In a major step to rapidly expand air defense capabilities, Lockheed Martin has entered a transformative seven-year framework agreement with the U.S. Department of War. The landmark deal is designed to more than triple annual production capacity for the PAC-3® Missile Segment Enhancement (MSE) interceptor, scaling from approximately 600 to 2,000 missiles to meet soaring global demand from U.S. forces and allied nations.
This partnership is a direct result of the Department of War’s Acquisition Transformation Strategy, a significant reform effort to modernize defense procurement. The new framework provides long-term demand certainty, enabling Lockheed Martin to confidently invest in its industrial base, increase production rates, and drive operational efficiencies. A collaborative financing approach aims to preserve initial cash neutrality while facilitating the necessary capital investments to meet the aggressive production goals.
The agreement builds on Lockheed Martin’s recent production momentum. The company has already increased PAC-3 MSE output by over 60% in the past two years, delivering 620 interceptors in 2025 alone—a 20% increase over the prior year. The new multi-year pact will solidify this trajectory, adding thousands of American jobs across the national supply chain and strengthening the resilience of the defense industrial base through predictable, sustained production.
“The Department of War’s leadership in acquisition reform is enabling a groundbreaking shift,” said Lockheed Martin Chairman, President and CEO Jim Taiclet. “This first-of-its-kind model applies commercial best practices to create unprecedented capacity, allowing us to deliver critical capability at the speed and scale required, while ensuring value for taxpayers and shareholders.”
The urgency for increased capacity is clear, with global demand for the proven PAC-3 MSE system rising sharply following recent real-world operational deployments. The program is a cornerstone of integrated air and missile defense.
Lockheed Martin will now work with the U.S. government toward a formal initial contract award, which is anticipated following final Fiscal Year 2026 Congressional appropriations.
