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Hear it from the Expert: Robert (Rob) Spencer and His Leadership as Vice President and General Counsel of Lockheed Martin Aeronautics

Robert (Rob) Spencer is Vice President and General Counsel of Lockheed Martin Aeronautics Company. In these roles, he is responsible for the overall direction and leadership of the company's General Counsel organization, providing legal advice and guidance to all programs, functions, and company senior management. 

In addition to heading the company's Legal Department, he leads Aeronautics' Internal Controls and Audit function, helping to ensure the integrity of Aeronautics' business systems. He also provides administrative oversight of the company's Security and Emergency Services operations. The combination of the Legal, Internal Controls and Audit, and Security and Emergency Services departments make up the largest General Counsel organization in Lockheed Martin Corporation.

Before assuming his current position in October 2013, Mr. Spencer was Vice President and Deputy General Counsel - Litigation & Compliance for Lockheed Martin, in charge of litigation, compliance, environmental law, and internal investigations. 

Mr. Spencer joined Lockheed Martin in July 2006 from the United States Attorney's Office, Eastern District of Virginia, where he was Chief of the Criminal Division. He served as an Assistant U.S. Attorney in Alexandria, Virginia, from 1995 through 2006, Chief of the Terrorism and National Security Unit from 2001 through 2004, and Chief of the Major Crimes Unit from 2000 through 2001. In these positions, he prosecuted terrorism and espionage cases, including United States v. Zacarias Moussaoui and United States v. Squillacote. Mr. Spencer also served as co-Chief of the Assistant Attorney General's 9/11 Task Force following the September 11th terrorist attack. 

Mr. Spencer was twice awarded the Attorney General's Award for Excellence in Furthering the interests of U.S. National Security. He also received a CIA medal for contributions to the war on terrorism, and the Director's Award for Superior Performance as an Assistant U.S. Attorney.

He has taught trial advocacy and forensics at George Washington University and the FBI Academy in Quantico, Virginia. He is a graduate of Amherst College and the University of Chicago Law School.


Q: Why did you decide to go to law school?

A: When I went to law school, a lot of people went there as an extension to the Liberal Arts education. They thought a law degree would give some value. On the other hand, I went to law school because I wanted to practice law. I had always wanted to be a trial lawyer. I was one of those kids who liked to argue and thought that being a lawyer was an interesting and honorable profession. For the most part, I have found that to be true. 

Q: For most of your career, you were a prosecutor at the U.S. Attorney Office. Why did you decide to go in-house?

A: Being a federal prosecutor is the best job you can have as a lawyer.  But in Washington, D.C., it was a little bit harder to support your family on a government salary. I got out from the government in 2006. I thought about going to a private law firm and practicing white collar criminal defense. However, I thought that being in-house might avoid having to go out and drum up business. One of the issues for private law firm folks is that you are judged based on how much business you bring in more than the quality of your skills as an advocate. Second, I liked Lockheed Martin. I liked the idea of building a product that helps us defend ourselves as a nation. Finally, the most direct relevance was the guy who hired me, Jim Comey, who is now the Director of FBI, was our General Counsel. I knew Jim from law school and when we both worked at the Department of Justice. He recruited me to Lockheed Martin.  

Q: How big is the Legal Department at Lockheed Martin?

A: In the entire Lockheed Martin Corporation, which has its headquarters in Bethesda, Maryland, there are about 130 lawyers. In the Aeronautics Division, which has its headquarters in Fort Worth, I am the General Counsel and I have about 25 lawyers and 15 international trade specialists. We also have an Internal Audit function with about a dozen people. 

Q: Isn't that a very big-size Legal Department?

A: We have about 100,000 employees and we are $46 billion business. So the legal department is actually very small. If you have a commercial entity of that size selling products to the general public, you probably have more lawyers.

Q: What challenges did you face when you first went in-house?

A: I was a prosecutor.  When you work for a business, you have to understand that you are there to facilitate and protect the business. It is a for-profit entity. We also pride ourselves on being an ethical business, so compliance and doing things the right way is also very important. In-house counsel run that function. When you work for a business, you have to know the business. You have to know what you do as a company, what products you sell, why you do it, etc. and not to lose track that you have to give advice to people that allows the business to continue or not do something if that would be a compliance risk. Your role is to guide the business, to understand the purposes of the business, and to figure out what you try to do as a business. 

Q: As a former prosecutor, how was that experience help you transitioning to your current position?

A: Some of it was easy for me. An in-house counsel in a compliance role performs a bit of a policing function. We have about 100,000 employees. Somebody is likely to do something wrong or stupid or motivated by greed. Part of your job is to root that out, make sure that it will not happen again, and punish the people if necessary. That came pretty easily to me. On the other hand, we sell almost all of our products to the federal government. The relationship between the U.S. Government and its contractor/supplier is a highly regulated and kinda weird interaction. Unlike in a commercial transaction, we have to tell the government what our cost is under the Federal Acquisition Regulation. That is very different from you and I go to a store to buy toothpaste. Therefore, learning the ins and outs of government contracting was the real challenge for me. It still is.

Q: I find it fascinating how Lockheed Martin has a very special relationship with the U.S. Government. As the General Counsel who sit on many high-level meetings, how do you help Lockheed negotiating with the government?

A: We negotiate things big and small with the government all the time. They are a customer so we try to listen to what they say. You can't always make them happy but we try to understand what their needs are and try to see a common ground so we can get there. It is a little bit the same interaction that I have with my Executive Vice President. For the most part, I tell my staff "say yes when you can but no when you have to." That is to say yes, you can do this or suggest a different way that we as a business may be able to do something. But there are times when as a lawyer you have to say no, you cannot do that, that would violate the law or that would be unethical. You have to put your foot down.

People often accuse in-house Legal Department for being the "Department of No." They don't want to have hurdles to jump over when they want to make and sell a product. But sometimes, that is necessary. As an in-house counsel, you have to be able to stand up and say “no” at times. 

Q: I assume that Lockheed Martin has a very close relationship with the Department of Defense given the nature of its product. Is that true?

A: That is a good point. We are the Department of Defense's largest contractor. We sell almost all of our products to the Department of Defense so we try to satisfy their needs. Here, we make fighter planes in Fort Worth, Texas. It is very important to understand what the customer needs, what the customer wants, how we meet those things and still make a profit for our shareholders. There are also parts of the government that regulate us like the Department of Justice under the federal False Claims Act. They regulate us to make sure that we are not overcharging the government, or making a false statement to try to get a contract signed or paid.

Q: Lockheed Martin is the biggest military airplanes producer in the U.S. Who are your major competitors?

A: There are about 4-5 big defense contractors in the United States. Boeing, for example, is one of our big competitors making airplanes. They also make commercial airplanes. We no longer make commercial airplanes except for one cargo aircraft that we are trying to get certified. Other than that, Lockheed has been out of the commercial aircraft business since the L-1011 back in the '70s. So we don't compete with Boeing on commercial aircraft but they still compete with us on military products. Northrop Grumman, General Dynamics, Raytheon, those are some of the other big competitors we have. 

In addition, one of our four businesses is Space Systems where we build and launch satellites and manned spacecraft. In the space business, SpaceX is trying to get into competition with us and with Boeing to see who launches satellites and who makes the manned space program equipment. They are a new competitor. 

Q: What have Lockheed Martin done to remain competitive in the market?

A: Lots of stuff! One of the things that has always driven our position in the market is innovation. For the aeronautics business, we have a development facility in Palmdale, California, that is known as the Skunk Works. There, we developed stealth aircraft, and the SR-71 spy plane, which is the fattest airplane ever to fly. Innovation in aerospace technology has always given Lockheed Martin a leg up on our competitors. Second, it is our attitude of doing things right and listening to the customers. Third, we have a culture that is pretty closely aligned with the U.S. military's. We have a lot of former military people working for us so it is not that much of a culture jump from working for the U.S. Armed Forces to working for us. There are many more of us who were civilian U.S. Government's employees who came over here. So culturally, we are very similar to our customer as well. 

Q: Can you tell me a little bit about your role and how it fits into the overall structure of Lockheed Martin?

A: I am the General Counsel of the Aeronautics business area. We sell fighter planes, cargo aircraft, and surveillance aircraft (like the U-2 which we still refurbish). We maintain, sustain, and modify those airplanes as well. Our role is to negotiate and sell those products to the government. We also sell them to foreign governments. Our foreign sales are usually through the U.S. Government. We sell our planes to the Pentagon; the Pentagon will then sell them to foreign governments. We have a lot of products that are being used around the world. For example, the F-16 fighter plane is in used by 22 countries. We have people in 35 different countries who sell and maintain aircraft. So that is a big piece of it.

All of those things involve some sort of contractual issues that lawyers handle. They all involve potential disputes. We also build the F-35 fighter plane here in Fort Worth. It is the single biggest government contract program ever. About 75% of the cost is subcontracted so we have subcontracts all over the United States and all over the world for that program. Again, those are all interactions that involve a written contract, law, and regulation.

Finally, we import and export goods. We get components in from foreign countries. We also export goods to foreign countries. All of these activities are regulated so we have a team of international trade specialists who deal with that regulation. We try to guide people in how to act, how to conduct themselves legally in the way they do business. So there is a lot of counseling going on as well.

Q: Lockheed Martin, the U.S. Government, and the foreign governments who want to buy Lockheed's products have a very special relationship. Has this relationship changed in the Trump Administration?

A: I think it has been in the news a lot that President Trump, even before he was inaugurated, began questioning the price per plane on F-35, which is our biggest program.  As our CEO, Marillyn Hewson, said two days ago, it helped us negotiate the latest lot with the U.S. Government for the F-35 fighter plane because it focused us on reducing the cost of that plane.  There has been a lot of focus on that program since President Trump took over. We also have a new Secretary of Defense, James Mattis, and his new staff.   A lot of these changes are the typical turnover between administrations in Washington, D.C., but I think with this new Administration, there are some signs that it is not business as usual. Things are different. The defense budget the President has proposed substantially increases defense spending. We don't know what will it look like when it comes back from Capital Hill, but that is our lifeblood. So there might be more money out there for our products and services. On the other hand, we have seen a lot of tension in bringing the cost of the F-35 planes down. That is some pressure.

Q: What is your thought on Lockheed's future relationship with foreign governments who want to buy your products?

A: I think we will continue to sell our products around the world. The security situation around the world is not getting less complex. It is getting more complex. I think there are as many threats out there now as there have been in recent history. Defense spending went down after the Cold War. It went up after 9/11. There was a bit of a lull after the recession in 2008. It is probably going back up again. We have newly aggressive near-peer states Russia and China, and we have some rogue states like North Korea launching ballistic missiles and doing a lot of saber rattling. Lockheed Martin also makes, for instance, the Terminal High Altitude Air Defense System, a missile defense system known as THAAD, that is going to be deployed in South Korea.  Missile defense will be something that will be sought by countries around the world because of these middle power states that are flexing their muscles. In addition to that, we also have non-traditional aggression from ISIS and terrorism. Countries around the world want to buy our products and services to make themselves more secure.  I think we have a lot of opportunities there.

On the other hand, European defense spending is generally going down, although now the Trump Administration is pressuring NATO to spend more. However, Europe is in a little bit of a fiscal crisis so that may not be a growing market. Asia is increasing its defense spending. We will, I think, increase our international sales.  Within the last five years, we have a focus to go from 15-20% to 30% in international sales of our products and services. Again, all of these are regulated by the federal government. The U.S. Government must approve all our international sales of military equipment. 

Q: What is the procedure to apply for the U.S. Government's approval?

A: It’s a bit complicated because it is essentially a three-way negotiation. A foreign government goes to the Pentagon and asks if it would be able, for example, to buy an F-16 which we have sold around the world for decades. The U.S. Government would tentatively say yes. Then we would enter into a negotiation with the foreign government that would essentially set out the outline of quantities, prices, etc. But the formal contracting is: Lockheed has a contract with the U.S. Government; the U.S. Government has a contract with the foreign country. Separately, Congress has to approve the transaction. In addition, we also need an authorization from the State Department to send these products abroad.

Q: How long this process would normally take?

A: It is a years-long process.

Q: Given the limitation on how Lockheed can sell its products abroad, how does it affect the company's marketing plans?

A: The marketing plan is not like selling a cellphone. It is a years-long process. You would look 4-5 years out or even longer for when a country might want to buy our products or services. Then to build the plane, we talk about nearly a three-year process to order the supplies, build, conduct test flights, and ship the final product. So the marketing plan tends to be very long. Of course the effort is big if you sell a plane to a foreign country, typically several billions worth of contracts. The stakes are high. The competition takes a while. But you have to be looking out on the horizon to see where those sales might be.

Q: Does Lockheed Martin submit bids to foreign countries?

A: Yes. You eventually will have a formal proposal which says "I will deliver you 25 F-16s for this amount of money." But you might hear four years before that Bolivia is interested in buying a cargo plane. You have a representative down there to see what they are interested in, whether they have the money, who our competitors are, and whether we want to compete for the contract. To make it more complicated, there is something called offset where you have a foreign country says: "We want to buy your products but we want you to build some of it here. Make the investment in us. We want to build the windshield." Different companies say: "We will build the following products. We will give you the following technologies to help your industrial base grow in your country." That complicates matters as well. 

Q: What are the roles of your team in this process?

A: You have lawyers involved in every piece of the negotiation. You have a lawyer looking at the regulation. There is a regulation between us and the U.S. Government. There is a regulation between the U.S. Government and the foreign government. There is negotiation between us and the foreign government. The offset requirement is looked at by a different branch of the Department of Defense. In addition, there is a whole regulatory regime of what you can export and import.  

More complication:  With the F-35 fighter plane, we have eight partner nations that have invested in the development of that plane. They are partners and consumers of these products. We have additional countries that have signed up to buy F35s.  In two of them, Italy and Japan, we put up final assembly factories. In addition, we buy parts from some foreign countries.  For example, we buy an ejection seat from a company in the U.K., and the U.K. is buying F-35Bs. Therefore, we import that part into the U.S., put it on our plane, and send the plane out to one of these foreign countries. It can also be sent to Italy to be put on a plane that will be an Italian jet. So it can be very complicated. All of these countries want to regulate that commerce. A lot of them want to tax it. So a lawyer, or at least an international trade compliance specialist, would look at all of these interactions.

Q: Do you employ outside counsels to help with the process?

A: We mostly do counseling and contracting in-house. We tend to outsource all of our litigations. We are sued by different people. If you are a big employer, you get sued by people who leave the business or get fired. We get into disputes with competitors or with some of our subcontractors or even the government. If it goes to arbitration or litigation, we typically get outside counsels. If it is a very specialized thing like tax, ERISA, or some other specialty, we tend to hire outside counsel. All the routine advice, we do in house.   And then there are some highly specialized areas like how you get paid and do your accounting with the U.S. Government, known as Government Cost Accounting. That is particularly arcane. We have specialized finance people who do that. But if we get into a disagreement with the U.S. Government over the treatment of something that we have done under those standards, we typically go and get an outside lawyer who has a specialty in that area. There are not many people who are true specialists in that type of work.

Q: In the past, Lockheed Martin ran into some issues with the Foreign Corrupt Practices Act ("FCPA"). What have the company done to ensure complying with the Act?

A: Good question. The genesis of the FCPA was couple of international bribery scandals from the Lockheed Aircraft Company in the 1970s.  One in Japan; one in Germany; and one in Egypt. These scandals played a large factor in leading the U.S. Government to pass the FCPA, which prohibits companies from bribing foreign officials to get business. We were, until recently, under a Consent Order to report every year to the SEC our compliance with the FCPA. That led us to institute a state of the art compliance program which we are very proud of. We are no longer under the Consent Order, but we have maintained a very aggressive compliance program and culture. We have consultants who help us selling products around the world. All of those consultants are drilled annually on our compliance program. We have very strict compliance requirements and on what you can do to win international competitions. Part of it is because of the FCPA, its origin, and our involvement in it. 

Q: In some countries, bribery is not illegal and it can even be part of the culture. How does the FCPA limit American companies and their capacities to compete in those markets?

A: It is hard to compete with companies where the companies' culture permits them to bribe to get the business. Bribery is still not only allowed but also expected in some parts of the world. However, we have found that as a long-term proposition, being an ethical company that complies with anti-bribery actually builds business. Once everybody gets used to it, people trust you, and it is better to do business that way. Laws like the FCPA and the U.K. Bribery Act, which proscribe bribery, actually build confidence in the fairness of contracting and business.   People compete based on the quality of their products, the technologies, the prices, and not whether you pay somebody off. So in the long run, it is actually better for everybody.

Q: You have been with Lockheed Martin since 2006. So far, what are the most memorable moments of your career at the company?

A: I have a lot of memorable moments. I have been involved in a couple of internal ethics investigations where we took disciplinary actions against people. It makes me very proud to work for a place that upholds those types of standards. I really like Fort Worth. I like this business here. I like to be involved in the executive team here. I am very proud to make some small contributions to the F-35 and the C-130 among other products. I like the fact that we build things. I will take you to see the factory in a couple minutes and you will see that the people of Lockheed Martin are highly motivated to build a product that matters. People believe that we are furthering national security. People believe that we are doing that in an honorable fashion. You will also see there are a lot of reminders here that we build a plane and somebody's son or daughter will get into that plane and fly it into combat. That means a lot and I am proud to do that. I am proud to work for an ethical company. I am proud to help in some small way to uphold our national security. 

Q: How do you find working in-house help you achieve work-life balance?

A: It depends, of course, but generally when you are at a private law firm, there is a built-in inefficiency that you are paid for your time. I worked for a law firm in Washington, D.C., before I worked for the Department of Justice. When you are a young associate, you are rewarded for billing a lot of hours. That tends to make people stay and work a lot. Your quality of life, your interaction with your family, your work-life balance will suffer. When you are a partner at a law firm, that pressure does not lessen. In fact, the pressure gets worse because now you have the pressure to bring in additional business. In-house lawyers don’t have that type of pressure. There are times when my staff and I work very hard and very intensely. There are things that we do on weekends and nights. We also have people traveling to foreign countries to work on different projects. So people do work hard. But, in general, there is no built-in incentive to be in the office and bill hours as there is at law firms. I am a big consumer of legal services, buying a lot of outside counsel time. It is very hard to get away from the billable hours. We can do it as piece work. We will pay you for this contract or that advice and no matter how much hours you and your associates put in, we will pay you X amount of dollars. But it is very hard to do. We have been talking about alternative billing methods for a long time, but we have not gotten there yet.

Q: What do you look for when you hire a lawyer for your Legal Department? What advice do you have for law students and young attorneys who want to become great in-house counsels?

A: That is a very good question and it is not a particularly easy one. Most people going in-house have some other experience first. I was a trial lawyer. You can find experience in a particular specialization like international law, benefits, labor and employment law. Government contracts lawyers are what we look for the most because there are not a lot of them. It is a very specialized field. Those types of specialties are the types of thing that big companies will hire for in-house counsel jobs. So my advice is go out, get the job you can and want, and see what you like to do. If you want to be a litigator, be a prosecutor, a public defender, or hang out a shingle and defend small cases. Nothing will prepare you to become a trial lawyer other than standing up in court and being an advocate. If you want to be a tax lawyer, go to a law firm and get as much experience in tax matters. Then you can look around and see if you prefer to work in-house or for a law firm. 

Also, if you want to go in-house, learn about the business.  You are going to work for that business. If you want to work for a tech company, know the business. It will help you even if you are an outside counsel. Here’s one example. When I got to Lockheed Martin, we went out and talked to a firm that wanted to represent us on an ERISA case. They had this glossy brochure and they said: "Look! These are our capabilities, not only on ERISA but also on government contracts." Their brochure was custom made for Lockheed Martin. It had a picture of a fighter plane on the front, but it was an F-18. That’s a Boeing product. I said: "That is a Boeing product." They took back the brochure and, in about half an hour, they returned with another glossy cover that had an F-35 on the front.  That was an impressive turn around effort, but it was a fundamental mistake.  We did not hire that firm. If you want to work for Microsoft, know something about the products, know something about the business. You can learn a lot about a company by reading its annual reports, the trade press, or the Wall Street Journal. If you want to work for Ford Motor Company, know something about the business, know something about the industry. They will appreciate that you get their business and what they need from a lawyer. Along the way, you will also figure out whether that means something to you and if you like to work there. 






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