PAE Incorporated

Good morning, and thank you for participating in PAE's Fourth Quarter 2020 Earnings Announcement. We hope you've had an opportunity to read the press release we issued earlier this morning.

We have also provided presentation slides on the Investor Relations section of our website. Joining me today to discuss our business and financial results are John Heller, PAE's President and Chief Executive Officer; and Charlie Peiffer, our Chief Financial Officer.

Following our prepared remarks, we will close with a question-and-answer session. Management may make forward-looking statements during the call regarding future events, anticipated future trends and the anticipated future performance of the company.

We caution you that such statements are not guarantees of future performance and involve risk and uncertainties that are difficult to predict. Actual results may differ materially from those projected in the forward-looking statements due to a variety of factors.

These factors are described in our SEC filings. Please refer to our earnings press release for PAE's complete forward-looking statement disclosure.

We do not undertake any obligation to update forward-looking statements. Management will also discuss non-GAAP financial measures during this call, and we remind you that these non-GAAP financial measures are not a substitute for their comparable GAAP measures.

Reconciliations of these non-GAAP financial measures to the comparable GAAP measures are contained in the press release and investor presentation issued earlier today. And now I will turn the call over to John Heller.

Thank you all for joining us this morning for our Fourth Quarter Earnings Conference Call. I'd like to start by thanking PAE's workforce, including our newest employees who've joined us through our recent acquisitions of CENTRA and Metis.

We all know what a challenging year this has been. But amidst this backdrop, we've been successful in turning the myriad of challenges we faced into opportunity.

We have served on the front lines of COVID-19 relief efforts while maintaining daily operations and successfully executing several strategic initiatives, including our debt refinancing and 2 acquisitions. Our teams consistently rose to the challenge and delivered exemplary results.

Thank you for your dedication and steadfast resolve to deliver. For the agenda for today's call, I'll start with an overview of the key fundamentals of the business and the highlights of the fourth quarter.

And I'll conclude my remarks with a discussion on federal procurement trends, PAE's competitive positioning and our perspective on the federal government's top priorities and their impact on PAE. I'm excited to start with the momentum and trajectory of our business.

This is a watershed moment for PAE coming off a strong year and in a position of strength to take the next step in our evolution of transitioning our portfolio into higher-value market areas and expanding margins. Looking back on 2020, we did everything we set out to do.

We increased margins 60 basis points. We refinanced our debt and completed 2 strategic and accretive acquisitions, all the while navigating the pandemic.

We have built a strong foundation, and I'm extremely excited about our prospects for 2021 and beyond. Moving to additional accomplishments.

First, we continued to execute against our strategy of growing our competitive IDIQ portfolio, both organically and through acquisitions. We've added IDIQ contracts to our portfolio with a ceiling value of more than $60 billion.

In the fourth quarter and throughout the year, we have consistently won positions on attractive IDIQ vehicles: AFICA Air Force, GTACS II, the recent GSS 2.0 award and access to RS 3 and SIA 3 through the acquisitions of CENTRA and Metis, to name a few. We believe these contract vehicles offer tremendous growth potential with an efficient procurement process.

When we win seats on multiple-award IDIQ contracts, we did not take any portion of the award into backlog. However, these vehicles have provided us a viable path to drive meaningful backlog expansion.

We've also been successful in our execution of expanding profit margins. When we provided guidance in March of 2020, we set out to expand our adjusted EBITDA margin by 20 basis points over 2019 results.

Through a concerted effort to drive our pipeline towards higher-margin bid opportunities, improved operational program performance and through successfully navigating the impacts of the pandemic, we delivered a 60 basis point improvement over the prior year. Furthermore, on the strategic initiatives front, we did exactly what we committed to do.

We refinanced our debt after prudently evaluating the return of the credit markets and executed the strategic acquisitions of CENTRA Technologies and Metis Solutions. The integration efforts for both acquisitions are on track, and we expect to be essentially completely integrated by the fourth quarter of 2021.

The customer-facing integration is largely complete, and we have expanded our NSS business segment's bid pipeline to include opportunities related to both acquisitions. Most importantly, our business development teams are hard at work identifying and developing capture strategies to drive revenue synergies, which is the core objective of these acquisitions.

The combination with CENTRA and Metis enables a key component of our strategy of positioning PAE as a leader in intelligent services and National Security Solutions. In combination with CENTRA and Metis, we now have widened our capabilities, customer access and contract vehicles across the intelligence and national security communities and significantly increased our addressable market by about $45 billion.

Having scaled up this side of our business, we're now positioned to compete effectively for the largest and most attractive opportunities in the intelligence analysis, communications and training solutions market areas. Next, I'd like to take a moment to discuss the business in the context of core capability focus areas.

In addition to reporting our results on the basis of our Global Mission Services and National Security Solutions operating segments, in our earnings presentation, we break down our financial profile across our core offerings to provide an expanded view of how we go to market and the strategic focus across these offerings. We are looking at the business across 5 core capabilities.

Infrastructure and engineering, mission readiness, business solutions, test and training solutions and intelligence and technology services. Infrastructure and engineering is focused on government facilities' operations, management and engineering services.

Mission readiness provides global logistics support as well as aircraft and vehicle maintenance support. We typically see long-enduring cost-plus contracts across these 2 business areas.

And cost plays a larger role in bid decisions. These 2 core capability areas represent the pieces of the portfolio that we want to protect, seek modest growth and extend into adjacent market areas, for example, integrated health services and smart phase-in; as well as additional geographic regions, notably the Asia-Pacific region.

The business solutions area, which primarily targets FedCiv and DoD customers, is focused on a variety of outsourced business process solutions, including biometric processing, data analytics and professional services. Contracts are typically 5 years in duration and primarily fixed-price and time-immaterial.

Immigration, financial management and various citizen services are key focused areas in terms of expanding our footprint. The test and training solutions capability area is primarily Department of Defense and national security-related, with several FedCiv customers also mixed in.

The offerings include training solutions and test and range operations. One of several strategic focus areas is further expansion into modeling and simulation-based training and test environments.

Lastly, the intelligence and technology services area comprises classified operations, analytics, communications and emerging technology programs targeting the intel community and other national security customers. Growth in these latter 3 business areas will be driven by using technology to deliver the best solution for our customers and less driven by price.

A great example being Metis' counterthreat finance programs, helping national security customers track, analyze and assess adversarial money flows and the associated risk profile. These 3 capability areas represent about 50% of our revenue this year and have the potential to grow to at least 60% of our business over the next 3 years and an even greater percentage if accelerated with M&A.

They also represent the portions of the business where we'll pursue the white space opportunities enabled by the CENTRA and Metis acquisitions. Moreover, we expect these latter 3 areas will play a prominent role in our strategy of expanding margins toward the 8% long-range goal.

Moving on to fourth quarter results. I am pleased to report we generated revenue and adjusted EBITDA at the high end of our revised guidance.

From an awards perspective, the fourth quarter has been a historically slower quarter for PAE, but we maintained a solid 1.2x book-to-bill on a trailing 12-month basis. Contract award win rates were strong.

The recompeted new business win rates were 93% and 35%, respectively, both of which were higher than our historical averages. However, these outcomes were on lower-than-expected award volume as several award decisions were pushed to the right, including due to protest, and will likely be adjudicated in 2021.

Moving to our awards activity for the quarter. We had several notable awards that provide the foundation for strong future growth and profitability.

Note, about 80% of fourth quarter single awards were for new business, and we had several significant IDIQ contract awards. One of our big strategic accomplishments of 2020 was winning a seat on the Global Support Strategy 2.0, or GSS IDIQ contract vehicle.

This is a 10-year, $3.3 billion Department of State contract providing integrated business process solutions to assist with the worldwide processing of nonimmigrant and immigrant visa applications. PAE, 1 of 3 awardees, will compete for task orders by leveraging the company's strengths in biometric collection solutions, secure data processing and integrated technology services.

We expect to see task order award activity in the second half of 2021 and anticipate this contract being a strong contributor to revenue and adjusted EBITDA beginning in 2022. As we have discussed since becoming a public company last year, we are making great progress bidding and winning attractive, complex programs across our entire business.

To this end, our GMS segment was awarded the electronic warfare operations, training and infrastructure maintenance, or EWOTIM, a single-award IDIQ contract with a ceiling value of about $100 million, to provide on-site program management services for electronic warfare training missions throughout Europe and Africa. This win is another example of our concerted focus to move the business up the services value chain.

Additionally, our NSS segment was awarded a seat on the U.S. Department of Justice MEGA V automated litigation support services IDIQ.

Under this contract, we support Department of Justice attorneys throughout the course of litigation with a wide range of professional services. Under the predecessor contract, we generated an annual revenue run rate of over $50 million, which we expect to expand on MEGA V.

Next, I'll provide a brief update on the $1.3 billion CBP award. As we previously discussed, we were awarded the 10-year $1.3 billion contract with the U.S.

Customs and Border Protection in May 2020. The award was subsequently protested and CBP reevaluated the award decision.

In January, CBP awarded the contract to a PAE competitor. We have filed a protest with the Government Accountability Office and will provide an update next quarter.

Next, I'll provide a summary of the bid pipeline. At the end of the quarter, we had about $7 billion in awards under evaluation, of which about $3 billion is new business and approximately $4 billion are recompete awards.

We also have an incremental $1 billion in the proposal writing process, the majority of which is new business. In GMS, we are awaiting about $6 billion in awards, which includes the protested $1.3 billion CBP contract.

Approximately $4 billion are recompete awards and about $2 billion are new business opportunities. In our NSS segment, we are awaiting more than $1 billion in awards, the majority of which are new business opportunities.

Note that the task orders we will bid under the GSS contract are not included in the bids under evaluation or in the proposal writing process. Moreover, our qualified pipeline has grown to about $39 billion, driven by the CENTRA and Metis acquisitions and organic growth initiatives.

Before I pass things on to Charlie, I'll take a moment to provide my perspectives on the macro environment, procurement trends, competitive position and the federal government's priorities. Despite the impacts created by the pandemic and the change in administration, we have not seen any material impact to the daily functioning of the government.

The federal government continues to rely on contractors to perform mission-essential services and agencies continue to award contracts on a best-value basis, incorporating both solutioning and price into their award decisions. And from a competition standpoint, it has remained consistent and rational.

PAE is uniquely positioned given our strong customer diversification. In our 2021 revenue guidance, DoD, spread amongst Army, Navy and the Air Force, represents only 30% of revenue.

Intelligence is now 20% of revenue. And federal civilian represents the remaining 50% of revenue, with the State Department representing 19% of revenue.

Next, I'll address our customer sets and competitive positioning. The U.S.

government and our allied nations continue to face heightened geopolitical risk, China, Russia, Iran and nation-state activity. In the last month, we have seen continued turmoil and conflict in Syria, the recent kidnappings in Africa and the reevaluation of the U.S.

military core structure around the globe, all of which demonstrates the interconnection between a national defense strategy and foreign policy initiatives supported by the State Department that the Biden administration is fostering. With our rich 65-plus year history and our Department of State and Department of Defense Services Legacy, we are very well positioned with many of the Biden administration priorities.

We are encouraged by the new administration's immediate focus on foreign policy, diplomacy and immigration initiatives. These are areas well aligned with PAE's core strengths, as evidenced by our global reach, PAE's enduring embassy work, humanitarian and development programs and our recent award on the State Department's Global Support Strategy IDIQ supporting the processing of these applications.

As the state department and other federal agencies are called upon to drive a more visible and leading role in global issues, PAE is well positioned to benefit from this renewed focus. With that, I'll hand the call over to Charlie for an overview of our fourth quarter and full year 2020 financial results and 2021 financial guidance.

Thanks, John. Good morning, and thanks to everyone for joining us on the call.

I'll start by providing an overview of our fourth quarter and full year 2020 results, followed by a discussion of 2021 guidance. Looking at the big picture, there are 3 important takeaways.

First, our strategy of expanding the business towards high-margin contracts is working, as evidenced by our 60-basis point improvement in margins in 2020. Second, our agility and diverse set of capabilities paid off by quickly responding to the COVID-19 pandemic and winning contracts to provide COVID relief and testing.

Not only did those COVID relief opportunities yield strong revenue and margins, but they created past performance to pursue health services work going forward. And third, we put ourselves in a position of strength for the future with the acquisitions and integrations of CENTRA and Metis that further expand our capabilities, customer presence and contract vehicles.

Moving to the results, I'll start first with revenue. We delivered a record quarter of revenue, $749 million for PAE on a stand-alone basis and $788 million including the contributions from CENTRA and Metis.

The organic year-over-year revenue growth of 7.4% was driven by increases in contract volume, nonlabor revenue and new business opportunities despite the impact from the pandemic. This increase was partially offset by a $62 million negative impact from COVID-19, of which nearly 70% was nonlabor-related.

Full year revenue, excluding the acquisitions of approximately $2.7 billion, was at the high end of expectations, driven by the strong fourth quarter. Fourth quarter adjusted EBITDA margins were 5.5% on a stand-alone basis and 5.6% including the contributions from CENTRA and Metis, reflecting a higher mix of nonlabor revenue in the quarter.

This performance was at the high end of expectations. We experienced strong program performance, especially in our NSS segment, which was a key factor in driving fourth quarter results.

For the full year, we delivered $178 million in adjusted EBITDA, excluding the contributions from the acquisitions. This, too, was at the high end of expectations, and with margins of 6.6%, represents a 60 basis point improvement over 2019 and a -- 40 basis point improvement over our original 2020 guidance.

Cash provided by operating activities was about $9 million for the quarter. This was lower than expected but driven entirely by the timing of certain collections.

We experienced about $15 million in accounts receivable that we anticipated collecting in December but were delayed until early January. Consequently, our free cash flow for the year was $97 million, which was $13 million below expectations.

The reduction of free cash flow was solely a timing issue and we have anticipated this $15 million shift in our 2021 cash flow guidance. Full year cash flow was impacted by 2 nonrecurring items.

First, we benefited from $37 million of CARES Act deferred payroll taxes, which will be paid back ratably in 2021 and 2022. Second, we incurred $27 million in M&A and integration expenses in 2020 and currently expect to only incur approximately $7 million of integration expense in 2021.

Moving next to our segment results. GMS fourth quarter revenue grew 11% over the period due to increases in contract value, COVID-19 relief opportunities and nonlabor revenue.

This growth was partially offset by a nearly $56 million negative impact from COVID-19, of which more than 70% was nonlabor-related. GMS fourth quarter adjusted operating income was $28 million for the quarter at a margin of 4.8%.

Margins declined relative to last year due to higher selling, general and administrative expenses and a higher mix of nonlabor revenue. For the full year, GMS revenue of $2.1 billion was comparable to the prior year despite a $147 million negative impact from COVID-19.

GMS was successful in offsetting the majority of the COVID-19 impact with increases in contract volume, new business revenue and COVID relief revenue opportunities. GMS delivered $129 million in full year adjusted operating income at a margin of 6.2%, representing a 20-basis point improvement over 2019.

The improvement in dollars and margin despite lower revenue year-over-year was driven by strong program performance and a lower mix of nonlabor revenue for the year. Turning to the NSS segment.

We generated $194 million of sales, or $155 million excluding the acquisitions for the quarter. This represented a modest reduction compared to last year and is primarily attributable to a $7 million COVID-19 negative impact.

Fourth quarter adjusted operating income and margins improved to $13 million and 8.4%, respectively, pre acquisition; and about $16 million and 8.1% including the acquisitions. NSS delivered a 600 basis point improvement over the prior period driven by higher revenue volume and improved program performance.

For the full year, NSS delivered $634 million in revenue or $595 million before the acquisitions. Pre acquisitions revenue was negatively impacted by $40 million due to COVID-19.

As we have previously discussed, NSS launched 3 small business set-aside contracts in the fourth quarter of 2019. We made a decision to not bid on a fourth contract in 2020 due to its low margins.

Excluding these 4 contracts, NSS grew 13% organically year-over-year. Approximately 50% of the growth was in the intelligence and technology services capability area and the remaining 50% was predominantly in the test and training area.

With these losses behind us, we are poised to show strong growth in 2021 and beyond. NSS delivered $52 million in adjusted operating income at an 8.1% margin or $49 million at an 8.2% margin, excluding the acquisitions.

This represents an approximate 200 basis point improvement over the prior year, driven by strong program performance. Moving next to the integration efforts on CENTRA and Metis.

As John mentioned in his remarks, the integration for both acquisitions are on track. Customer-facing activities will be fully integrated by the end of the current quarter, and we expect to be largely integrated by the fourth quarter of 2021.

We expect to drive $4 million in cost synergies in 2021 and expect to generate approximately $7 million of full run rate cost synergies by 2022. Now turning to 2021 financial guidance.

We expect revenue in the range of $3.05 billion to $3.15 billion with a midpoint of $3.1 billion. We expect adjusted EBITDA in the range of $205 million to $215 million, representing a 20 basis point improvement at the midpoint over 2020.

For 2021, we are guiding to cash flow from operations instead of free cash flow, a change to better align with our peer group and a simpler process that will be -- that will tie to the statement of cash flows. We expect at least $120 million in cash flow from operations, which incorporates the $15 million of collected receivables that were originally anticipated in December of 2020.

To tie the cash flow guidance back to free cash flow, we expect approximately $5 million in CapEx. Guidance is based on the assumption that we will experience impacts of COVID through the first half of 2021.

We are assuming the COVID-19 impact in the first half of 2021 will be comparable to the second half of 2020 COVID impact. The revenue growth implies low single-digit growth in GMS and low double growth -- low double-digit growth in NSS.

We anticipate revenue to be back-end-loaded, driven by new business opportunities, a reduced impact from COVID-19 and a second half increase in nonlabor revenue. We expect revenue to increase sequentially, with first quarter revenue to be below the fourth quarter 2020 level.

This is in line with historical trends as we typically experience a higher weighting in second half revenue due to increases in nonlabor revenue and contract volume driven by end-of-year government funding and the availability of contract funding with the start of a new fiscal year for the government. At the midpoint of revenue guidance, approximately 85% of our guidance is in backlog, approximately 7% is from recompete contracts and about 8% is from new business awards.

With regard to adjusted EBITDA guidance, we expect a sequential increase in dollars consistent with revenue growth throughout the year. Other key assumptions for our 2021 guidance are available in our earnings presentation on the Investors section of our website.

With that, operator, let's open the call for questions.

Maybe we'll start with -- where Charlie just left off, the 20 basis point margin expansion that you're looking for in fiscal '21. Is that -- to talk a little bit further, that's driven by the mix, program performance, SG&A?

A little bit more color there.

Sure. No problem.

If you look at the drivers, first of all, the organic revenue growth that we're seeing in NSS, that mix is -- represents about 50% of that improvement. And the balance of the other 50% is split between performance on existing contracts as well as what I'll call expense management.

Obviously, we're not growing our SG&A and our expenses in line with the top line growth, that is also providing some margin expansion from that as well.

Got it. That's helpful.

So in terms of CENTRA and Metis, it sounds like most of the year is going to be focused on the integration of the 2. You've talked a lot about the white space growth opportunities there.

Is the assumption there that most of that white space opportunity is really kind of fiscal '22 and beyond opportunity?

Well, I think it's a real combination. I think there's -- and Chris, this is John.

I would say we do believe the IDIQs that both of them bring to the table represent an opportunity in '21 to see expansion of the pipeline, bidding work throughout the year. And with IDIQ task orders, you can have a much faster turnaround.

So I think there is a definite expectation that we can see some task order volume hit in '21. I think -- and that -- when we call white space, there's white space there as well, because when you think of either of these companies bidding task orders that could come out on their contracts that are in the hundreds of millions, they might have been too large in scale or they may not have had the overall capability or past performance to bid on a number of those task orders, which now, combining PAE with Metis and CENTRA, we have the ability to bid more.

So there's white space on the IDIQs. But then the other factor, and Charlie mentioned this, is about how we've integrated the front end of the business to where we're really operating as one team, but obviously a team with much more past performance.

And we've brought on some great people as a result of the acquisition that have experience with different customers, and combining that capability allows us to identify single-award opportunities. Most of those, you would expect, would be more of a '22, '23, just given the time line of acquisition for that.

But we've already done really well at identifying additional pipeline. Charlie mentioned the pipeline growth that we've had.

So we're excited about what that's already bringing to the table and the prospects for the future.

Got it. Extremely helpful.

Last one for me. Are there any additional small business set-asides on the horizon that you might -- may not be able to bid on, you might have to walk away from?

Right now, when you look at small business set-asides with the acquisitions we just made, there aren't any headwinds like that, which is what also interested us in those acquisitions. So Chris, there isn't anything like that, for the foreseeable future, anyway.

John, Charlie, just wanted to touch on revenue here for a moment, sort of unpack what's buried within it. It looks like it's about 14% at the midpoint of the guide.

What does that 14% look like on an organic basis? And just how much Metis and CENTRA revenue is embedded in the $3.05 billion to $3.15 billion range for the year?

So Matt, if you look at the guidance, our core business in GMS, we're expecting low single-digit growth. In the case of our NSS core, pre acquisition, we're looking at low double-digit growth consistent with what we just covered for 2020.

And then similar to what we announced when we completed the 2 acquisition transactions, we expect low double-digit growth coming from the 2 acquisitions as well.

Got it. And then just for the COVID-19 impact, I think 2020 looked like it was about $125 million for the year.

Is that a net number that accounts for any sort of COVID-19 response revenue? And then maybe just a little bit of color on how you're thinking about it into 2021.

I know you mentioned during your prepared remarks that it was front-end loaded, but just any sort of cadence or overall expectation for that level.

Yes. When we look at overall COVID headwinds, $187 million gross, with the lion's share of that coming from GMS just because of the nature of the business with higher nonlabor volume.

And then the headwinds were offset by the, what I'll call, COVID-19 response revenue, which was predominantly in GMS as well. And if we were to net that out, we were roughly, net, around $80 million to $85 million of net negative impact once you netted out about $100 million or so of COVID-related revenue for the year.

Okay. Got it.

And then I just want to touch on awards and bookings here for a moment as well. Did you guys -- I know you mentioned you didn't see any sort of impact from, I guess, the overall government activity on the quarter.

But was the 0.7x book-to-bill consistent with your expectation? And then how are you thinking about book-to-bill trends into 2021?

Is there a target that you need to reach in order to sort of achieve the high end versus the low end of your revenue range? Or what do you actually need to do in order to push towards the upper end?

Yes. I would say just, first of all, I'll talk on kind of the trends.

We definitely saw a lower volume from an expectation standpoint of actual awards in 2020. So some of that is carried over into 2021.

The effects of COVID, I think, have been a big part of that, just the impact on the ability for acquisition teams to collaborate and get things accomplished, A. B, the fact that any contract that involved travel, so individuals that had to travel across the U.S.

or outside of the U.S. in particular, the government slowed those acquisitions down because to do a contract transition that required personnel to travel and kind of transition a contract that was overseas or had significant travel in the United States, that was severely impacted by the inability of people to travel.

The government recognized that and held back on certain awards that we saw -- that we expected in 2020. So as -- I would think that even in the first quarter, first half of 2021, with COVID still having an impact on the overall workplace and the ability to travel sort of residual there.

But we're expecting that, as the vaccine is mostly distributed, we're hearing about military bases opening back up, government offices returning to normal, I think we'll probably get back to a regular pace of activity by the second half of the year. From a book-to-bill standpoint, expectations for 2021, Charlie, I don't know if you've got a factor there.

Yes, no problem. So Matt, the book-to-bill for a total year basis should be around 1.5x.

It could be slightly higher than that, but it would be in that range to support the guidance that we have provided.

Congrats on solid results and a good guide. Just going back to the bid pipeline.

I understand IDIQs are not imputed, if I'm not mistaken. But I was just wondering if you could help us just quantify, how much task orders do you have in the proposal phase?

Or how do we think about the potential for task orders on an annualized basis this year? And maybe any color going forward as well.

Yes. First of all, just in terms of what we have in proposal today is around $1.1 billion, which is pretty consistent.

A lot of that is task order-oriented. So those are quick-turnaround, meaning that we'll see a lot of those bids go in shortly.

And because of the expansion of IDIQs, we probably anticipate a more steady volume. Whereas in the past, we would see spikes in volume and then it would drop back off when you're bidding $200 million, $300 million, $400 million, $500 million bids, versus, say, a higher volume of smaller opportunities.

We also expect in the back half of the year, the GSS contract that we won in the fourth quarter, that task order volume will start to come out. And that's a pretty significant number.

But overall, our expectation from both businesses is with a pretty healthy bid pipeline for the year that would exceed what we saw last year. So last year was in that $6 billion to $7 billion bid.

So this year, we're expecting a higher volume, just based on timing, of what we see in our pipeline.

That's great. That's very helpful color.

And maybe just -- I was wondering if you could comment on some of the contracts that are coming up for renewal this year, in particular, the 2 Iraq contracts, both OMSS and BLISS as well as the AFRICAP. Any color on when should we -- how should we think about the renewal for those contracts?

So if you look at our recompetes, OMSS and BLISS, based on what we hear from the customer, we don't expect that to be awarded until 2022. So Ashish, that's going to move to the right.

As far as other contracts, from an award standpoint in 2021, as we highlighted, we have about 7% of the volume that we have in 2021 guidance is related to recompetes. It's the resolution CBP.

Johnson Space Center is a contract that we expect to be awarded in late 2021. And then we have decisions on Pax River as well as AUTEC.

They are the significant drivers. And then we do have some of the recompete activity on MEGA.

John highlighted that we won a seat on MEGA V. So those task orders will be recompeted in 2021, as well as the new task orders will be coming up for us to bid on, which is the primary driver for some of the growth that we see coming out of '21 on the MEGA contract for us.

But those are the major drivers for recompetes in...

And AFRICAP, you mentioned AFRICAP, and that -- I mean, we would just expect a normal task order season on AFRICAP in 2021, as we've seen in the decades in the past. So there's nothing out of the ordinary expected there.

And when they awarded under the new contract, well, I think it was 2 years ago, they were awarding a contract for a period of performance that were more in the 5-year arrangement. In the past, it was 3.

So you're going to see a slightly different profile on AFRICAP now, which is different than what you've seen in the past just because they have contracts with longer period of performance.

Just looking at the strategic goals breakdown chart here, where do you think is the most significant change in that model over the last 6 months? And then as we look forward maybe 3 years, how do you think this is going to change?

And you're talking about the strategic growth areas?

Yes, I'm looking at intelligence, infrastructure, mission readiness, business solutions.

Yes. Yes.

And what we're expecting, just based on the investments we're making, the pipeline that we're pursuing, is right now you look at the business solutions, test and training solutions and intelligence and technology services representing about 50% of revenue, growing organically to closer to 60% over the next few years. We really, with the Metis and CENTRA acquisitions, see momentum in the intelligence and technology services.

Our GSS award can really put some momentum behind the business solutions and training. ETSC and other range work, [Knight] and other contracts that we were awarded will provide continued momentum in the test and training solutions area.

So we feel strongly that these 3 areas have really come together strategically well for us in terms of the capabilities and, with the last 2 acquisitions, should continue to drive good growth at a higher rate than the infrastructure and engineering and mission readiness, although we still have a great pipeline there as well. Our market positions are very strong in those areas, and we continue to expect to win our fair share in those areas as well.

We just expect a lower growth rate as compared to the other 3.

Right. And then, I mean, I guess, kind of relatedly, I mean, if we do see some funding shifts back to the State Department, I know you talked about the biometric and visa opportunities.

But are there any other areas where you think we could see upside? Or maybe any holes in M&A which you want to fill in that area?

Well, we would expect that contracts like AFRICAP will -- where the U.S. government identifies key regions of the world that will become a priority for engagement by the U.S.

government, we have GATA and ICITAP are 2 other contracts. ICITAP was awarded last year, that Justice Department contract.

But obviously, we'll link with the State Department in terms of identifying areas of the world where the U.S. government wants to engage and that spending will follow.

So from an acquisition standpoint, we really do feel like we have a great foothold across the different capability areas in support of the State Department. Obviously, our relationships there are strong.

So we really don't see a need to leverage acquisition to expand. However, USAID is an area that we have pushed into over the last couple of years through the acquisition of Macfadden.

We do see significant opportunities for growth that fits PAE very well. It's not an area that we have done a significant amount of business in, in the past, so we think it represents great white space for growth.

But we -- again, we don't think we need M&A to allow us to achieve our organic growth goals.

Thanks, everyone, for joining us this morning and for your continued interest in PAE. If you have any questions, please don't hesitate to give me a call.

Thanks a lot, and have a great day.