Good morning. I spoke with Booz Allen Hamilton CEO Horacio Rozanski on Friday before the U.S. bombed three nuclear sites in Iran. Rozanski was personally sanctioned by Iran in 2017 as part of a retaliation for U.S. sanctions. “It’s because they understood the role we played in these critical missions,” he says. “For a while, my kids were not allowed to ride the school bus.”
His security consulting firm derived 98% of its $12 billion in revenue from U.S. government contracts last year, which made Booz Allen vulnerable to DOGE cuts that spooked investors and forced him to lay off 7% of its staff. But Rozanski told me he’s optimistic as DOGE has moved to an “agency-by-agency efficiency discussion” that he welcomes. And national security funding “is likely to go up if the reconciliation bill goes through.” Here are four takeaways from our conversation.
In defense, the U.S. can’t afford to be second. “If China can have significant compute capacity in space with very low latency down to the ground, they can essentially embed AI into much cheaper, much simpler systems. You don’t want China to be able to break all of our encryption, and us not being able to break theirs. The price for that is tremendous.”
Government needs to be an early adopter on tech. “By the time the government got into the cloud, the private sector was already there. These clouds were not architected to meet the exacting security needs that the government has. It would have been a lot better if the government had moved together with the private sector and said, We want to adopt this technology. We are going to be a big customer, and this is what we need. When you get to autonomy, robotics, physical AI, quantum, I would want the government to be at the table saying we’re going to use a lot of this, and this is what we need to be able to use it.
It’s good to have options in dealing with Iran. “The investments that the country has made in defense technology give the president options that frankly no other country on Earth has … I rather live in a world where the U.S. is leading the way and has options, even if the option is to do nothing. In most countries, doing nothing is the only option they have.”
CEOs spending time in Washington should be talking—and listening. “The most important thing is to engage. I will talk to anybody who will talk to me. I learn everything from every conversation. And sometimes I learn more from their questions than I learn from my answers. But it also is an opportunity to ask questions. So I think consistent, persistent engagement, very broad engagement. Who’s relevant today, who’s relevant tomorrow, the political process will dictate that, so you can’t get narrowly focused.”
More news below.Contact CEO Daily via Diane Brady at diane.brady@fortune.com
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