“I’d like to point out that the team is executing a game plan to get BDS back to the high-single digit margins by the 2025, 2026 time frame.”

In context

“5B fixed price development program due to higher estimated manufacturing costs related to engineering changes, labor instability, and the resolution of supplier negotiations. As we closed the books at quarter end, we saw another 8 points of margin erosion driven by first a $315 million loss tied to customer considerations and higher estimated costs to deliver a highly innovative satellite constellation contract that we signed several years ago. And second, we had smaller, less material cost pressures across a couple programs totaling $136 million primarily driven by the MQ-25program. These are disappointing results in the quarter and year-to-date. This performance is below our expectations, and we acknowledge that we aren’t as far along in this recovery as we expected to be at this stage. I’d like to point out that the team is executing a game plan to get BDS back to the high-single digit margins by the 2025, 2026 time frame. As you can see on the right hand side of the slide, we’re driving lean manufacturing, program management rigor and cost productivity consistently across the division. We have invested in new training programs to accelerate performance on the factory floor, and we’ve deployed resources at our suppliers to support their recovery. Perhaps most importantly, we instituted much tighter underwriting standards. As you know, part of the challenge we’re dealing with are legacy contracts that we need to get out from under. Rest assured, we haven’t signed any fixed price development contracts nor intend to. These moves are all fundamental to accelerating the recovery by the 2025, 2026 time frame. We have detailed metrics and milestones to evaluate our performance and progress across the three areas t”