services capabilities and service offerings to both federal and private sector clients. Prior to joining the Company, Mr. Labovich spent 18 years at American Management Systems in key roles as both an entrepreneur and a senior executive specializing in systems development and strategic consulting for federal, state, local and commercial organizations. Mr. Labovich is a former chair and a member of the board of trustees for the Greater DC Maryland Chapter of the National Multiple Sclerosis Society and serves on the board of trustees for Clark University.
Susan L. Penfield is an Executive Vice President and our Chief Innovation Officer, and leads our Strategic Innovation Group. Ms. Penfield joined the Company in 1994. She has over 25 years of strategy, technology, marketing and solutions delivery experience. Prior to joining the Strategic Innovation Group, Ms. Penfield led the Company's Health business, where she drove technology and transformation initiatives across the federal, commercial and non-profit health space. She serves on the board of directors of the Children's Inn at the National Institutes of Health and Seed Spot. Ms. Penfield is a member of the National Association for Female Executives (NAFE), and was recognized by the NAFE as its 2015 Digital Trailblazer.
Elizabeth M. Thompson is an Executive Vice President of our Company and serves as our Chief People Officer. Ms. Thompson joined our Company in 2008. Ms. Thompson served as Vice President of Human Resources for Fannie Mae from 2000 to 2008. Ms. Thompson sits on the board of the Society for Human Resource Management.
Laura S. Adams is a Vice President of our Company and our Corporate Controller and Chief Accounting Officer. Ms. Adams joined Booz Allen in January 2009 and has served as the Company’s Controller since July 2014 and Chief Accounting Officer since 2016. Ms. Adams brings more than 25 years of finance and accounting specialty and industry experience, primarily in aerospace and defense and government and commercial IT management consulting services. Before joining Booz Allen, Ms. Adams was a senior manager in the audit and assurance practice of Ernst & Young from 1995 through 2008.

39




PART II 

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information
Our Class A Common Stock began trading on the New York Stock Exchange on November 17, 2010. On May 18, 2020, there were 142,864 beneficial holders of our Class A Common Stock. Our Class A Common Stock is listed on the New York Stock Exchange under the ticker symbol "BAH".
Dividends
The Company plans to continue paying recurring dividends in the future and assessing its excess cash resources to determine the best way to utilize its excess cash flow to meet its objectives. Any future dividends declared will be at the discretion of the Board and will depend, among other factors, upon our earnings, liquidity, financial condition, alternate capital allocation opportunities, or any other factors the Board deems relevant. On May 26, 2020, the Company announced that the Board had declared a quarterly cash dividend of $0.31 per share. Payment of the dividend will be made on June 30, 2020 to stockholders of record at the close of business on June 15, 2020.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
The following table shows the share repurchase activity for each of the three months in the quarter ended March 31, 2020:
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
January 2020
 
138,983
 
$71.95
 
138,983
 
$
619,795,782

February 2020
 
476,158
 
$73.50
 
476,158
 
$
584,795,913

March 2020
 
1,501,762
 
$66.58
 
1,501,762
 
$
484,813,926

Total
 
2,116,903
 
 
 
2,116,903
 
 
(1)
On December 12, 2011, the Board approved a $30.0 million share repurchase program, which was further increased by the Board on (i) January 27, 2015 to $180.0 million, (ii) January 25, 2017 to $410.0 million, (iii) November 2, 2017 to $610.0 million, (iv) May 24, 2018 to $910.0 million, and (v) May 23, 2019 to $1,310.0 million. As of March 31, 2020, the Company had approximately $484.8 million remaining under the repurchase program. A special committee of the Board was appointed to evaluate market conditions and other relevant factors and initiate repurchases under the program from time to time. The share repurchase program may be suspended, modified or discontinued at any time at the Company’s discretion without prior notice.
Use of Proceeds from Registered Securities
None.


40




Performance
The graph set forth below compares the cumulative shareholder return on our Class A Common Stock between March 31, 2015 and March 31, 2020, to the cumulative return of (i) the Russell 1000 Index and (ii) S&P Software & Services Select Industry Index over the same period. The Russell 1000 and S&P Software & Services Select Industry Indices represent comparator groups for relative cumulative return performance to Booz Allen Hamilton. This graph assumes an initial investment of $100 on March 31, 2015 in our Class A Common Stock, the Russell 1000 Index, and the S&P Software & Services Select Industry Index and assumes the reinvestment of dividends, if any. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
https://cdn.kscope.io/1606a7a216b30cb63ef0063ae77ff662-chart-b8767fd54c4a8b0c43a.jpg
ASSUMES $100 INVESTED ON MARCH 31, 2015
ASSUMES DIVIDEND REINVESTED

 
Company/Market/Peer Group
 
3/31/2015
 
3/31/2016
 
3/31/2017
 
3/31/2018
 
3/31/2019
 
3/31/2020
Booz Allen Hamilton Holding Corp.
 
$
100.00

 
$
106.77

 
$
127.27

 
$
141.97

 
$
216.59

 
$
259.44

Russell 1000 Index
 
$
100.00

 
$
100.50

 
$
118.02

 
$
134.52

 
$
147.03

 
$
135.23

S&P Software & Services Select Industry Index
 
$
100.00

 
$
97.16

 
$
120.79

 
$
156.08

 
$
196.26

 
$
172.16

This performance graph and other information furnished under this Part II Item 5 of this Annual Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.


Item 6.
Selected Financial Data
The selected consolidated statements of operations data for fiscal 2020, fiscal 2019, and fiscal 2018 and the selected consolidated balance sheet data as of March 31, 2020 and 2019 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. The selected consolidated statement of operations data for fiscal 2017 and fiscal 2016 and the selected consolidated balance sheet data as of March 31, 2018, 2017 and 2016 have been derived from audited consolidated financial statements which are not included in this Annual Report. Our historical results are not

41




necessarily indicative of the results that may be expected for any future period. The selected financial data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this Annual Report.
 
 
 
Fiscal Year Ended March 31,
(In thousands, except share and per share data)
 
2020
 
2019
 
2018
 
2017
 
2016
Consolidated Statements of Operations:
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
7,463,841

 
$
6,704,037

 
$
6,167,600

 
$
5,809,491

 
$
5,405,738

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Cost of revenue
 
3,379,180

 
3,100,466

 
2,866,268

 
2,678,715

 
2,580,026

Billable expenses
 
2,298,413

 
2,004,664

 
1,861,312

 
1,751,077

 
1,513,083

General and administrative expenses
 
1,035,965

 
927,938

 
855,541

 
814,141

 
806,509

Depreciation and amortization
 
81,081

 
68,575

 
64,756

 
59,544

 
61,536

Total operating costs and expenses
 
6,794,639

 
6,101,643

 
5,647,877

 
5,303,477

 
4,961,154

Operating income
 
669,202

 
602,394

 
519,723

 
506,014

 
444,584

Interest expense
 
(96,960
)
 
(89,517
)
 
(82,269
)
 
(62,298
)
 
(70,815
)
Other income (expense), net
 
7,192

 
2,526

 
(7,418
)
 
(18,059
)
 
5,693

Income before income taxes
 
579,434

 
515,403

 
430,036

 
425,657

 
379,462

Income tax expense
 
96,831

 
96,874

 
128,344

 
164,832

 
85,368

Net income
 
$
482,603

 
$
418,529

 
$
301,692

 
$
260,825

 
$
294,094

Earnings per common share (1):
 
 
 
 
 
 
 
 
 
 
Basic
 
$
3.43

 
$
2.94

 
$
2.05

 
$
1.74

 
$
1.98

Diluted
 
$
3.41

 
$
2.91

 
$
2.03

 
$
1.72

 
$
1.94

Weighted average common shares outstanding (1):
 
 
 
 
 
 
 
 
 
 
Basic
 
140,059,494

 
141,910,799

 
145,964,574

 
148,218,968

 
146,494,407

Diluted
 
141,238,135

 
143,156,176

 
147,750,022

 
150,274,640

 
149,719,137

Dividends declared per share
 
$
1.04

 
$
0.80

 
$
0.70

 
$
0.62

 
$
0.54


 
 
As of March 31,
(In thousands)
 
2020
 
2019
 
2018
 
2017
 
2016
Consolidated Balance Sheets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
741,901

 
$
283,990

 
$
286,958

 
$
217,417

 
$
187,529

Working capital
 
1,000,510

 
520,101

 
463,205

 
211,701

 
249,858

Total assets
 
4,793,966

 
3,831,841

 
3,606,619

 
3,378,693

 
3,010,171

Long-term debt, net of current portion
 
2,007,979

 
1,701,837

 
1,755,479

 
1,470,174

 
1,484,448

Stockholders’ equity
 
856,356

 
675,366

 
562,491

 
584,873

 
408,488


On April 1, 2019 (fiscal 2020), we adopted Accounting Standard Codification (ASC) No. 842 Leases (Topic 842), using the modified retrospective transition approach and, as a result, comparative information for the prior fiscal years have not been retrospectively adjusted.

On April 1, 2018 (fiscal 2019), the Company adopted Topic 606, Revenue from Contracts with Customers, using the full retrospective transition method and adopted retrospectively ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Fiscal 2019, fiscal 2018 and fiscal 2017 results reflect the impact of the adoption of the two standards. fiscal 2016 has not been restated for the adoption of Topic 606 and ASU 2017-07, in accordance with the standard, and is therefore not comparable to the results from fiscal 2020, fiscal 2019, fiscal 2018 and fiscal 2017.

(1)
Basic earnings per share for the Company has been computed using the weighted average number of shares of Class A Common Stock outstanding during the period. The Company’s diluted earnings per share has been computed using the weighted average number of shares of Class A Common Stock including the dilutive effect of outstanding common stock options and other stock-based awards. For the purposes of calculating basic and diluted earnings per share, the Company has utilized the two class method, given non-forfeitable dividends declared on unvested Class A Restricted Common Stock. The weighted average number of Class E Special Voting Common Stock has not been included in the calculation of either basic earnings per share or diluted earnings per share due to the terms of such common stock.


42




Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, and liquidity and capital resources. You should read this discussion in conjunction with “Item 6. Selected Financial Data,” and our consolidated financial statements and the related notes contained elsewhere in this Annual Report.
The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources, and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Item 1A. Risk Factors” and “Introductory Note — Cautionary Note Regarding Forward-Looking Statements”. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Our fiscal year ends March 31 and, unless otherwise noted, references to years or fiscal are for fiscal years ended March 31. See “— Results of Operations.”
Overview
We are a leading provider of management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber services to U.S. and international governments, major corporations, and not-for-profit organizations. Our ability to deliver value to our clients has always been, and continues to be, a product of the strong character, expertise and tremendous passion of our people. Our approximately 27,200 employees work to solve hard problems by making clients' missions their own, combining decades of consulting and domain expertise with functional expertise in areas such as analytics, digital solutions, engineering, and cyber, all fostered by a culture of innovation that extends to all reaches of the company.
Through our dedication to our clients' missions, and a commitment to evolving our business to address their needs, we have longstanding relationships with our clients, some more than 75 years. We support critical missions for a diverse base of federal government clients, including nearly all of the U.S. government's cabinet-level departments, as well as increasingly for top-tier commercial and international clients. We support our federal government clients by helping them tackle their most complex and pressing challenges such as protecting soldiers in combat and supporting their families, advancing cyber capabilities, keeping our national infrastructure secure, enabling and enhancing digital services, transforming the healthcare system, and improving government efficiency to achieve better outcomes. We serve commercial clients across industries including aerospace, financial services, health and life sciences, energy, and transportation. Our international clients are primarily in Europe, the Middle East and Southeast Asia.


43




Financial and Other Highlights
Effective April 1, 2019, the Company adopted Accounting Standard Codification (ASC) No. 842 Leases (Topic 842), using the modified retrospective transition approach and, as a result, comparative information for the prior fiscal years have not been retrospectively adjusted. See Note 2 to our accompanying consolidated financial statements for more information on the impact of the adoption of this accounting standard.
During fiscal 2020, the Company generated its highest annual revenue since its initial public offering and reported increases in headcount and backlog for the year. Revenue increased 11.3% from fiscal 2019 to fiscal 2020 primarily driven by sustained client demand and increased client staff headcount to meet that demand. Revenue also benefited from higher billable expenses as compared to the prior year.
Operating income increased 11.1% to $669.2 million in fiscal 2020 from $602.4 million in fiscal 2019, while operating margin was 9.0% in both years. The increase in operating income was primarily driven by the same factors driving revenue growth as well as strong contract performance. These increases in operating income were partially offset by approximately $10.0 million in COVID-19 related expenses, including transitional costs, temporary reductions in billability during the month of March of fiscal 2020, and charges related to certain contracts involving a ready workforce that we believe we may not be able to recover. During fiscal 2019 the Company also benefited from an $11.2 million reduction in expense as a result of an amendment and associated revaluation of our long term disability plan liability. The Company also incurred incremental legal costs during fiscal 2019 and 2020 in response to the U.S. Department of Justice investigation and matters which purport to relate to the investigation, a portion of which was offset by the receipt of insurance reimbursements. We expect to incur additional costs in the future. Based on the information currently available, the Company is not able to reasonably estimate the expected long-term incremental legal costs or amounts that may be reimbursed associated with this investigation and these related matters.
We are monitoring the evolving situation related to the COVID-19 outbreak and we continue to work with our stakeholders to assess further possible implications to our business and to take actions in an effort to mitigate adverse consequences. To protect employee health and safety while COVID-19 remains a threat, we plan to continue to deliver a majority of our services to clients via telework for the foreseeable future. In cases where telework options or effectiveness are limited, we are working closely with clients to achieve safe return plans guided by federal, state and local policies and advice from other experts. We are also working closely with our clients, where classified work is concentrated, to retain continuity of service and ensure a ready workforce. We expect to continue to be impacted by the inability of certain employees to perform their contract requirements at their designated work locations due to facility closures or restrictions as a result of COVID-19 and cannot perform such work remotely. While the CARES Act contains a provision that allows federal contractors to seek specified reimbursement for certain employees who are unable to perform their contract requirements due to government restrictions, such provision does not require the government to reimburse a contractor and reimbursements are also subject to limitations and do not extend past September 30, 2020. As a result, we believe that some of our costs for certain employees who are unable to perform their contract requirements due to government restrictions will not be reimbursed and we expect that approximately $6 million per month for the fee on certain contracts involving a ready workforce may not be reimbursed or may exceed reimbursements in the near term. Although we cannot currently predict the overall impact of the COVID-19 outbreak, the longer the duration of the event, the more likely it is that it could have an adverse effect on our business, financial position, results of operations and/or cash flows.

44




Non-GAAP Measures
We publicly disclose certain non-GAAP financial measurements, including Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, and Adjusted Diluted Earnings Per Share, or Adjusted Diluted EPS, because management uses these measures for business planning purposes, including to manage our business against internal projected results of operations and measure our performance. We view Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, and Adjusted Diluted EPS as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP measures also provide another basis for comparing period to period results by excluding potential differences caused by non-operational and unusual or non-recurring items. In addition, we use Revenue, Excluding Billable Expenses because it provides management useful information about the Company's operating performance by excluding the impact of costs that are not indicative of the level of productivity of our consulting staff headcount and our overall direct labor, which management believes provides useful information to our investors about our core operations. We also utilize and discuss Free Cash Flow, because management uses this measure for business planning purposes, measuring the cash generating ability of the operating business, and measuring liquidity generally. We present these supplemental measures because we believe that these measures provide investors and securities analysts with important supplemental information with which to evaluate our performance, long-term earnings potential, or liquidity, as applicable, and to enable them to assess our performance on the same basis as management. These supplemental performance measurements may vary from and may not be comparable to similarly titled measures by other companies in our industry. Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow are not recognized measurements under accounting principles generally accepted in the United States, or GAAP, and when analyzing our performance or liquidity, as applicable, investors should (i) evaluate each adjustment in our reconciliation of revenue to Revenue, Excluding Billable Expenses, operating income to Adjusted Operating Income, net income to Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income and Adjusted Diluted Earnings Per Share, and net cash provided by operating activities to Free Cash Flow, (ii) use Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, and Adjusted Diluted EPS in addition to, and not as an alternative to, revenue, operating income, net income or diluted EPS, as measures of operating results, each as defined under GAAP and (iii) use Free Cash Flow in addition to, and not as an alternative to, net cash provided by operating activities as a measure of liquidity, each as defined under GAAP. We have defined the aforementioned non-GAAP measures as follows:
"Revenue, Excluding Billable Expenses" represents revenue less billable expenses. We use Revenue, Excluding Billable Expenses because it provides management useful information about the Company's operating performance by excluding the impact of costs that are not indicative of the level of productivity of our consulting staff headcount and our overall direct labor, which management believes provides useful information to our investors about our core operations.
"Adjusted Operating Income" represents operating income before transaction costs, fees, losses, and expenses, including fees associated with debt prepayments and supplemental employee benefits due to the COVID-19 outbreak. We prepare Adjusted Operating Income to eliminate the impact of items we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar nature.
"Adjusted EBITDA" represents net income before income taxes, net interest and other expense and depreciation and amortization and before certain other items, including transaction costs, fees, losses, and expenses, including fees associated with debt prepayments and supplemental employee benefits due to the COVID-19 outbreak. “Adjusted EBITDA Margin on Revenue” is calculated as Adjusted EBITDA divided by revenue. "Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses" is calculated as Adjusted EBITDA divided by Revenue, Excluding Billable Expenses. The Company prepares Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, and Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses to eliminate the impact of items it does not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non-recurring nature or because they result from an event of a similar nature.
"Adjusted Net Income" represents net income before: (i) transaction costs, fees, losses, and expenses, including fees associated with debt prepayments, (ii) supplemental employee benefits due to the COVID-19 outbreak, (iii) tax credits, net of reserves for uncertain tax positions, (iv) amortization or write-off of debt issuance costs and write-off of original issue discount, (v) release of income tax reserves, and (vi) re-

45




measurement of deferred tax assets and liabilities as a result of the 2017 Tax Act in each case net of the tax effect where appropriate calculated using an assumed effective tax rate. We prepare Adjusted Net Income to eliminate the impact of items, net of tax, we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar nature. We view net income excluding the impact of the re-measurement of the Company's deferred tax assets and liabilities as a result of the 2017 Tax Act as an important indicator of performance consistent with the manner in which management measures and forecasts the Company's performance and the way in which management is incentivized to perform.
"Adjusted Diluted EPS" represents diluted EPS calculated using Adjusted Net Income as opposed to net income. Additionally, Adjusted Diluted EPS does not contemplate any adjustments to net income as required under the two-class method as disclosed in the footnotes to the consolidated financial statements.
"Free Cash Flow" represents the net cash generated from operating activities less the impact of purchases of property, equipment, and software.


46




Below is a reconciliation of Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow to the most directly comparable financial measure calculated and presented in accordance with GAAP.

 
Fiscal Year Ended March 31,
(Amounts in thousands, except share and per share data)
2020
 
2019
 
2018
 
(Unaudited)
Revenue, Excluding Billable Expenses
Revenue
$
7,463,841

 
$
6,704,037

 
$
6,167,600

Billable expenses
2,298,413

 
2,004,664

 
1,861,312

Revenue, Excluding Billable Expenses
$
5,165,428

 
$
4,699,373

 
$
4,306,288

Adjusted Operating Income
 
 
 
 
 
Operating Income
$
669,202

 
$
602,394

 
$
519,723

Transaction expenses (a)
1,069

 
3,660

 

COVID-19 supplemental employee benefits (b)
2,722

 

 

Adjusted Operating Income
$
672,993

 
$
606,054

 
$
519,723

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue & Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses
 
 
 
 
 
Net income
$
482,603

 
$
418,529

 
$
301,692

Income tax (benefit) expense
96,831

 
96,874

 
128,344

Interest and other, net (c)
89,768

 
86,991

 
89,687

Depreciation and amortization
81,081

 
68,575

 
64,756

EBITDA
750,283

 
670,969

 
584,479

Transaction expenses (a)
1,069

 
3,660

 

COVID-19 supplemental employee benefits (b)
2,722

 

 

Adjusted EBITDA
$
754,074

 
$
674,629

 
$
584,479

Adjusted EBITDA Margin on Revenue
10.1
%
 
10.1
%
 
9.5
%
Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses
14.6
%
 
14.4
%