And Sealing Technologies’ fly-away kits can also be used for commercial applications. As far as criteria and meeting the right size, we’re going to keep our strict criteria, which greater than 10% topline growth and 10% margin expansion. And I’ll also just mention I.S. Engineers, they provide transportation engineering. And while that’s predominantly on our Critical Infrastructure side, some of the work they do there can also help our Engineered Systems Group on the Federal side of the house.
Tobey Sommer: Thank you. And then could you refresh us on what the impacts were on the — either the income statement or cash collections contract awards in the last government shutdown so we could know sort of what to look for in terms of potential impacts should one unfold over the next coming months?
Carey Smith: Yeah. So the last government shutdown, we were only impacted by one contract that was a shutdown that occurred late 2018, early 2019, and that was our FAA contract. So I would say it really depends on what is exempted from the shutdown process as they continue to go forward. My personal opinion, I expect that we’re going to continue to see continuing resolutions. The current CR ends November 17. We’ve learned how to deal with CRs. There’s been 47 of them between FY ’10 and FY ’22, those have lasted for a duration of 1 to 176 days or just less than six months. So we know how to deal with that very well. And the nice thing with the Parsons’ portfolio in a CR perspective is 50% of our portfolio is outside of the federal budget because we have the commercial business and the international business.
We also have very strong backlog at $8.8 billion, 59% of that is funded backlog. And we have $14 billion of contract wins that we’ve not yet reflected in bookings or backlog. So, I feel our portfolio is in very good shape to withstand the CR and remain optimistic that we will not have a shutdown.
Matt Ofilos: Yeah. And Tobey, specifically on the topline side, FAA was impacted by about $20 million back in ’19 during that shutdown, so just to give you kind of a directional. But importantly, the DoD was exempted at that point.
Tobey Sommer: Thank you very much.
Matt Ofilos: Thanks, Tobey.
Carey Smith: Thanks, Tobey.
Operator: [Operator Instructions] The next question comes from Andrew Wittmann with Baird. Your line is open. The next question comes from Andrew Wittmann with Baird. Your line is open. [Operator Instructions] The next question comes from Cai von Rumohr with TD Cowen. Your line is open.
Cai von Rumohr: Thank you very much, and terrific quarter, guys. Very impressive.
Carey Smith: Thank you, Cai.
Cai von Rumohr: So, what do you have baked into your guidance for a shutdown? I agree with you totally, CR is not going to be a big deal, but a shutdown and if it’s 45 days, what would happen to the FAA? And is there any incremental margin impact? Like if you lose $20 million of revenue, is the incremental margin 20%?
Carey Smith: Yes, I’ll start and then Matt can address the margin impact. So because of the type of services we provide, first, again, 50% of our portfolio will not be affected. But because of the type of services, we provide the alignment with the national defense strategy, everything going on in the world today, we remain optimistic that during a shutdown, most of our programs are going to continue. Just again, as an example, FAA being the only one that was impacted last 2019 shutdown. Matt, on the margin?
Matt Ofilos: I would say, Cai, specifically, if there were no shutdown, I think we would kind of trend toward the higher end of the guide. At the midpoint, we’ve got — the great news is, if you look year-over-year, our funded backlog is up about 13%. So, we’ve got really strong funding on our existing jobs. And so, we feel pretty good. But for FAA specifically, you can probably think about it as a 10%-ish and the majority of the work ranging in that 8% to 10%. So if you had a $20 million or $40 million, it would be $2 million to $4 million of EBITDA, I would say.
Cai von Rumohr: But I guess the issue is like, so if you can’t do the work, employees are there and presumably want to get paid. So, is the incremental margin higher just because I assume you have to pay their salaries, even though they’re not able to bill?
Matt Ofilos: Yeah, it’s kind of a mix, Cai. There’s a mix of furlough, there’s PTO, there’s modified time. So the team is really effective at working through those things, but I don’t suspect it will be a pure absorption of all the employee costs.
Carey Smith: The other thing that we have available is research and development. So we either use combination PTO or research and development.
Cai von Rumohr: Okay. Great answer. And then how is hiring? I mean, when you’re growing 20% two quarters, does that put any stress on your ability to hire folks and your ability to kind of control the growth?
Carey Smith: So both our hiring and retention are strong. Our retention year-over-year continues to improve. And hiring has been great, obviously, to be able to keep up with growth. I would say our human resources team as well as all of our four of our business units are laser-focused on both the hiring and the retention and doing an excellent job.
Matt Ofilos: Yes, I’d say, generally speaking, Cai, we’ve been investing in the support functions appropriately to support the growth.
Cai von Rumohr: Terrific. Thank you so much.
Matt Ofilos: Thank you, Cai.
Operator: [Operator Instructions] The next question comes from Louie DiPalma with William Blair. Your line is open.
Louie Dipalma: Carey, Matt and Dave, good morning.
