Where SAIC's attention is now following GSA, other customer dialogue

From Science Applications International Corp.’s vantage point, the company sees its initial discussions with the General Services Administration and other agencies about what it does for the government as nearing the finish line.

GSA has gone to three groups of companies so far with requests for information on their entire federal contract portfolio and ideas for how to extract more savings out of those programs.

During SAIC’s fiscal first quarter earnings call with investors Monday, chief executive Toni Townes-Whitley said her company has “had very few conversations since submitting all of our information” to GSA.

She used the term “audit” to characterize those discussions and filings to GSA. That also means the Department of Government Efficiency gets a look at what SAIC provides to agencies.

As SAIC sees the world, GSA’s spotlight on what it defines as consulting and reselling of technology solutions to agencies will move away from the company soon following its submissions and explanations.

“As you hear words on integration and sort of the middle person or middleman role, the reseller role, there are very few areas in our portfolio where we play that type of role. In fact, we are a direct provider of solutions and capabilities and what we'll call a hands-on keyboard kind of capability, and our customers are very much aware of that,” Townes-Whitley told analysts. “We have reconfirmed that through our most recent months through our GSA audit and are reconfirming that now with the customer set, so I think that things will shake out. I'm sure there's a lot of language that's being parsed right now.”

With that soon to be out of SAIC’s way, the company is looking to focus on continuing its pivot toward more enterprise and mission IT solutions that can be delivered via more commercial-like models.

Townes-Whitley said the company is pushing to further refine that commercial approach for its work in digital engineering, data platforms, operational artificial intelligence and secure cloud computing.

For the Defense Department specifically, she said the company has been able to do that via sprints and then “sell commercially directly off marketplaces” for other customer sets to buy from.

“If you think about the strategy as a Horizon 1, we said for the first three years, which now we're halfway through, we are probably speeding up our efforts in the path that we were already on rather than selecting a new path,” Townes-Whitley said.

Any talk about commercial approaches in the government market also leads to discussions about having more outcome-based contracts, which are structured as fixed-price and a priority for GSA in the Trump administration.

Townes-Whitley said SAIC has not seen any movement on converting its existing contracts to fixed-price in “any significant meaningful way,” nor an increase in volume of those to bid on.

The historical norm is for fixed-price elements to be introduced at the line item level, which Townes-Whitley said is happening in the current landscape as well.

“There are some contracts that are better positioned for fixed price. A lot of our work in our enterprise IT, our IT infrastructure, we think, is very, very prone to a fixed-price environment,” Townes-Whitley said. “Does that introduce more risk to the contractor? Absolutely. However, if you look at where we've done fixed price, most of that work sits in our civilian business, and we've been able to hold very solid margins within that business.”

Growing the civilian side of SAIC’s portfolio remains a priority for the company even amid widespread expectations of large increases in defense spending during this Trump administration.

Townes-Whitley estimated the civilian business represents 20-to-22% of the current revenue profile, but could become 25% “over the next few years.”

Some examples of key civilian customers she cited include Customs and Border Protection, where SAIC helps operate that agency’s cloud computing environment.

The State Department’s reorganization plan also involves what she called “grandizing the IT backbone there,” an effort SAIC has worked on since 2010 under the Vanguard program.

SAIC is also the Treasury Department’s lead cloud broker under the contract called T-Cloud and looking at the Federal Aviation Administration’s modernization blueprint as a potential growth pathway.

“If you just take a look at where we are positioned best, they are also the areas where the administration is looking to invest, looking to bring more commercial technology, and I believe we are well positioned there,” Townes-Whitley said. “We do believe we are not in the midst of significant headwinds in our civilian business and we see opportunity there.”

Fiscal first quarter revenue of $1.9 billion was approximately 2% higher than the prior year period, while profit of $157 million represented a 5% year-over-year decrease in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

SAIC reiterated its fiscal year 2026 outlook of revenue in the $7.6 billion-to-$7.75 billion range and adjusted EBITDA in the $715 million-to-$735 million range, indicating a margin of 9.4%-to-9.6%.