Parsons awaits 'imminent' award of air traffic control overhaul contract

One of Parsons Corp.’s major priority pursuits is apparently not affected by the government shutdown and an award could come any day now.

During Parsons’ third quarter earnings call with investors, chief executive Carey Smith used the word “imminent” to describe where the Federal Aviation Administration stands in evaluating bids for the contract to stand up a new nationwide air traffic control system.

“This program is going to use the $12.5 billion of funding that was awarded under the (One Big Beautiful Bill) reconciliation bill. This is a critically important program to our country,” Smith said. We need to improve the safety, reliability, redundancy and efficiency of the National Aerospace System. And in parallel, we have to transform that for the future.”

Problems with the U.S.' airspace system are well-documented and date back over multiple decades, ranging from outdated equipment and technologies to staffing shortages that include lower numbers of air traffic controllers.

Then there is the matter of the government shutdown. On Wednesday, the Federal Aviation Administration said it will begin to reduce air traffic by 10% at several major airports to maintain travel safety until appropriations are passed and signed.

As for the Brand New Air Traffic Control System competition, it is a head-to-head showdown between one team led by Parsons and another led by Peraton.

Peraton announced its pursuit of the contract in August, saying its bid would also include contributions from the Peraton Labs applied research-and-development organization in key tech areas like artificial intelligence and big data.

“The FAA’s BNATCS initiative is not just about upgrading infrastructure – it’s ultimately about propelling America into the golden age of transportation. Our mission is to increase the efficiency and security of America’s skies, with safety as our guiding light,” Peraton's chief executive Steve Schorer said in that announcement.

The FAA originally expected to pick a prime integrator winner by the end of October and expected multiple companies to submit bids, Reuters reported in late September. FAA Administrator Bryan Bedford told the news agency that many larger companies have opted to partner with whomever wins the contract instead.

During the call with analysts, Smith highlighted how Parsons announced its teaming arrangement with IBM back in June in a move to get ahead of the final solicitation. The FAA unveiled the request for proposals in late August and said the winner will have three-and-a-half years to implement the new system.

The FAA was also apparently picky about the kind of companies it was interested in working with. In a Tuesday earnings call with investors, Leidos chief executive Tom Bell said his company decided not to submit a bid because of conflict-of-interest language in the RFP.

Smith spoke about that language as well on Wednesday after one analyst asked about there being only two competitors for the contract.

“Other competitors dropped out due to potential organizational conflicts of interest because if you want to provide systems, it's kind of hard to sit in an integrator role where you may be selecting and evaluating and acquiring those systems,” Smith said.

Also during the call, Smith characterized where the company is seeing interruptions in activities because of the shutdown. Or as she put it, where Parsons had “things move to the right.”

One task order from the Air Force for an airbase defense contract was awarded later than the company expected, while Parsons is also awaiting awards to supply its defensive cyber threat hunt kits to an unnamed agency.

It is worth pointing out, and as Smith alluded to, that the federal contracting ecosystem has already had several stresses put on it this year. Workforce departures are one significant factor, including contracting officers and others that oversee acquisition activities.

“I think we're dealing with two things at one time. One is federal contracting capacity, there's been some delays in getting things signed off,” Smith said. “The second is the shutdown, which I would say the big impact there that we saw was limiting our recovery in the fourth quarter, not knowing how long the shutdown is going to continue.

“We plan for it to continue for the rest of the year, but the big issue for us has been material procurements on existing contract awards.”

Third quarter revenue of $1.6 billion was down 10% from the prior year period, but up 14% after zeroing out a confidential State Department contract for the rest of 2025. Parsons also touted a 9% organic growth rate for the quarter after excluding acquired sales and that contract.

Recall that back in June, Parsons took the contract out of its guidance after learning the department’s reorganization plan eliminates the program office responsible for that contract.

Profit of $158 million showed a 5% year-over-year increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

Parsons lowered its revenue outlook to a range of $6.4 billion-to-$6.5 billion, down from the prior outlook of $6.48 billion-to-$6.68 billion. That suggests a 4% decline and 8% organic decrease from the prior year, but respective growth rates of 14% overall and 9% organic after excluding the confidential contract.

The company lifted its adjusted EBITDA outlook to a range of $600 million-to-$630 million, up from the prior outlook of $595 million-to-$635 million.