Lockheed Martin CEO touts company’s changed approach to research and development

Lockheed Martin has adjusted how it spends internal research and development dollars, putting a focus on self-funded prototypes, the company’s chief executive said Tuesday.

Speaking to analysts during a quarterly earnings call, James Taiclet said Lockheed Martin has been shifting toward this model for the last five years. “Now we’re basically at the mountaintop here,” he said.

In the past, business units would each get a part of the internal R&D budget and would direct their slice of the pie to their most important projects, Taiclet said. Now, the company is putting more of that money toward “real, highlight, corporate-level R&D programs.”

He pointed to several examples, including the Space-Based Interceptor program.

“We are building prototypes — full-up, operational prototypes. Not things in labs, not stuff on test stands — things that will go into space or in the air or fly across a missile range,” Taiclet said. “These are real devices that will work.”

He also mentioned the company’s autonomous Black Hawk effort, noting the company expects to fly a prototype in about a year. Another example is the firm’s push to insert sixth-generation technology, including stealth, propulsion and coating advances, into its existing F-35 and F-22 aircraft.

“We are now in the business of self-funding prototypes at the corporate level,” Taiclet said, which “can actually demonstrate real capability leapfrogs to our customers.”

Lockheed Martin on Tuesday reported July-September sales of $18.6 billion, up nearly 9% from the same three-month period a year earlier. Quarterly profit totaled $1.6 billion, essentially flat when compared to the prior year.