Lockheed: Kubasik Promotion Tied To Gates Goals

When Secretary of Defense Robert Gates visited the Texas plant where Lockheed Martin plans to assemble the F-35 joint strike fighter on August 31, he gave a big boost to the company’s most important program. Gates said the aircraft was essential to the nation’s future security, and that the development program was progressing well. But he also repeated a refrain heard frequently from the Pentagon since President Obama took office: defense contractors must execute programs on time, and on cost. Or as the President put it in March, “No more excuses!”

That’s what this morning’s announcement from Lockheed Martin is really about. Christopher E. Kubasik, Executive Vice President in charge of the company’s electronic-systems business, is being promoted to President & Chief Operating Officer (COO) of the entire company. The position of COO is being re-established to emphasize sound oversight and execution of programs. While Lockheed’s track record on execution surpasses that of many competitors, company Chairman & Chief Executive Officer Robert J. Stevens decided that a COO was desirable to strengthen the enterprise’s management system.

The move is consistent with an earlier decision by Stevens not to contest termination of the F-22 fighter and VH-71 presidential helicopter. The terminations were bitter pills for Lockheed Martin to swallow, but Stevens felt that challenging the priorities of his most important customer would be foolish. So while competitors scrambled to save endangered programs on Capitol Hill, Lockheed Martin lobbyists sat on their hands as F-22 died. Stevens reasoned that it was more important to deliver on what Gates wanted — thousands of joint strike fighters — than to wring a few more F-22s out of a dying program.

Some industry observers will interpret the Kubasik promotion as signaling who is likely to follow Stevens in the CEO’s job. But it’s a bit early to be drawing such conclusions: Stevens is only in his mid-fifties (he was born in 1952) and shows no signs of wanting to depart. The real driver of the decision is a desire to be responsive to the goals of Lockheed’s government customer. Of course, it won’t hurt to have somebody the investment community liked a lot when he was Chief Financial Officer in the number-two corporate job.