Tobey Sommer: Thanks. As you migrate the margins towards the industry average, it seems to me that there’s kind of a tension where you’re bidding on work that’s higher value in order to drive the margin higher and also trying to inject more value into lower margin work to see if you can keep the same margin or even encourage that hire. Are you having more success or less success on that higher value stuff sort of the newer work to the company where we’re trying to push the frontier out? Or on the lower margin work that you’re trying to defend or sort of inject with more value and distinction to drive the margin higher?
Prabu Natarajan: Great question. And maybe I’ll take first run at it and then Toni. So look, I think — I don’t think we have the luxury of focusing just on margin improvement out of the new business. And nor can we be sanguine about holding margins when we go through repeated recompete cycles. I think it’s a little bit of both. I think part of what we’ve done on the new business front is focus on the differentiators that allow us to generate the accretive top line growth that is necessary to keep the business moving forward in areas that are relevant to the future of SAIC. So to me, that’s the way we’re approaching it. I think, as we think about the recompete work, I think the focus there is how do we bring innovation while we’re on a period of performance right now in a program?
How do we deliver as a service while we are on a cost plus program? How do we effectively deliver solutions within the confines of a fixed price program by actively getting out labor cost and replacing with solution costs? So to me, there’s probably a couple of different ways we’re going at it. The other thing we are absolutely focused on doing is looking at our thresholds for recompete win rates. To make sure that we are identifying the right things we want to bid, making sure that we are adding value over the course of the period of performance. So we’re actually delivering higher operating margin rates in a recompete, but think of this as more solutions focused on what we have to deliver. But it’s hard to pick one or the other. I think companies have to do both.
And I think we’ve got a different approach for both, but we are focused on doing both.
Toni Townes-Whitley: And look, I fully agree on the recompete side, as Prabu spoke to very specific measures to ensure that margin is increasing on that — the business that we retain. If you will then tie in the investment we’re making on reskilling where labor is an element for a recompete, that labor has to bring increased value over time. Another element of why we are making some of the investments on the upskilling side. But I would suggest to you that our win rates might indicate that our new business, given where we are, it’s above industry standard that we are getting into the clip of being able to bid differentiated portfolio and win with new business. We’re going to spend a significant amount of time and the investments that we’ve made, ensuring that in our existing program business that we’re bringing more value on the ground in those existing contracts and bringing up the recompete side of that win rate.
Tobey Sommer: Thank you.
Prabu Natarajan: Thank you. Sure.
Operator: And your final question comes from the line of David Strauss with Barclays. Your line is open.
Josh Korn: Hi. Good morning. This is Josh Korn on for David. Thanks for taking the question. So I think you mentioned for sort of new verticals during the prepared remarks, you see border, which I don’t think has really been emphasized before, so I just wanted to ask like how you plan to differentiate in those markets going forward? Thanks.
Toni Townes-Whitley: Yes. Let me speak to them. We call them national imperatives. I believe there were five that were identified. You don’t think of them as an organizational construct, they are not. In fact, what they represent are the long-term efforts of our customer, our programmatic engagement with our customers, the imperatives for the country that the customers are working. What we are trying to do in our strategy is to ensure that when we build differentiation across our portfolio, and we do good bid selection in terms of how we want to grow our business that we’re driving towards outcomes in each of those imperatives. So for example, undersea dominance is one that speaks to our naval fleet and the undersea capabilities of the U.S., we have contracts in that space.
We are doing work in that space. We are differentiated. We want to continue to differentiate in that space and grow that type of work going forward. So they’re more directional for mid and long-range investments and how we engage and how we position with those customers that are driving towards those outcomes.
Josh Korn: Great. Thank you.
Toni Townes-Whitley: Yes. No worries, Josh.
Operator: This will conclude the question-and-answer session and today’s conference call. We thank you for joining. You may now disconnect your lines.
