ManTech's growth means it also has to win the talent

ManTech International is on a streak of contract wins and revenue growth as it positions for increases in defense and IT spending but is finding some challenges in filling key staff positions for that work -- just like nearly all of its market peers.

During ManTech’s first quarter earnings call with investors Wednesday, CEO Kevin Phillips said “the answer is no and yes” when asked about the company’s ability to hire staffers in support of its expectation of an accelerated growth trajectory.

The government IT contractor’s headcount increased to 7,600 employees last year from the almost 7,000 it had at the end of 2016, according to regulatory filings.

Without specific numbers, Phillips told analysts that the company has over the last six months been able to increase staffers that support customer missions “pretty significantly based on contract awards.”

ManTech also has “about the same number of open requisitions today that we had six months ago that we’re trying to fill,” Phillips added.

Last year saw ManTech not only break its four-year stretch of revenue declines but post record bookings that lay the foundation for a continued and accelerated bounce back.

The contractor’s increased revenue guidance of $1.9 billion-$1.95 billion suggests growth of between 11 and 14 percent. Around 7 percent of this year’s growth is organic with the remainder from contributions to the acquisition of InfoZen closed in October of last year. ManTech’s original sales outlook for this year was $1.88 billion-$1.95 billion.

But some positions and particularly those in certain IT fields to help ManTech’s portfolio growth stay sustainable are just not that simple to fill, as characterized by Phillips on the call. Skilled technologists are in what he called a “negative unemployment rate,” which hints at the fierce competition across the federal market for talent and especially those with clearances.

ManTech is far from the only contractor to cite a difficult hiring environment as a headwind for the marketplace. The well-documented backlog of 710,000 pending security clearance requests is one factor, as is the increasing cost of labor in the Washington, D.C. metropolitan area.

In one example of searching for new talent sources, Leidos CEO Roger Krone told our sister publication FCW.com earlier this month that his company has set up a software development center near the University of West Virginia in Morgantown.

CGI Federal, CACI International and Science Applications International Corp. have also established capability-focused delivery centers across the U.S. to find talent at lower costs than that of the D.C. region.

A key component of the talent issue remains the clearance backlog. Phillips said that involves “pressing form the industry side… so we can provide the talent at all levels to be responsive to the needs of the nation.”

Phillips represented industry before lawmakers in March when he testified to the Senate Intelligence Committee on the clearance backlog and efforts to reform the process.

The near-term picture for ManTech from a labor standpoint to support its growth looks stable. Chief Financial Officer Judy Bjornaas told analysts the company has completed “ramping on most of the awards from last year.”

In addition, ManTech's trailing 12-month book-to-bill ratio as of the first quarter's end March 31 was 2.2. That shows the company's contract backlog has grown twice as fast as it has drawn down from it to recognize revenue.

ManTech’s first quarter of this year included a win with an unnamed Defense Department agency for managed enterprise IT services. Phillips did not go into detail on the nature of the work and who it is for, but did call it of “meaningful size” and similar to other large IT programs won last year.

This year also brings promise for ManTech to continue accelerating its turnaround from years of decline stemming from the defense spending drawdowns. The fiscal year 2018 omnibus spending bill allocated $655 billion in defense spending -- 8 percent higher than that of fiscal 2017 -- and the White House has requested $686 billion for FY 2019.

“Our customers have had clear knowledge what they need and they’ve been able to focus on it, Phillips said. “Now that we have funding there’s more money going to procurement, more money going to (research, development, testing and evaluation… also money going to sustainment and development around cyber and space resilience.”