Defense contractors have a talent problem, and it goes well beyond salary.
The National Defense Industrial Association has reported that 82% of companies in the defense industrial base struggle to locate qualified STEM workers.
The typical defense engineering hire needs not just a degree and domain expertise but an active security clearance and direct experience working inside government programs. That combination is rare.
Margarita Howard, founder and CEO of HX5, a defense contractor with roughly 1,000 employees operating across 20 states and 70 government locations, calls these people “purple unicorns” — professionals who combine technical credentials, an active clearance, and hands-on familiarity with government program operations.
“Experience in their respective fields, while supporting these agencies’ respective programs and missions,” Howard says, “is very different from experience gained from working in the commercial world.”
A Shrinking Pool of Cleared Engineers
Roughly 2 million Americans currently hold an active federal security clearance — less than 0.6% of the country’s population. Competition for them is intensifying. A 2025 analysis from CCS Global Tech found that demand for cleared experts in cybersecurity, data analytics, and intelligence operations grew 12% year over year, while the clearance process itself takes anywhere from 8 to 24 months to complete.
An engineer with an active security clearance can often command a compensation premium. Security clearances generate an estimated average 10% to 20% salary premium, with higher clearances producing the largest increases. In a tight hiring market, top candidates also move quickly: aerospace-defense recruiters have cited 10 to 15 days as a typical window for top talent to receive competing offers
Add to that a looming generational transition: 25% of employees in aerospace and defense organizations are 56 or older, according to PwC’s 2024 A&D workforce study. When a 30-year veteran systems engineer departs a program, the vacancy is not simply a headcount problem. Institutional knowledge — the kind built through years of working inside specific DoD or NASA systems — leaves with them, and it cannot be replicated quickly.
Larger primes like Lockheed Martin, Raytheon, and Northrop Grumman have deeper recruiting infrastructure and the brand recognition to attract graduates directly out of top engineering programs. Mid-sized contractors work with fewer resources and less name pull. HX5 sits in that tier, competing for the same narrow pool of cleared, experienced engineers as firms with far more employees and prime contract capacity.
Tapping the Veteran Pipeline
Margarita Howard’s answer draws on her own background. She is a service-disabled Air Force veteran who founded HX5 in 2004 after working on major federal contracts, including implementation of the Tricare military health care program. That experience gave her a ground-level view of how contractors and government agencies actually collaborate, and it shaped her view of who belongs at HX5.
More than 30% of HX5’s workforce is made up of veterans. By contrast, veterans make up only a small share of the broader U.S. civilian workforce, about 7% of the civilian noninstitutional population age 18 and over, according to BLS data.
Veterans bring something specific to defense contracting: many already hold clearances, they have real operational familiarity with military and government programs, and they understand the culture of federal work in ways that take years to acquire through other routes. For HX5’s contracts with the Department of Defense and NASA, that background is often the difference between a capable engineer and one who can contribute from day one.
Since 2021, HX5 has participated in the U.S. Chamber of Commerce Foundation’s Hiring Our Heroes Corporate Fellowship Program, a DoD SkillBridge initiative that places transitioning service members with host companies for 12-week fellowships. The program reports an 80% hire rate nationally, with fellows landing positions at an average starting salary of $70,000. HX5 has brought in eight fellows since joining, two per year. The firm received the 2025 HIRE Vets Gold Medallion Award for its veteran recruitment and retention practices alongside that track record.
The veteran pipeline is not a workaround for HX5. For a firm whose contracts require the precise overlap of clearance and government program experience, it is one of the most direct routes to candidates who can actually do the job.
Adapting to a New Generation of Engineers
Veterans alone cannot meet HX5’s hiring needs as it grows. The broader labor pool is getting younger: Generation Z is projected to make up about 30% of the U.S. workforce by 2030, according to the National Association of Colleges and Employers.
A Deloitte survey found that younger workers tend to place greater weight on work-life balance, learning and development, meaningful work, and well-being when choosing an employer. For defense employers, that creates a real recruiting challenge. The Defense Department has said it must reform its hiring approach to resonate with younger applicants, while McKinsey has warned that aerospace and defense is shifting from an older to a younger workforce and faces intense competition for talent.
Margarita Howard has adjusted where she can. Where security protocols allow, HX5 now offers hybrid work arrangements. The company has updated its internal communication tools to include instant messaging and interactive project management platforms.
“We’ve modernized some of our internal communication processes to include those platforms that we believe that [younger employees] are comfortable in,” Howardsaid. But she has been clear that environmental changes are secondary to a different pitch: the work itself.
“You have to get up in the morning and be excited about the particular program you’re supporting,” she continued. “Let’s get to the moon, let’s accomplish this mission overseas.”
The programs HX5 staffs — weapons systems engineering, aeronautical research, NASA mission support — offer something that most commercial tech roles cannot: a direct connection to national defense and space exploration that is observable and concrete. For a portion of younger engineers who want their work to carry consequence beyond the next product cycle, that argument has traction.
Keeping Who You Find
Recruitment gets engineers in the door. Retention keeps the expertise from walking out with them. Howard attributes much of HX5’s low turnover to deliberate choices about management. The result, by her account, is a workforce where many employees have remained with HX5 for a decade or more, notable in a sector where contract changes routinely prompt staff departures.
Whether any firm’s retention practices are sufficient to offset a structural shortage is a separate question. Engineering degree production has increased over the past decade, according to the National Science Foundation’s Science & Engineering Indicators, but the pipeline lags government demand for cleared, experienced personnel, and no hybrid schedule resolves a clearance backlog that can stretch two years.
What HX5 has built is a recruiting model calibrated to the constraints it actually faces: drawing from the veteran talent pool where credential overlap is highest, adapting the work environment at the margins to stay competitive with commercial employers, and relying on mission as a recruitment argument.
