Brian Kinstlinger: Hi Kathryn. Can you talk about the bookings and proposal submission trends, I joined the call late, if not from a quantitative perspective, then at least at a high level, have they — each of them have they been strengthening? Have they been weakening? Are they stable? Just high-level discussions so we can understand the market conditions.
Zach Parker: Yes. I missed the first part. You said that bookings and what was the other…
Brian Kinstlinger: Proposal submissions?
Zach Parker: Yes. Yes. I think like Kathryn said, the data that contributed to the softer SG&A is an indication of the little lighter than anticipated proposal development period. We — there are a number of programs that the government has issued that are continuing to extend to the right. Probably the most notable one that we’ve given color to is one of our large multiple award IDIQ contracts, which will open up channels for us to bid a number of contracts, and we refer to that one as the CIO-SP4. We believe that the evidence indicates that the government is getting very, very close to resolving all of the protests that they’ve encountered over the last year now, and that we should see an award in [ online ] potentially by the end of Q2, which will create those bidding opportunities for us in Q3 and 4.
Some of those are going to be long-term opportunities. Some of those will be quick turnarounds. And so we’ve positioned ourselves to be able to do both as they come forward. But again, a little disappointed that we haven’t had the opportunity to bid on those as yet as the booking continues to slip to the right. But having said that, we’re still continuing to develop value propositions. We believe we’re going to be winning value propositions on some of our existing IDIQ contracts provided that the funding comes as well.
Brian Kinstlinger: So I’m curious, in past coverage where I’ve covered some of the more defense-related IT guys, the win rates were around 25% to 30%, 30% would be excellent. I’m not sure it is similar for DLHC or not. But if it is, I’m wondering, are you casting a wide enough web outside of your existing book of business to drive growth? And if not, what can you do to increase that web to drive stronger growth?
Zach Parker: You are actually a great straight man for us. Yes, so we have, as a result of some of the capabilities that came in at the end of last calendar year, in part with our acquisition and also with some key investments and hires that we have made. We have been very active over the last quarter to accelerate diversification of our addressable market. So there are some agencies that we felt were a little far for us before that are now within our swim lanes. We’ve expanded our pipeline development in areas that are leveraging stronger cybersecurity — or enhanced cybersecurity calls or stronger health IT qualifications, and our pipeline, new business pipeline is beginning to really reflect that. Those opportunities, of course, are things that we hope to see in this fiscal year [ today ].
And then, of course, we expect to exit very, very strong with the ability to get some of those awards in place. We’re also very accurate with regard to our industry. We generally look at 30% win rate. Our new business has been very, very good. We expect a lot higher than that, as in close to 100 on our recompetes that we choose to stay in that business. But 30% would be an industry standard top-of-the-line win rate. And we’ve — and 20% is still good. We’ve had — we also kind of bucket those into three areas. One is the multiple award IDIQs, [ GYX ] as they call them, which generally have a zero booking the way in which we treat them, but open up huge opportunity for organic growth. And then we have small to medium-sized bids which had been our sweet spots in the prior stages before our last phase of the acquisitions.
Those are, again, things ranging anywhere from $10 million to $50 million. And then medium size to larger being north of $50 million and much like probably our last $600 million or $700 million win. So we’re — we kind of look at each of those as now we feel that we can swing the bat on some of those larger opportunities that before we had to partner with, and we’re now establishing those opportunities into our pipeline.
Kathryn JohnBull: And that’s really the opportunity for productive use of that delay time. No one desires the delays that the industry is experiencing, but for us, particularly probably more so than most, it’s an opportunity to really have the client call plans working and really raise awareness and really, to your point, open the aperture, not even that far adjacent from where we’ve been, but more so really for people who don’t necessarily think of DLH and certain capability sets because they haven’t seen us there yet, but really having them understand how we have resident in the company that the breadth of capabilities that can really respond to new things and really giving those proof points and building awareness before the bid opportunities come out.
So you never run out of ideas of how to raise profile and build awareness. So in some respects, we’re I think making the best use of that delay time to really continue to improve our position for when the opportunity to bid comes in.
Zach Parker: And that pipeline shaping activity will be in part reflecting the answer that Kathryn gave to Joe earlier, right? So we’re doubling it down on the positioning opportunities, whether the RFPs come out or not from the customer, from — which would lead to [ B&P ] investment on the SG&A side. So you’ll see we would expect that the next quarter’s results will be more reflective of that portfolio expansion.
