Lockheed on board with Pentagon cost-cutting initiative
Government’s biggest contractor says it’s working to reduce inefficiencies and cut overhead expenses.
Officials at Lockheed Martin Corp., the Pentagon's largest contractor, said on Wednesday it has taken several steps to comply with the Defense Department's new efficiency initiative.
In June, Ashton B. Carter, undersecretary of Defense for acquisition, technology and logistics, announced plans for the department to cut more than $100 billion in costs during the next five years and to redirect those funds to higher priority items in the Pentagon budget. Defense contractors, Carter said, would be asked to reduce inefficiencies in their procurement systems and to cut unnecessary overhead.
During an afternoon press briefing focused on the company's missile defense programs, Lockheed executives said they supported the department's plans. While declining to discuss specifics, John Holly, Lockheed's vice president of missile defense systems, said the company has been going through a rigorous internal process to drive down costs.
"We are involved in significant initiatives to reduce overhead … and to focus on cost at the corporate level," Holly said.
Company officials said they believe compliance with Carter's directive will be critical in determining whether Lockheed receives follow-on contracts for programs on which it is currently working.
Lockheed announced plans last month to reduce its number of leaders at the director and vice president levels. The industry giant is offering financial incentives to many top executives to leave the company by Feb. 1, 2011.
The contractor also has begun a major reorganization, started the process of divesting itself of two units and significantly reduced its participation in international trade shows.
Lockheed is not the only big Defense contractor cutting its costs. On Wednesday, Northrop Grumman Corp. announced layoffs of 642 employees at its shipbuilding operations in Pascagoula, Miss. The company announced similar layoffs at two shipbuilding facilities in Louisiana.
The Navy has indicated it plans to reduce the size of its fleet and cut spending for new shipbuilding projects.