Lockheed Martin has reached a significant milestone by signing a framework agreement with the U.S. Department of War to significantly enhance the production of PAC-3® Missile Segment Enhancement (MSE) interceptors. This agreement, announced on January 6, 2026, aims to increase the annual production capacity from approximately 600 to 2,000 units over the next seven years, addressing the growing needs of U.S. forces, allies, and partner nations.
Strategic Transformation in Defense Procurement
This partnership is a core component of the Department of War’s Acquisition Transformation Strategy, a crucial reform in U.S. defense procurement aimed at modernizing and streamlining operations. By establishing a new model that guarantees long-term demand, the agreement allows for increased investment from Lockheed Martin and other industry players, which is essential for raising production rates and enhancing operational efficiency.
The collaborative financing approach embedded in the agreement is designed to maintain initial cash neutrality, encouraging industry confidence in meeting the elevated production levels. This initiative represents years of effort to adapt the defense acquisition process to meet the demands of today’s security landscape.
Recent production achievements underscore Lockheed Martin’s readiness to fulfill the terms of the agreement. In 2025, the company successfully delivered 620 PAC-3 MSE interceptors, marking a 20% increase from the previous year. This rise aligns with Lockheed Martin’s broader strategy to boost production by over 60% in the past two years.
Economic and Operational Implications
The implications of this agreement extend beyond mere numbers. The increase in production capacity is expected to generate thousands of jobs across the supply chain in the United States. This move not only addresses the immediate demand for PAC-3 MSEs but also strengthens the resilience of the U.S. defense industrial base. By fostering long-term supplier investments and providing predictable demand signals, the agreement ensures a sustainable production environment.
The demand for PAC-3 MSE interceptors has surged following recent global military operations, highlighting the necessity for an agile response in defense capabilities. In 2025 alone, Lockheed Martin delivered over 24,000 missiles and related products to the U.S. and its allies, reinforcing its position as a key player in the defense sector.
Lockheed Martin’s Chairman, President, and CEO, Jim Taiclet, expressed gratitude for the Department of War’s initiative in advancing acquisition reform. “This first-of-its-kind approach builds on years of advocacy and collaboration to bring commercial practices to major acquisition programs,” he stated. “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 the agreement continues to unfold, Lockheed Martin plans to collaborate with the U.S. government towards an initial contract award, anticipated in the final fiscal year 2026 Congressional appropriations.
Lockheed Martin remains committed to innovation and excellence in defense technology. The company’s focus on delivering transformative solutions aligns with its vision of 21st Century Security®, ensuring that the needs of those they serve are met with the highest standards of readiness and capability. For more information, visit LockheedMartin.com.
