stockrowWhat it does
Science Applications International Corporation, or SAIC, provides technical, engineering and information technology services primarily to the U.S. government. Founded in 2013, it is headquartered in Tysons. James C. Reagan is interim chief executive officer.
SAIC helps government customers design, build, modernize, operate and secure technology systems. Its work ranges from moving applications to the cloud and improving cybersecurity to integrating artificial intelligence into systems that handle sensitive data. It also uses digital engineering tools for design, modeling and simulation.
Beyond office and enterprise IT, SAIC supports military and national-security missions. It designs, modifies, integrates and maintains weapon systems, supports training and simulation, and upgrades and sustains ground vehicles. Civilian work includes systems used for border security and public services affecting travel, trade and health.
The company generally combines technologies and services to meet a customer’s requirements rather than selling only a single piece of software or hardware. Its Innovation Factory develops solutions that can be sold on their own or incorporated into broader customer work. Teams there focus on areas including AI, cloud, application development, engineering and cybersecurity.
SAIC serves customers through approximately 1,700 active contracts and task orders. It had 23,000 employees in fiscal 2026.
How it makes money
SAIC earns revenue by performing services and delivering solutions under government contracts, either directly as a prime contractor or as a subcontractor. Its two reporting segments organize that work by customer: Defense and Intelligence serves national-security customers, while Civilian serves government customers working on public services and other civilian missions. Each offers a range of technology and engineering services rather than relying on one product.
In fiscal 2026, Defense and Intelligence revenue was $5.6 billion and Civilian revenue was $1.7 billion. SAIC reported second-quarter fiscal 2027 revenue of 1.9 billion.
Contract terms determine how SAIC is paid. Under cost-reimbursement contracts, it recovers eligible direct and allocated indirect costs and receives a fee. Time-and-materials contracts typically pay negotiated hourly rates for specified labor categories, plus reimbursement of other direct costs. Firm-fixed-price contracts set a price for a defined solution: SAIC can earn more if it completes the work below its planned cost, but unexpected expenses can reduce profit or cause a loss.
Government agencies also buy through arrangements that establish terms before ordering specific work. Under an indefinite-delivery, indefinite-quantity contract, an agency issues task orders for the services it needs; a contract ceiling does not itself commit the government to buy that amount. Some contracts have multiple qualified providers that compete for individual task orders.
Work can continue through system operation, maintenance and sustainment after initial development. Existing contracts can also generate additional work, although contract awards and task orders do not guarantee a particular level of future purchases. SAIC’s profitability varies with contract type, the work performed and its achievement of performance objectives.
| Segment | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| Defense and Intelligence | $5.6 billion | 76.9% | −2.53% |
| Civilian | $1.7 billion | 23.1% | −4.11% |
| Corporate Segment | $0.00 | 0.00% | — |
Customers and how it sells
SAIC’s principal customers are U.S. government departments and agencies. Its defense and intelligence work serves the military and intelligence community; its civilian business serves federal, state and local government missions. Named customers include NASA and the Departments of State, Justice and Homeland Security.
In fiscal 2026, 98% of revenue came from prime contracts with the U.S. government or subcontracts for other contractors doing U.S. government work. Approximately 52% of total revenue was attributable to the Department of War, while 46% was attributable to intelligence and other federal government agencies. The remainder came from commercial, state and local government and international customers.
SAIC reaches agencies directly through prime contracts and indirectly by working under other contractors. Government purchasing channels include single-award contracts, task orders under indefinite-delivery contracts and prequalified supplier schedules. SAIC also collaborates with other companies when pursuing large contracts, including companies it may compete against on other bids.
Substantially all revenue was earned by entities located in the United States. The company serves customers through approximately 1,700 active contracts and task orders, and many employees work at customer sites.
| Segment | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| Defense and Intelligence | $5.6 billion | 76.9% | −2.53% |
| Civilian | $1.7 billion | 23.1% | −4.11% |
| Corporate Segment | $0.00 | 0.00% | — |
Suppliers and costs
SAIC is a services provider whose work depends on skilled employees, including engineers, software developers, technicians and people with security clearances. It also integrates commercial products and technologies into customer solutions, including products used in ground-vehicle support. Its business currently requires minimal infrastructure investment.
Contract costs include direct labor and other direct costs, as well as allocated indirect costs and overhead. Government contracting rules govern cost accounting, allowable expenses and reimbursement. On time-and-materials contracts, SAIC must provide appropriately qualified staff at the negotiated hourly rates; on fixed-price work, it bears the effect of higher or unexpected costs.
SAIC is implementing Project Orbit, an operational improvement program that includes changes to procurement, recruiting and mission delivery. A proposed procurement system would analyze spending, consolidate suppliers and manage demand. SAIC expects approximately 150 million in annual run rate savings by the end of the three-year implementation period, with approximately two-thirds reinvested in the business.
The company acquired SilverEdge Government Solutions in fiscal 2026. Acquisition and integration costs are among the items excluded from the adjusted operating income measure used to manage its reporting segments.
- Revenue$7.3B
- Cost of revenue−$6.4B
- Selling, general and administrative−$350.0M
- Operating income$521.0M
Competitive position
SAIC competes for government contracts against large defense contractors, specialized government technology providers and commercial IT companies. Defense contractors with competing technical and IT operations include General Dynamics, Lockheed Martin, Northrop Grumman and RTX. Government-focused competitors include Booz Allen Hamilton, CACI, Leidos, ManTech, Parsons, Peraton and Serco. Commercial providers competing for government IT work include Accenture, Deloitte and IBM.
Bids are judged on factors including technical expertise, cleared personnel, price, past program execution, customer reputation and the ability to deliver on time. Government procurement has placed increased emphasis on cost competitiveness, while some arrangements allow several prequalified contractors to compete for individual task orders. SAIC also competes with the government’s own capabilities.
Our reading: Customer relationships and mission knowledge provide a meaningful advantage in complex work, but they do not eliminate competition when contracts come up for rebid. SAIC says some relationships have lasted 20 years or more, and it frequently bids against established providers.
Our reading: A cleared workforce and experience across a system’s life cycle are useful barriers to entry, especially where security requirements are demanding. Their strength is limited by competition from other cleared technical providers and by procurement methods that can lower entry barriers.
SAIC’s services and solutions are not generally dependent on patent protection. The government can have rights to material developed under government-funded contracts and, in some cases, disclose or license it to competitors.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| General Dynamics Corporation | Defense engineering, technical and IT services | High |
| Lockheed Martin Corporation | Defense engineering, technical and IT services | High |
| Northrop Grumman Corporation | Defense engineering, technical and IT services | High |
| RTX Corporation | Defense engineering, technical and IT services | High |
| Booz Allen Hamilton Inc. | U.S. government technical and IT services | High |
| CACI International, Inc. | U.S. government technical and IT services | High |
| Leidos Holdings, Inc. | U.S. government technical and IT services | High |
| ManTech International Corporation | U.S. government technical and IT services | High |
Growth opportunities
SAIC’s growth opportunities include modernizing government IT, deploying AI, providing digital engineering and supporting national-security missions. Its Innovation Factory develops solutions for use on their own or as part of larger contracts. SAIC also acquired SilverEdge Government Solutions to advance its strategy of providing mission-focused solutions and commercial products.
In the first half of fiscal 2027, SAIC booked over $1.6 billion of intelligence and space awards. It also secured an Army recompete for hardware-software integration and, after the second quarter closed, a border security program recompete. A recompete retains work that was put out for bid again; it is not necessarily a new customer program.
SAIC reported approximately 5% organic growth in the second quarter of fiscal 2027. It attributed growth in part to additional work on existing contracts and said some programs won in earlier years had ramped slowly before contributing more revenue. The company raised its fiscal 2027 revenue guidance to a midpoint of $7.25 billion, reflecting organic contraction of 2% to flat.
SAIC expects Project Orbit to support growth and margin improvement through changes in procurement, processes and delivery. It plans to reinvest approximately two-thirds of its expected savings in areas including new efforts and capacity on current contracts. The company also said some large opportunities had been delayed as procurement offices implemented new guidelines, including fixed-price directives.
- $7.4BFY2022
- $7.7BFY2023
- $7.4BFY2024
- $7.5BFY2025
- $7.3BFY2026
- $7.2BFY2027 guidance
Structural risks
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Government spending and priorities: SAIC’s performance depends on U.S. government spending and whether its services align with agency priorities. Delayed awards, funding delays, stop-work orders, contract terminations or government shutdowns could hurt revenue, cash flow and profitability.
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Contract and pricing exposure: The government can terminate contracts for convenience or default. Fixed-price contracts expose SAIC to reduced profits or losses when costs exceed expectations, while changes to reimbursement rules could limit recovery of costs and overhead.
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Competition and procurement: Competitive bidding and multi-award contracts increase pricing pressure. Small-business set-asides can reduce the work available to SAIC, and alternative procurement methods can lower barriers for new competitors.
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People and security: SAIC depends on attracting and retaining skilled personnel, including employees with security clearances. Cyber or other security threats could also negatively affect its business and financial results.
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Acquisition execution: SAIC may be unable to retain employees, customers or partners from acquired businesses, integrate their systems successfully or realize expected benefits. It may also assume liabilities that were not identified during due diligence.
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Regulatory compliance: Government contract rules cover pricing, accounting, cybersecurity and protection of sensitive information. Violations of applicable laws and regulations can result in penalties, suspension or debarment, or loss of contracts.
Bottom line
Our reading
Our reading: SAIC is primarily a government services and systems-integration business, with recurring opportunities to operate and sustain customer systems but no guarantee that contract ceilings become revenue (item1).
Our reading: Customer relationships, cleared staff and technical experience support its competitive position, while reliance on federal budgets, rebids and contract terms leaves results exposed to procurement decisions and execution costs (item1; item7).