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Tuesday, 01/08/2019 7:53:47 PM

Tuesday, January 08, 2019 7:53:47 PM

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What the shutdown is costing one contractor — and how it may affect recruiting

For companies like SAIC, the advantage of scale — through the diversity of the work it does and the types of benefits it can offer to cover forced leave — is something that can help it attract talent in the midst of a government shutdown, CEO Tony Moraco said.

For companies like SAIC, the advantage of scale — through the diversity of the work it does and the types of benefits it can offer to cover forced leave — is something that can help it attract talent in the midst of a government shutdown, CEO Tony Moraco said.

Executives with Science Applications International Corp. trekked to New York this week to talk up its pending $2.5 billion acquisition of Engility Holdings to Wall Street, and not surprisingly, the government shutdown has come up.

Reston-based SAIC (NYSE: SAIC) revealed the now 18-day shutdown — four days away from being the longest on record — has cost it $10 million per week in revenue so far and the government is $40 million to $50 million behind on payments to the company.

But part of the conversation during its investor day centered on talent and the competition to attract and retain people with the technology skills that commercial companies also covet, especially as web giant Amazon.com Inc. (NASDAQ: AMZN) plans to bring part of its HQ2 to the region. When asked specifically about the effects of the government shutdown on those efforts, SAIC CEO Tony Moraco said Tuesday that while the devotion to mission is the ultimate recruiting tool, he believes government dysfunction might actually play to SAIC’s favor.

As government agencies bear the bigger brunt of the labor impact, civil servants may get turned off more and more by the prospect of working for Uncle Sam. And that could only ratchet up the dependence on contractors to cover that strain on tech resources, he said.

For massive companies like SAIC, the advantage of scale — through the diversity of the work it does and the types of benefits it can offer to cover forced leave — is also something that can help it attract talent.

“I would not be surprised if this quarter, part of our recruiting theme is we’re a large company. If you’re going to operate in this space being with SAIC, we will cover such anomalies that exist,” Moraco said. “Whereas some of the small businesses people may work for actually struggle to meet payroll if they can’t get a bill through on a NASA account or FAA account.”

SAIC still expects its deal to acquire Engility (NYSE: EGL) to close before the end of the month.

GO SAIC

"PEACE"

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