DOGE Federal IT Vendor Impact Series: SAIC

The Trump administration and its Department of Government Efficiency (DOGE) have generated massive upheaval across the board in federal operations, including in the federal IT segment. As of March 2025, thousands of contracts described by DOGE as “non-mission critical” have been canceled, including some across the federal IT and professional services landscape. TBR’s DOGE Federal IT Vendor Impact Series explores vendor-specific DOGE-related developments and impacts on earnings performance. Click here to receive upcoming series blogs in your inbox as soon as they’ve published.

 

Content Updated: June 11, 2025

DOGE notwithstanding, SAIC’s 1Q25 fiscal performance was on target with expectations and historical patterns

SAIC reported its CY1Q25 (FY1Q26) fiscal results on June 2, and as in CY4Q24, the impact of DOGE was minimal on the company’s P&L, backlog or other fiscal markers. During SAIC’s 1Q25 earnings call, CEO Toni Townes-Whitley indicated that the annualized impact of DOGE on SAIC’s top-line revenue remained less than 1%, which TBR assumes refers to the proportion of total company annual revenue, or less than $75 million (based on FY25 sales of $7.59 billion).

 

SAIC posted quarterly revenue of $1.88 billion in 1Q25, up 1.6% year-to-year. Quarterly sales and year-to-year growth in 1Q25 were below TBR’s projections for revenue of $2 billion, or 8.3% year-to-year growth, but still in line with overall company guidance for FY26. SAIC’s 1Q25 gross margin of 11.1% was slightly weaker than TBR had expected, but operating margin of 6.4% came in stronger than TBR projections.

 

Company backlog of $22.3 billion was up 1.8% sequentially from $21.9 billion in 4Q24, with the sequential increase consistent with historical patterns. Bookings of $2.4 billion in 1Q25 were on par with the year-ago quarter ($2.6 billion in 1Q24) and were up sequentially from $1.3 billion in 4Q24, consistent with seasonal bookings patterns. SAIC’s quarterly book-to-bill ratio of 1.3 in 1Q25 was on par with its year-ago book-to-bill ratio of 1.4, though on a trailing 12-month (TTM) basis, book-to-bill of 0.8 in 1Q25 was down from 1.0 a year ago in 1Q24.

SAIC remains on track to reach its FY26 fiscal targets, at least as of 1Q25

SAIC does not expect erosion to its top-line growth, margins, earnings, adjusted EBITDA or cash flow from DOGE in the company’s FY26. SAIC also maintained its outlook for downward adjusted EBITDA guidance later in FY26. The federal procurement environment remains unstable, the federal fiscal 2026 (FFY26) budget negotiations must still take place, and the full scope of the Trump administration’s IT spending and other budget priorities is still in development.

 

For example, SAIC’s business development teams have experienced delays in procurement patterns with increasingly elongated decision cycles that could delay awards expected during FY26 until FY27. SAIC also reported high, post-inauguration turnover of procurement personnel at federal agencies in 1Q25 that has impeded business development and program funding, particularly on larger strategic awards, while procurement processes at some agencies are currently being revamped.

After the near-term disruption subsides in federal IT, the Trump administration’s IT investment plans will generate long-term opportunities

SAIC believes its portfolio of mission-centric solutions, its emphasis on speed-to-market in deploying its offerings, and its focus on embedding commercially developed digital technologies into its solutions align well with the Trump administration’s technology priorities and DOGE’s efficiency optimization goals.

 

In the Department of Defense (DOD) and Intelligence Community (IC), where SAIC generates 75% of its revenue, overall budget growth is expected in FFY26 prioritizing national security and force readiness, particularly in the U.S. Navy, U.S. Air Force and U.S. Space Force. Conversely, SAIC anticipates some funding challenges in its U.S. Army account during the remainder of FFY25 and into FFY26. Since FY24, SAIC has aggressively expanded its bidding activity across the federal space.

 

In 1Q25 alone, the company tendered proposals with a total contract value (TCV) of more than $7 billion with a FY26 goal to submit between $28 billion and $30 billion in bids. The company has nearly $20 billion in awards awaiting client adjudication as of 1Q25.

 

TBR expects the competition for net-new work and recompetes will intensify during the latter half of FFY25 (2Q25 and 3Q25), particularly in the civilian market. More than half of the $2.4 billion in new bookings SAIC landed in 1Q25 were for net-new programs, which the company hopes is an early sign of accelerating IT procurement activity across the space.

 

On-contract growth will also remain one of the chief objectives of SAIC’s business development strategy for the remainder of FY26, particularly with new programs being delayed by staffing shortages within agency-based procurement teams. Standing by its FY26 guidance also implies to TBR that SAIC expects the pace of on-contract growth will remain strong enough to sustain momentum toward its FY26 fiscal objectives, and sufficient to offset any deceleration in net-new award activity.

SAIC’s Civil business posted strong results in 1Q25; the company appears better positioned than some peers to ride out the DOGE-based disruption

By market, growth was led by SAIC’s Federal Civilian business group with 8% year-to-year sales growth in 1Q25 up from a year-to-year revenue contraction of 0.2% in the DOD & IC unit. In comparison, Leidos’ Health & Civil group expanded sales 7.7% in 1Q25 while CACI’s Federal Civilian Agencies unit grew revenue 13.2%.

 

In stark contrast, Booz Allen Hamilton (BAH) suffered a very sudden stoppage in growth in its Civil group in 1Q25. Year-to-year top-line expansion in BAH’s Civil unit decelerated after the segment posted 13 straight quarters of double-digit growth from 3Q21 through 3Q24. Civil growth was 7.8% in 4Q24 and -0.1% in 1Q25.

 

According to TBR’s 1Q25 Booz Allen Hamilton Earnings Response, “The volume of disclosed deal activity plummeted in 4Q24 and 1Q25, a harbinger of tough times ahead for federal IT’s most venerable advisory-led firm.” BAH also expects a low-double-digit decline in Civil revenue in FY26, with the bulk of the contraction transpiring in FY1H26 (2Q25 and 3Q25). BAH’s Civil unit posted FY25 sales of $4.17 billion, up 5.7% year-to-year from $3.83 billion in FY24. A year-to-year decline between 10% and 12% in FY26 implies Civil sales of between $3.57 billion and $3.67 billion, or down between $400 million and $500 million.

 

Conversely, SAIC expects favorable IT spending patterns in FFY26 in the company’s five largest civilian accounts, which account for over 70% of the company’s Civil revenue (or about $1.23 billion based on FY25 civilian sales of $1.75 billion). The Department of Transportation is expected to receive $1 billion in the federal budget to support modernization at the Federal Aviation Administration, while the Department of Homeland Security (DHS) will be allocated over $40 billion to develop and install new border security technologies.

 

IT spending at the U.S. Department of State is expected to remain stable, and SAIC recently won a two-year extension on the department’s strategic Vanguard program. SAIC also anticipates higher IT budget outlays for modernization initiatives at the Department of Treasury and the Department of Veterans Affairs (VA). In the past, SAIC has struggled to win some big-ticket recompetes and typically factored renewal risk into its guidance, but as of 1Q25, the only recompete headwinds on its books are the loss of a NASA program in FY25 and the company’s decision to forgo bidding on lower-margin portions of the recent Cloud One recompete.

 

SAIC is instead focusing on the higher-value aspects of Cloud One where the company can showcase its expanding cloud capabilities (another area of SAIC’s portfolio that lines up well with the IT spending priorities of Trump 2.0).

 

TBR’s DOGE Federal IT Impact Series will include analysis of Accenture Federal Services, General Dynamics Technologies, CACI, IBM, CGI, Leidos, IFC International, Maximus, Booz Allen Hamilton and SAIC. Click here to receive upcoming series blogs in your inbox as soon as they’ve published.