A panel of experts found "systemic" quality-control and management problems in Lockheed Martin Corp.'s space and missile businesses, the Bethesda aerospace company said yesterday.
Lockheed released an executive summary of the findings of former president A. Thomas Young, who agreed in May to review the company's space and missile sector after a string of launch failures with Lockheed's Titan IV rockets and problems with an anti-missile defense system. The failures resulted in billion-dollar losses of key military reconnaissance satellites, as well as a commercial remote-imaging satellite.
"To sum up months of work, we found problems in accountability, quality, subcontract/supplier management and cost emphasis," Young said in announcing the results of his probe.
Young and Lockheed President Peter B. Teets said the problems were most apparent at the company's satellite-manufacturing and missile complex in Sunnyvale, Calif., and at its rocket-making unit near Denver. Both operations have made management changes in the past 12 months and have been the sites of considerable employee layoffs and cost-cutting moves. Lockheed's other main space businesses, in New Orleans, at Cape Canaveral in Florida and at Vandenberg Air Force Base in California, were largely free of quality-control problems, Young said.
Teets acknowledged in a telephone interview that some of the cost cutting in Colorado and Sunnyvale may have backfired. In one instance, Young's panel found that because of consolidation of quality-control and "mission success" operations, some important oversight had been lost. Problems that should have been spotted were not found until much later in the process, Teets said.
"It removed one layer of oversight," Teets said. "It was a case of being penny-wise and pound-foolish."
Although the summary did not mention it, an Air Force investigation of a Titan rocket failure found that the problem stemmed from the improper entry of some computer software code into a program designed to set the rate at which a rocket turns after liftoff. The problem was detected by some employees, but because of confusion over which employees were responsible for quality control, the problem was never corrected.
"In the one-strike-and-out business, you've got to have oversight," Teets said.
Young's report also suggested that the company had lost years of experience and program knowledge because of retirements and layoffs among the workers who assemble and test the Titan rockets, considered among the most complex products made by the U.S. aerospace industry.
"You can replace intellectual capability," Young said, "but replacing experience is a more difficult thing to do."
Many of the work-force reductions have come as Lockheed continued to lead the consolidation of the aerospace industry in the years after the end of the Cold War.
"This is an ongoing endeavor to deal with all these acquisitions of the past few years," said A.G. Edwards analyst Glenn Stewart. "From my angle, the dust is yet to settle."
The Young report also criticized a lack of communication from top management down on how to follow the company's "better-faster-cheaper" mandate. In some cases, Young and Teets said, employees may have interpreted this to mean corners could be cut with regard to quality to make products cheaper or to make deadlines.
Lockheed chairman and chief executive Vance D. Coffman said in a statement that the company endorsed the findings of Young's panel and would work to carry out its recommendations, which include bringing back some of the company's retirees for special assistance with launches and other "critical events."
"We're going to pick ourselves up and move forward," Teets said. "This corporation has a wealth and depth of talent that we need to bring to bear on this, and we shall."
Lockheed shares closed at $35.81 1/4, up 81 1/4 cents, yesterday on the New York Stock Exchange.
CAPTION: Lockheed Martin's Titan missile program has been plagued by a series of costly, embarrassing failures.