WASHINGTON ― Defense contractor CACI International on Thursday forecast that its future losses from the U.S. pullout from Afghanistan would be more than offset by the U.S. military’s growing investments in forward-leaning technologies.
The company projected 4 percent sales growth despite a 2 percent headwind linked to Afghanistan, where CACI has supported the U.S. Army with intelligence analysis. The Virginia-based company sees its agile software development business as a key driver and touted its April award worth $376 million from the National Geospatial-Intelligence Agency for an AI-driven intel processing platform.
During CACI’s fourth-quarter earnings call Thursday, CEO John Mengucci told analysts some of its Afghanistan-based employees are continuing work from different locations, while others remain at work in Africa, Korea and throughout the Middle East, including Iraq.
“We’ve watched the administration make the decision to completely exit Afghanistan by 9/11, and all I can say is they’re executing on that decision,” Mengucci said, adding that CACI’s ongoing analytical services are “much broader counter-terrorism” to include “near-peer threats.”
As the military modernizes with an eye toward competition with Russia and China, CACI sees bipartisan support for information technology modernization, offensive and defensive cyber capabilities, border security, electronic and space ― all a potential boon to its bottom line.
The company’s comments come just days after the Democrat-led Senate Armed Services Committee unveiled its draft 2022 defense authorization bill, with $25 billion more for defense than President Joe Biden proposed.
But while CACI is betting on persistent demand for agile software development, Mengucci acknowledged it does upend the traditional contracting cycle. Meant to help the government update continuously, the contracts are not as predictable as cost-plus or a firm-fixed-price methods.
“We’re all still working through the challenges of contracting for agile. By the nature of the word, it’s agile, which means it’s fluid, it’s going to change,” he said. “That’s tough coming from the contracting world.”
To win future work, the company hopes to leverage its contract worth up to $1.9 billion with Customs and Border Protection to modernize back-office systems. The contract, dubbed BEAGLE, includes more than 100 applications, according to the company.
“We’re delivering on agile software development with about 300 people,” Mengucci said. “What it does is it allows us to deliver programs and agile applications at a lower price to our customer and a lower cost. If we do that right, the margins will be higher for us, because we’re taking on some of that risk.”
Meanwhile, CACI disclosed on the call that Ascent Vision Technologies, which it acquired a year ago, has felt the impact of the global semiconductor shortage. AVT specializes in intelligence, surveillance and reconnaissance technologies.
To manage broader pandemic-related supply chain slowdowns, the company has made bulk buys of certain long-lead items.
“We have had supply chain issues,” Mengucci said. “We’ve also had customer delivery delays because our customers were not there to receive those items.”
Joe Gould is senior Pentagon reporter for Defense News, covering the intersection of national security policy, politics and the defense industry.