Bucking the Trend: High-Tech Defense Contractors Struggling to Fill Jobs

By Sandra I. Erwin
Top defense contractors continue to threaten to lay off thousands of workers if Congress doesn’t call off across-the-board federal budget cuts that are set to take effect in January.
In an alternate Pentagon-contracting universe, companies are paying bounties to workers who refer qualified applicants for jobs that have gone unfilled for months.
Such is the dichotomy of an industry where work is drying up for some, and booming for others.
Dire forecasts by industry groups predict that loomingPentagon budget cuts will leave more than a million people unemployed. The apocalyptic rhetoric stands in sharp contrast to what is happening in some niche sectors of the defense market such as software suppliers and data-mining firms.
“I have three recruiters working for me pretty heavily” to fill eight openings for Java programmers, says Richard McNeight, president of Modus Operandi, a small defense software company based in Florida.  “We also pay bounties to employees for referring someone … and still haven’t been able to fill those jobs,” he says.
Modus Operandi writes and maintains software for U.S. civilian and military intelligence agencies. The company’s primary products are “semantic search” software that analysts use to plough through enormous databases, find useful data and share it with colleagues. The demand for this technology is growing dramatically, McNeight says. “We have the biggest backlog we’ve ever had.”
The company needs Java programmers not just to write software but also to continually reconfigure it as clients change their data searches, he says. “Wars might be winding down but the intelligence community is winding up,” says McNeight. The U.S. military’s new emphasis on Asia and Northern Africa also is fueling the demand for intelligence-related products and services, he says.
A similar scenario has played out for another software supplier based in Colorado Springs. Yes, there is downsizing in the defense sector, says Jay Jesse, co-founder and president of Intelligent Software Solutions. “But for us, it’s been difficult to find the right people.”
ISS employs 450 software engineers, and needs more, Jesse says. “We’ve had 25 to 30 job openings pretty much constantly over the last two years.”
The company, in this case, created its own problem by providing a faster turnaround time than is customary for government projects.  
“With our business model, we are growing in an environment that is shrinking,” Jesse says. “We are growing because we provide solutions much more quickly” than larger contractors, he says. “For that reason, we are getting more and more orders.”
Pentagon software contractors have been accustomed to projects that take five to seven years to complete. That would allow a company time to train new employees or retrain the existing workforce. Government agencies that are ISS clients now demand “deliverables” within a year or less, and that means the company needs engineers who can jump in quickly. “We have a project where we expect to turn out new releases every 90 days,” says Jesse. Hiring at ISS has doubled over the past three years, and almost all new hires were software engineers.
In an effort to tackle the talent shortage, ISS opened a satellite office in Denver to attract engineers who might not want to make the long commute to Colorado Springs. That turned out to be a wise move, says Jesse. “We hired 15 engineers in six weeks.”
Budget cuts will affect many Pentagon contractors, says Jesse. Some will be laying off large numbers of workers, he predicts. But the cutbacks should not affect companies that can provide relevant products and services at competitive prices, he adds. “We feel we are going to do well in this environment. We’ll buck the trend and we’ll thrive because of the need to build cheaper, faster systems,” he says. “We have customers that continue to work with us because we provide solutions for 20 to 30 percent less than what they were paying two to three years ago.”
The defense market is changing, not only as a result of budget cuts but also because many companies are not up to speed with the technology that some government agencies now want, says Jesse.
“The companies that are downsizing are those that don’t have those cutting-edge talents … and are working on 10 to 15-year-old technologies,” he says. “Many of the workers that other companies lay off are not equipped to come work for a company like us.”
McNeight, of Modus Operandi, says the shortage of software engineers is exacerbated by U.S. citizenship requirements associated with any intelligence contract.
If foreign nationals were allowed to work on these projects, there would be no shortage of talent, says McNeight. Another concern is that many U.S. born engineers prefer to not work in full-time jobs because they can make more money as independent consultants. “If we put a consultant on a project we have to get approval from the customer to do that,” says McNeight. “And you can’t get a security clearance for someone who doesn’t work for us.”
Without being able to hire foreign nationals or consultants, the eligible pool of software engineers becomes very small, he says. Most of those already are employed by large corporations and might not want to move to a smaller company.
McNeight says it is no surprise thatU.S. born engineers are in dwindling supply. Most engineering graduates at U.S. universities are foreign born, he says. American students are not motivated to become engineers, he adds. That view was confirmed by McNeight’s own daughter, who decided to pursue a medical career even though she had the qualifications and grades to enter the engineering field, he says. “She said engineering is too difficult, and too nerdy.”
The skills gap will continue to be a problem both for government customers and suppliers.
The explosion in the demand for so-called “big data” technology services is likely to continue, industry experts say.  
For defense contractors, this is one bright spot in an otherwise down market, says Jesse. “Big data is a huge deal. You need talent that really understands how to deal with the scale and the magnitude of big data.” That requires workers who are versed in cloud computing, user experience web-based interactive applications, data analytics and mobile apps development, he says. “ Those are areas where there’s a pretty big need and not as much talent.”
Gary Bloom, CEO of MarkLogic, says government agencies are projected to become avid consumers of technologies that merge data, voice and video from different sources. The company expects to gain more customers in the intelligence community. “They are producing more data than any other part of the government,” says Randall Jackson, vice president of MarkLogic. “We have plenty of meetings at the Pentagon where officials lament the large amounts of data they are storing” and not able to exploit.
Maj. Gen. Genaro Dellarocco, who heads the Army Test and Evaluation Command, says that when it comes to managing data, the U.S. military is crossing new frontiers. During recent evaluations of a new tactical communications network, he says, “We didn’t collect megabytes, we didn’t collect gigabytes, we collected four terabytes. … That’s new territory for us.”
Photo credit: Istockphoto

Topics: Business Trends, Service Contracts, C4ISR, Intelligence, Defense Contracting, Infotech, Systems Engineering

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