Fed Judge: Booz Allen Acquisition of EverWatch Won’t Harm Competition

Citing an antitrust violation, in June the Department of Justice (DOJ) sought a preliminary injunction to halt the $440 million acquisition of EverWatch by Booz Allen Hamilton.

However, according to an opinion filed October 11 by U.S. District Court Judge Catherine Blake, the DOJ has failed to provide direct evidence that Booz Allen’s acquisition would have detrimental effects on competition, or pose probable harm for a National Security Agency (NSA) contract. She also found that Booz Allen would still be disincentivized to reduce services or hike prices (should it win the NSA’s Optimal Decision modeling simulation and signals intelligence contract), and that the contract does not constitute an entire market.

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With bids due a few weeks after the judge’s decision was to be released, and the acquisition up in the air, sole competitors Booz Allen and EverWatch continued to work on their offers throughout the period of the lawsuit.

“To some extent, the very existence of this litigation gave the government what it was looking for — competition fueled by uncertainty,” Blake wrote in her opinion.

Judge Blake also wrote that, in order to demonstrate a reduced incentive to compete, the DOJ had relied on “uncontextualized” emails and informal chats from low-level Booz Allen and EverWatch employees that were made in response to the announcement of the acquisition.

But the judge discounted this evidence, writing, “The court cannot predict a company-wide shift in bidding strategy based on these off-handed and speculative comments.”

The DOJ had also previously argued that the Optimal Decision contract represented the whole of the signals intelligence modeling market, but Judge Blake took issue with conflating the two.

Meanwhile, the judge declined to render a final judgment on the DOJ’s claim that Booz Allen’s acquisition of EverWatch violates Section 7 of the Clayton Act, in that it either substantially lessens competition or tends to create a monopoly.

A Booz Allen spokesperson publicly praised the judge’s decision: “We appreciate Judge Blake’s careful consideration of the evidence and her thoughtful conclusion that despite the DOJ’s claims, ‘little evidence suggests the companies, or their capture-team employees, intend to give the NSA anything less than their best proposal.’”

The Booz Allen spokesperson added: “We look forward to integrating EverWatch as part of Booz Allen’s service offerings as soon as we are able to do so, in accordance with the Order entered by the court, and will continue to enhance our competitive offerings through similar strategic acquisitions.”