Lockheed Martin to triple Patriot PAC-3 missile production

Launch of a PAC-3 MSE at Huntsville, Alabama, U.S. on July 01, 2024. The PAC-3 MSE is a next-generation interceptor, offering improved range, speed, and manoeuvrability, against threats including tactical ballistic missiles, cruise missiles, and aircraft | Photo: U.S. Army/Darrell Ames

The U.S. Department of War (DoW) and Lockheed Martin have signed a seven-year framework agreement intended to more than triple annual production of the PAC-3 Missile Segment Enhancement (MSE) interceptor. The agreement sets the basis for negotiating a long-term supply contract, subject to Congressional authorisation and appropriations, that would raise output from about 600 missiles per year to approximately 2,000.

The PAC-3 MSE is a hit-to-kill interceptor used with the Patriot air and missile defence system to destroy incoming ballistic and cruise missiles. It features a larger motor and improved manoeuvrability, extending range and interception capability compared with earlier PAC-3 variants.

The framework agreement follows the Department of War’s Acquisition Transformation Strategy, announced by Secretary of War Pete Hegseth in November. As Hegseth said at the time, “We will stabilise demand signals. We will award companies bigger, longer contracts for proven systems so those companies will be confident in investing more to grow the industrial base that supplies our weapons systems more and faster.”

Under the new model, Lockheed Martin is expected to support investments needed to expand production capacity, while the government provides long-term demand certainty. The Department of War said this approach is intended to reduce the need for upfront government funding of new factories and tooling, while improving delivery timelines and supply chain stability.

Michael P. Duffey, Under Secretary of War for Acquisition and Sustainment, described the agreement as a change in how the department works with industry. “This framework agreement marks a fundamental shift in how we rapidly expand munitions production and magazine depth, and how we collaborate with our industry partners,” Duffey said. “Lockheed Martin’s willingness to help pioneer this transformative acquisition model is a win-win for the taxpayer, our national security, and the rebuilding of the industrial base needed for the Arsenal of Freedom.”

The agreement also includes provisions for delivery accountability and for sharing any additional profitability generated by higher production volumes and new equipment efficiencies. The Department of War said similar strategies could be applied to other munitions programs in the future, pending Congressional approval.

Production of the PAC-3 MSE | Photo: Lockheed Martin

Lockheed Martin said it has already increased PAC-3 MSE production by more than 60% over the past two years, delivering 620 missiles in 2025. Jim Taiclet, Chairman, President and CEO of Lockheed Martin, said the framework provides predictability needed for further expansion. “This first-of-its-kind approach builds on years of advocacy and collaboration to bring commercial practices to major acquisition programs,” Taiclet said.

During a press briefing, Duffey said discussions with industry intensified over recent months and that leadership on both sides was willing to accept risk under a new model. Taiclet added that the agreement includes recovery provisions if production plans change, stating that industry would be “rateably reimbursed for any sort of non-absorbed, non-recurring expense” should the framework be altered.

According to Lockheed Martin, the goal is to reach a production rate of 2,000 PAC-3 MSE interceptors annually by the end of 2030, with increases across manufacturing lines and the supplier base. The initial contract award is expected to depend on final fiscal year 2026 Congressional appropriations.