Lockheed Martin has entered into a significant framework agreement with the U.S. Department of War aimed at accelerating the production of the PAC-3® Missile Segment Enhancement (MSE) interceptors. Announced on January 6, 2026, this partnership will ramp up annual production capacity from approximately 600 to 2,000 interceptors over the course of seven years, enhancing support for U.S. forces, allies, and partner nations.
Strategic Acquisition Transformation
The agreement is a cornerstone of the Department of War’s Acquisition Transformation Strategy, a major reform in U.S. defense procurement practices. This initiative introduces a new model that ensures long-term demand certainty, facilitating industry investments while boosting production rates and operational efficiencies. A key component of this framework is a collaborative financing approach, which maintains initial cash neutrality, enabling Lockheed Martin to invest confidently in meeting production requirements.
In recent years, Lockheed Martin has already increased PAC-3 MSE production by over 60%, delivering 620 interceptors in 2025, a figure that marks a more than 20% increase from the previous year. The company’s readiness to fulfill this agreement is bolstered by its established track record of production excellence.
Expanding Capacity and Economic Impact
The enhanced production capacity is crucial as global demand for PAC-3 MSEs continues to rise, particularly following recent operational needs. This agreement is expected to more than triple production, thereby addressing the defense requirements of the U.S. and its allies. The impact of this agreement extends beyond just output; it is anticipated to create thousands of jobs across the American supply chain.
The agreement also fortifies the resilience of the U.S. defense industrial base. By establishing predictable demand signals and long-term supplier investment, it positions the industry to sustain production effectively. In 2025 alone, Lockheed Martin delivered more than 24,000 Missiles and Fire Control products to the U.S. and its allies.
In remarks regarding the agreement, Lockheed Martin Chairman, President and CEO Jim Taiclet emphasized the importance of the Department of War’s leadership in acquisition reform. “This first-of-its-kind approach builds on years of advocacy and collaboration to bring commercial practices to major acquisition programs,” said Taiclet. “We will create unprecedented capacity for PAC-3 MSE production, delivering at the speed our nation and allies demand while providing value for taxpayers and our shareholders.”
As this partnership progresses, Lockheed Martin will continue to work with the U.S. government towards an initial contract award, which is anticipated to align with the final fiscal year 2026 Congressional appropriations.
Lockheed Martin stands as a global defense technology leader, committed to driving innovation and advancing scientific discovery. The company’s focus on all-domain mission solutions aims to provide transformative technologies that ensure readiness for those it serves. More information can be found at LockheedMartin.com.
