Everett's father retired in 1958  and his mother died in the early 1960s. The 1960s were a trying time in America. First there was the Cuban missile crisis in 1962, then an escalating conflict in Vietnam.
Permutations are not unknown in the Pentagon. At the end of August 1964 the Defense Research Corp. (DRC) of Santa Barbara, California, which had been engaged in defense research only , announced the formation of Lambda Division  (also called the Lambda group), which, in addition to military problems, would work also to solve civilian ones in the general areas of systems analysis and computer modeling . Everett left his post as director of the mathematics and physical sciences division of WSEG and was named head of Lambda . Joining him in Lambda were George E. Pugh from the Arms Control and Disarmament Agency and three experts from IDA-Lawrence B. Dean, Jr., Paul M. Fitzpatrick, and Robert J. Galiano (very likely, the "Bob" to whom Everett wrote from Denmark about Lagrangian methods) . Lambda Division set up its headquarters in a new building at 1401 Wilson Boulevard, Arlington, with over a million dollars in government study contracts (a hefty amount in 1964) [80, 81]. Later Lambda moved to 1501 Wilson Boulevard [1a]. The photos illustrating the newspaper articles about Lambda show a highbrow young Ph.D. in glasses and with a soft smile, rather similar to that of Mona Lisa [81a].
It is generally accepted that scientists are impractical people, but Everett didn't fit that stereotype. After working less than a year in the Lambda division of DRC, he, with the same four partners, founded an independent firm-Lambda Corporation-and on July 1, 1965 he was elected its President. Apparently, civilian problems in the new company took second place, because the scale of its military work increased. Two employees recalled Lambda Corporation as the organization that was responsible for much of the strategic analysis work in support of the systems analysis program at the Pentagon while Robert McNamara was Secretary of Defense , and in an obituary, Princeton's Graduate School praised Everett as a strategic adviser and analyst during the Vietnam War (it said also that he "was in part responsible for the application of game theory to the analysis of ballistic missile performance") .
Lambda was intended as a company where people with extraordinary intelligence and problem-solving ability (which indeed describes its small staff, and certainly its leader, Everett) would be assigned problems exceeding the usual degree of complexity and challenge. It is such problems that are interesting to such people. The staff included physicists, mathematicians, and chemists (among them were those who had worked in the Manhattan Project) . The idea succeeded very well . From recently written memoirs by Joseph George Caldwell, an ex-member of the technical staff of Lambda Corporation who developed there a practical method for applying the famous John Nash solution [1a] (for which Nash later received a Nobel Prize), one learns that "Lambda Corporation's specialty was solving constrained optimization problems, especially two-sided optimization problems, such as occur in warfare." Lambda developed the Quick General War Game Simulator for the Department of Defense.
Turning to the personal side of life at the company, Caldwell wrote, "Every Friday afternoon was 'Sherry Hour' at Lambda Corporation. Once a month we had a 'pot luck' square-dance dinner. Once a month we played poker in the Lambda poker group, which evolved from the WSEG poker group. There was an annual Lambda family picnic. Hugh and Fred Miercort bought a beach condo in Charlotte Amalie in the US Virgin Islands, and a number of us stayed there. Hugh was married to a very pleasant, down-to-earth lady." Mr. Caldwell adds some private recollections about Everett: "His home had an indoor swimming pool. He . . . enjoyed eating in fine restaurants. He enjoyed taking pictures with the microfilm camera that he always carried in a small case attached to his belt. He smoked his cigarettes with a filter, had long, swept-back black hair and a mustache/goatee, which he stroked while reviewing his poker hands" [1a]. Caldwell also recalls Nancy Everett: "She enjoyed the Lambda monthly square dances, and the wives of the Lambda staff (most were men) enjoyed chatting with her. Although her husband was the founder and president of Lambda, there was not a trace of her taking advantage of this social position, as many women would. She chatted with the other women on a 'peer-to-peer' basis." [83a]
So, in the 1960s Everett was recognized as an applied mathematician. Inquiries now came to him concerning Lagrange multipliers [84, 85]. In print he is mentioned in the same connection , and many his colleagues of those years found out only years later that Everett was also a physicist . An operations research student, H. Greenberg, introduced to Everett by Dr. Mandell Bellmore, recollects that in 1967 and later he discussed with Everett the Lagrange multiplier method, as well as other subjects. Everett liked solving problems, especially those that others could not solve. Greenberg admired Everett, his honesty, his generosity with compliments, and his encouragement. Everett taught him some of his techniques of application of his method, and was open with his ideas, even though he was in a highly competitive business .
Administration probably attracted Everett less. After being the president of the Lambda Corporation for three years, he was succeeded by L. Dean, reserving for himself only the post of chairman of the board. Fitzpatrick by that time had left the management of the firm, and Galiano and Pugh served as vice-presidents. The board of directors included three leaders of General Research Corp. (a firm that G. Pugh would later join ), the president of Boston Capital Corp., and a vice-president of Control Data Corp.  An overview of the Lambda Corp. is given by Mr. Caldwell as follows: "Lambda Corporation grew rapidly until the early 1970s. With the advent of massive spending on the Vietnam War, and the 'Great Society' welfare programs, defense budgets became tight, and the firm was eventually absorbed by General Research Corporation (formerly Defense Research Corporation) of McLean, Virginia" [1a]. During its "civilian" period Lambda did some contract work for American Management Systems (AMS) and about 1970 "was awarded (from Merck & Company) the largest private operations research contract ever awarded, to conduct an analysis of the economic feasibility of modular manufacturing methods for production of chemicals and pharmaceutical drugs" [1a].
A recollection by Dr. John Y. Barry shows that Everett's relations with client companies were not always smooth. (Barry, despite his negative view of Everett's ethics, held his intellect in highest esteem): "I knew Hugh Everett when we both worked in the Weapons Systems Evaluation Group in the Pentagon during the early 1960s. . . . In the middle 1970s I was in the basic research group of J. P. Morgan and hired Lambda Corporation to develop . . . the Bayesian stock market timer. He refused to give us the computer code and insisted that Lambda be paid for market forecasts. Morgan could have sued Lambda for the code under the legal precedent of 'work for hire'. Rather than do so, we decided to have nothing more to do with Lambda because they, Hugh, were so unethical. We found that he later used the work developed with Morgan money as a basis for systems sold to the Federal Government. He used us. . . . In brief a brilliant, innovative, slippery, untrustworthy, probably alcoholic, individual." [87a]
Here's an impression by another ex-colleague of Everett, Dr. Paul Flanagan (who was a Lambda employee): "Hugh was the smartest man I have known, but only smart in some areas. His understanding of emotions and people was limited and he hurt many people by how he treated them. Hugh the thinker was very different from Hugh the human being.". [87b]