Lockheed Martin

Sep 14, 2017 in Research

Lockheed Martin is a global aerospace and security company with approximately 120,000 employees worldwide. Its principal focus is the research, development, design, manufacture, integration and sustainment of services, products and systems that use advanced technology. The vast majority of Lockheed Martin's business is done with the U.S. Department of Defense and agencies within the U.S. federal government. Currently, Lockheed Martin provides more systems integration, IT services and training to the federal government than any other private organization. The rest of Lockheed Martin's practice comes from work for international governments as well as commercial platforms, services and products. The mission statement is: “Lockheed Martin is the leading global security and aerospace company, solving our customers’ most difficult problems through our employees’ innovation, performance and unmatched integrity.” There are five main areas in which Lockheed Marin's operating units are classified. First is aeronautics, that drew in almost $15 billion in sales during 2012; this includes tactical airlift, aircraft and aeronautical R&D business lines. Another is Information Systems and Global Solutions, bringing in almost $9 billion in sales in 2012. This includes federal services, C4I, commercial and government IT solutions. Third is Missiles and Fire Control, with about $7 billion in sales in 2012. This includes the Joint Light Tactical Vehicle, PAC-3 missiles, and the Terminal High Altitude Area Defense System. Fourth is Mission Systems and Training, also with about $7 billion in 2012 sales. This includes platform integration, naval systems, energy programs, simulation and training. Last are Space Systems, with just over $8 billion in sales in 2012. This includes commercial satellites, space launch, stragegic missles and government salleties. Overall 2012 sales totaled $47.2 billion. Listed as LMT on the New York Stock Exchange, Lockheed Martin currently stands 58th on the 2012 Fortune 500 list of largest industrial corporations.

In general, the Lockheed Martin code of ethics appears to be duty-driven. The statement “Our Value” in the code says that the company is “committed to doing the right thing and remembering who we work for. For this reason, we believe that it is important to comply with both the letter and spirit of the laws and regulations that govern their business.” Complying with all regulations, laws and policies and procedures is considered a minimum expectation at Lockheed Martin, and there are a dedicated legal department and ethics office within the company with staff available to help employees interpret and understand the regulations and laws. There is a continued emphasis that mere compliance with laws and regulations may not be enough, in situations where there is a gray area. This is the reason why there are available staff to consult about legal or ethical questions. Throughout the code, the employee is reminded that the vast majority of Lockheed Martin's contracts are with the American government, which means that the real client is the American people. Because of the reputation for fraud which so many government contracts have, Lockheed Martin realizes that it is imperative that employees and management understand the ethical imperative of following rules and regulations. This is not simply an ends-driven policy, though. Lockheed Martin realizes the goodwill that comes with doing work for the American government. With that goodwill comes an additional accountability, because losing the faith of the American government means losing the faith of the American people.

The vast majority of these regulations have to do with employees and up to mid-level management. A great deal of the regulations have to do with the ways in which the company gains contracts. Such items as antitrust laws, business records and political contributions (and other activities) are of special emphasis. Taking contracts can lead to violations of antitrust law, in areas in which there is not currently sufficient competition. The idea of competing fairly with other companies for contracts is repeated over and over again, as is the idea of properly using representative, consultants and additional third parties. Because the arrival of impending contracts can give management knowledge about the value of the stock of Lockheed Martin (as well as competitors) it is important for those managers to avoid the appearance of insider trading. Given the fact that the company is a steward of the trust of the American people, avoiding these appearances is crucial to success.

Another area in which this code engages in management is in human resources administration. Not only does the code forbid harassment or discrimination, but it also discusses the accurate assignation of labor costs to specific contracts. Managing these details is another key area of trust that the company has in its hands.

If I were changing this document in any way, I would suggest that it address areas of budgetary analysis more carefully. Defense contracts have long been the target of satire because of the alleged cost-padding that has long been a part of receiving government work orders. Even though there is considerable attention to ethics and integrity throughout the code, it would be worth seeing some additional attention paid to the composition of budget estimates. There is considerable attention paid to the accurate billing of costs accrued and maintenance of records, but a proactive stance would also include the writing of budget estimates. Ensuring that estimates are ethical and do not include any “extras” that are not really part of the job is an important part of being a solid steward of the American taxpayer's money. There should be a section of the code that pays attention to that topic.

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