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Booz Allen sues Deloitte for stealing proprietary info

Tuesday - 6/24/2014, 8:04am  ET

Two federal contracting heavyweights are embroiled in a lawsuit, with Booz Allen Hamilton Inc. accusing Deloitte Consulting LLP of using stolen proprietary information to recruit an entire team of employees and then target Booz Allen’s contracts and clients.

Deloitte denies the accusations.

McLean-based Booz Allen added Deloitte and four of its managers to a complaint it filed more than a year ago against two former Booz Allen employees now working at Deloitte. According to the amended complaint, filed June 17 in the U.S. District Court for New Jersey, a Booz Allen investigation showed Deloitte directors and managers conspired with the Booz Allen employees beginning in 2012 to steal proprietary information about salaries, roles and security clearances of the team that supports Booz Allen’s delivery of 3D models, animations, interactive simulations, games and videos to government customers. That team — part of Booz Allen's Instructional development and immersive learning (IDIL) capability — has been a key investment for Booz Allen during the last four years.

In addition to data about the IDIL team, Booz Allen (NYSE: BAH) claims the former employees gave Deloitte revenue projections and analyses of near-term Booz Allen contracts, a demonstration of a simulation that was still in development by Booz Allen and screenshots and videos of work performed for clients.

“The Deloitte defendants planned to use this proprietary and confidential information not just to ‘lift out’ the Booz Allen IDIL team, but also to market the team’s capabilities once they arrived at Deloitte and to deprive Booz Allen of its ability to compete for work it anticipated it would secure,” the complaint alleges.

According to the complaint, that plan worked at least in part. Including the two employees accused of conspiring with Deloitte management, 10 Booz Allen employees resigned at the end of June 2012 and soon after began working at Deloitte. Without the team to support the work, Booz Allen claims it was forced to delay the delivery of certain projects, move around resources to complete others and spend substantial time and money recruiting and training replacements to restaff the group.

One example provided in the complaint related to a mobile learning project for the National Institute of Standards and Technology that was delayed by over two months and required about $25,000 in additional funds to complete. The additional funds were needed in part to re-create graphics that Booz Allen claims it could not locate after the team’s departure.

Booz Allen alleges the recruitment of its team was initiated by a director at Deloitte who used to work at Booz Allen with the IDIL team. According to Booz Allen's complaint, the director told a colleague the “bulk lift out” of the Booz Allen IDIL team would yield about $20 million in revenue, derived in part from work the team was performing for Booz Allen at the Department of Defense, as well as marketing opportunities that had begun at the Federal Aviation Administration.

“These claims are without merit and we intend to defend ourselves vigorously,” Deloitte said in an emailed statement to the Washington Business Journal.

In all, Booz Allen’s lawsuit includes 11 counts, some against the former employees, some against Deloitte and its managers, and some against all of the defendants. Among the charges were tortious interference with customers, breach of confidentiality agreements, computer fraud and civil conspiracy.

Booz Allen asked the court to grant damages in an amount proved at trial, issue a permanent injunction against the former employees to adhere to their confidentially agreements, and force Deloitte to return all Booz Allen information and provide a detailed written explanation of each incident of use or disclosure of that information.

Booz Allen asked for a similar permanent injunction against the Deloitte managers involved, as well as payback of any profits achieved through the alleged scheme, and recovery of compensation paid by Booz Allen to the former employees during the period they were allegedly supporting Deloitte's effort to snag talent. It also asked that the court order Deloitte to pay punitive damages, investigative costs and attorneys fees. No specific amount was specified.

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