It isn’t as though defense firms can build a bench of cleared talent, either. To get someone into the clearance process, the government must first identify a need for requiring it—i.e., specify what the contract is, the role on that contract, and what level of security clearance is needed—as a condition of awarding the contract. One of the biggest challenges defense firms face is that once a contract comes up for bid, there is a rush to find already-cleared talent that fits the position, which creates bidding wars.
McGinn, as do leaders across the defense industry, expects that Amazon’s arrival in Washington, DC, is only going ramp up the intensity. Amazon is planning to hire 25,000 workers for its new offices just outside the capital, which equates to about one-sixth of the existing private sector workforce for defense contractors and government IT specialists in the area. Through its web services division, AWS, Amazon is bidding on more government projects, particularly those with cloud computing elements; reports suggest it is the frontrunner for a $10 billion data storage project from the Pentagon.
There are significant financial repercussions from the cleared talent crunch, not the least of which is that competition for talent is driving up wages and benefits. Low unemployment, more open positions than people to fill them, and other labor market conditions are further compounding the problem. Patricia Munchel, executive vice president and chief human resources officer at the defense contractor PAE, notes it is not uncommon for firms like hers to offer bonuses to keep cleared workers on staff for up to two years. Privately held PAE employs about 20,000 people in 60 countries and generates roughly $2 billion in annual revenue.
Most retention bonuses or incentives for hiring “come right out of our profit margins,” says Munchel.
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Overall, the pool for cleared employees in general is challenging. For starters, only US citizens are eligible for security clearance for government defense contracts. Then there’s the fact that not everyone is interested in working in the industry. Next is the need defense firms have for highly skilled tech and digital talent, which puts them in competition with pretty much every other organization in every other industry. Oh, and let’s not forget that clearance isn’t guaranteed—plenty of eligible candidates fail to be cleared. What’s left is a pretty shallow pool of properly skilled talent who want to and can be cleared.
“Demand for talent in aerospace and defense, particularly in engineering and cybersecurity, is significantly exceeding supply,” says David Berteau, CEO of the Professional Services Council, a trade organization in Arlington, Virginia, that represents 400 companies that do business directly with federal agencies.
Berteau says the decision to move responsibility for clearing talent from the Office of Personnel Management to the Department of Defense will help speed up the process. But defense firms themselves will need to stock up on workers who are eligible for clearance more aggressively. Barney says one dramatic way firms are doing this is by acquiring companies where a majority of the employees already have clearances. “It’s easier for them to move into an adjacent space by acquiring a company with cleared workers than recruiting, hiring, and getting new talent cleared,” he says.
PAE’s Munchel says creating better internal employee mobility and sourcing veterans or college students are recruiting priorities, as the clearance process tends to be shorter with those groups. Other defense firms are doing the same, and Barney says he expects to see more formal institutions like McGinn’s Center for Government Contracting pop up in the coming years. While working from home is not always possible for security-related projects, some traditional defense firms have been offering more options for remote work, such as setting up secure facilities that would allow cleared workers to patch into classified labs and networks.
And, of course, if none of that works, there’s always Secret Squirrel.