WASHINGTON - A Lockheed Martin executive on Tuesday bristled at the Navy's growing interest in fixed-price contracts for new military programs, saying the money-saving strategy could backfire by reducing the quality of the work performed.

"We do not think that fixed price contracts are appropriate for development activities because they do not encourage the type of direct, responsive, collaborative behavior necessary for success," said Chris Kubasik, vice president of investor relations, in a conference call with Wall Street analysts following its first-quarter earnings report.

Since the termination of a Lockheed combat ship earlier this month, several senior Navy officials have said the department should consider using more fixed-price contracts on ship programs, blaming open-ended contracts for escalating costs.

In January, the Navy placed a 90-day stop work order on Lockheed's second ship after costs on the first ship ballooned to $350 million from its initial price tag of $270 million.

The Navy initially awarded contracts for four ships, two to Lockheed and two to Falls Church, Va.-based General Dynamics Corp.

U.S. Secretary of the Navy Donald Winter said last month Lockheed could start work on the second ship at its Wisconsin shipyard if the company agreed by April 12 to switch to a fixed-price contract. After a month of extensive negotiations, neither the Navy or the company could agree on a restructured pact that could control costs on the Littoral Combat Ship, or LCS, program.

Lockheed has repeatedly blamed cost overruns on LCS on revised Navy requirements and delays in getting material from subcontractors.

Kubasik said decisions to move toward a fixed-price deal should be made on a program-by-program bases. For example, Lockheed's F-22 Raptor jet is a fixed-priced contract.

"There's clearly a time and a place and in fact almost half of our backlog and revenue is a result of fixed-price contracts," said Kubasik. "So we're not averse to them. It's just at the right time in the life cycle."

The Pentagon's No. 1 defense contractor assured investors that its customers, including the Navy, are pleased with the progress being made on various programs including the newly redesigned Marine One presidential helicopter.