BOSTON – June 10, 2025 – Global demand for defense and aerospace capabilities is rising and outpacing supply—fueled by geopolitical uncertainty, rising military budgets, and demand for air travel. At the same time, programs continue to struggle to meet schedule and cost commitments. New analysis from Bain & Company reveals a different approach to aerospace and defense program performance could dramatically reduce cost overruns and delivery times, driving upside to companies’ bottom lines and delivering much needed capability to the user.

Countries around the world are increasing their defense budgets. In the US, defense contractors’ foreign military sales surpassed $115 billion in 2024, more than triple the level of 2021. At the same time, major US defense program cost overruns have surged to almost $46 billion while delivery timelines have grown from eight years to 11 years.

With a new executive order now requiring the US Department of Defense to scrutinize major programs that are 15% or more behind schedule or over budget, defense contractors must now act quickly to improve their efficiency and doing so would reap material benefits.

“We are not talking about traditional performance improvement efforts that tend to optimize existing inefficient processes and rarely remove unnecessary work - those usually produce single-digit, short-lived gains,” said Erich Fischer, a partner from Bain & Company’s Aerospace & Defense sector. “The biggest constraints to improving performance lie within the seams between functions, suppliers, and programs. Addressing these issues could reduce unit costs by up to 30% and cut delivery times by up to 50%.”

The most successful companies take a program-led, system-wide approach to improve program performance characterized by four principles:

1. Lead with the program instead of the function. They take a system-level view (cross-function, cross-site) to resolve constraints at the seams, and address the root causes of costs and inefficiency.
2. Use a zero-base strategy to achieve breakthrough improvements. Winning companies apply a clean-sheet strategy based on what processes or work are truly needed vs. optimizing current, inefficient processes and procedures that create unnecessary work delays and costs.
3. Use rigorous analytics to distinguish the root causes of problems from the symptoms. Hard data and deep analytics are vital to arming the leadership team with irrefutable data and analysis to overcome entrenched resistance to change from the C-suite to the shop floor.
4. Work shoulder-to-shoulder with the front line to build trust, buy-in, and quick wins for confidence. Working deep within the organization with the teams responsible for execution helps changes stick. Top-down mandates for improvement are rarely effective.

Widespread adoption of these principles across the defense industrial base could dramatically improve deployed capabilities, accelerate time-to-mission by years, free up tens of billions of dollars to reinvest in capacity, or repurpose to more urgent needs while at the same time improving company win rates and increasing margins significantly.

Media contacts:

Ann Lee (Singapore) — ann.lee@bain.com

Gary Duncan (London) — gary.duncan@bain.com

Dan Pinkney (Boston) — dan.pinkney@bain.com

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