SAIC clarifies its mission to the new administration amid heightened contractor scrutiny

Little doubt exists that consulting contracts are under a new spotlight across government including at the General Services Administration and Defense Department, two agencies that always have the attention of contractors.

More specific to GSA, its directive for a consulting contract review issued in late February called out 10 companies by name including Science Applications International Corp.

That specific memo was not mentioned during SAIC’s fourth quarter and fiscal year-end earnings call Monday, either by company executives or analysts asking the questions on behalf of investors.

But SAIC’s chief financial officer Prabu Natarajan acknowledged the overall scrutiny on what he called “contracts that are viewed as consulting arrangements, where people fly into our meetings and fly out.”

Agencies are also looking closer at what Natarjan called “fairly typical reseller agreements,” or those where the focus is on “simply buying and selling at higher profits to the government”

From the standpoint of SAIC itself, the company is taking on some educational responsibility to explain the work it does to new leaders at its agency customers.

“We've been able to clarify the work that we do, explain where SAIC fits in this ecosystem, explain the mission criticality of our work, as well as some of the technical work that we do to support at an enterprise IT level,” CEO Toni Townes-Whitley told analysts. “I think with greater explanation, it will start to, if you will, bring down some of the more knee-jerk reactions that all of us have had over the last few weeks.”

The flurry of executive orders and other contract-related communications from agencies is the context for many of those knee-jerk reactions across the industry, sometimes with multiple memos going out in a single day.

Or as Natajaran also put it, SAIC has been highlighting its “role as integrators (in) putting together very disparate pieces of data and architectures and consumption patterns inside the government in a way that is cost-effective for the government long term.”

Continuing resolutions like the one Trump signed into law on Saturday are often seen as giving the entire public sector ecosystem instability and a barrier to the kind of long-term planning everyone wants, both on the industry and government side.

As Townes-Whitley sees this new CR however, it “has more flexibility than what we’ve seen in prior years.” That is translating to more coalescence and clarity around what this stopgap funding measure means for everyone, she said.

Full fiscal 2025 revenue of $7.5 billion showed year-over-year organic growth of 2.1%, while profit of $710 million registered a 6% increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization. That equates to a 9.5% adjusted EBITDA margin compared to the 9% recorded in FY 2024.

For SAIC’s 2026 fiscal year that started Feb. 3, the company’s initial outlook has revenue in the range of $7.6 billion-to-$7.75 billion to indicate expectations of 3% organic growth at the midpoint. The outlook also puts adjusted EBITDA in the range of $715 million-to-$735 million, which indicates a range of 9.4%-to-9.6%.

Reston, Virginia-headquartered SAIC also reported a total backlog of about $21.9 billion and a book-to-bill ratio of 0.9 for the full 2025 fiscal year. SAIC wants the latter number to become 1.2 by the first half of 2026, which would show that contract bookings are growing faster than drawdowns from the backlog to recognize revenue.

Townes-Whitley became SAIC’s chief executive in the fall of 2023 and has since prioritized a reinvigoration of the overall business development engine, both in terms of bid submission volume and the type of work to go after.

She estimated roughly two-thirds of SAIC’s pipeline that it is waiting on award decisions from is in mission and enterprise IT, which featured prominently in the company’s April 2024 Investor Day presentation.