With CEO departure, Lockheed is latest contractor to announce new leadership

Bethesda-based Lockheed Martin, the world’s largest defense contractor, said Thursday that its chief executive will retire at the end of the year, making it the latest firm to bring in new leadership as the defense industry braces for a major contraction in Pentagon spending.

Christopher E. Kubasik, 51, Lockheed’s president and chief operating officer, has been named to succeed Robert J. Stevens, 60, as chief executive. Kubasik is part of a new crop of contracting executives who have been groomed within their companies and are being tasked with overseeing a transition that has required layoffs, buyouts and corporate restructuring.

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Defense contractors with a large presence in the region: These public and private firms employ a large amount of people in the D.C. area, according to the Post 200. The list produced by Capital Business ranks the largest 200 Washington area businesses.

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Jan. 26 (Bloomberg) -- Kevin Brancato, an analyst with Bloomberg Government, discusses U.S. Defense Department budget cuts and the impact of the cuts on defense contractors like Lockheed Martin Corp., L-3 Communications Holdings Inc., and Northrop Grumman Corp. Brancato speaks on Bloomberg Television's "InBusiness with Margaret Brennan." (Source: Bloomberg)

“When I look at future challenges, I recognize they will certainly extend beyond my mandatory retirement age,” Stevens told reporters Thursday morning.

Lockheed’s announcement means the top leadership of three of the largest local defense contractors, including Northrop Grumman and General Dynamics, will have turned over within the past several years.

“When the Defense Department goes into a transition, its industry transitions, too, to new demand trends and a new business model,” said Loren Thompson, a defense industry consultant. “That’s the logical time for the old guard to start relinquishing their jobs.”

The reductions to military spending have triggered upheaval within the industry, which has a history of ups and downs. The 1990s saw significant industry consolidation; Lockheed Corp. and Martin Marietta became Lockheed Martin, and Northrop Corp. and Grumman Corp. became Northrop Grumman.

After the attacks of Sept. 11, 2001, and the start of the wars in Afghanistan and Iraq, defense contracting sales surged, but as the conflicts come to an end and federal spending slows, contractors are again repositioning to protect their businesses.

Federal officials are increasingly pushing for lower prices, forcing large contractors to reexamine their corporate costs and staffing. In the information technology sector, in particular, traditional contractors’ government dominance has been challenged by commercial providers, such as Google and Amazon.

A defense contracting chief needs “more qualifications now than you’ve ever needed in the past,” said David J. Berteau, director of the Center for Strategic and International Studies’ international security program.

Whereas past leaders were typically engineers or technical scientists, executives today generally also bring extensive financial knowledge, he said.

“The defense industry and the Defense Department still need that technical excellence in its leadership,” he said, but “however good you are at engineering and physics, you’ve got to have a grounding in the financial side as well.”

Wes Bush, chairman, chief executive and president at Falls Church-based Northrop, was one of the first of a new class of contracting executives.

An electrical engineer, Bush, 51, became CEO and president in January 2010 after tours as chief operating officer, chief financial officer, and president of Northrop’s space technology sector.