Lockheed Martin has entered into a framework agreement with the US Department of War (DoW) to increase production and delivery of Patriot Advanced Capability-3 (PAC-3) Missile Segment Enhancement (MSE) interceptors.
The agreement, which extends over seven years, is intended to boost annual output from nearly 600 to 2,000 units.
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This framework results from the DoW’s Acquisition Transformation Strategy, a recent reform in US military procurement processes.
The new structure aims to provide the defence industry with long-term demand certainty, supporting investment and increased production rates.
In addition, the framework introduces a collaborative funding model designed to preserve initial cash neutrality for manufacturers as they scale up to meet production targets.
Lockheed Martin chairman, president and CEO Jim Taiclet said: “We appreciate the Department of War’s leadership 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.
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By GlobalData“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.”
Lockheed Martin reported delivery of 620 PAC-3 MSE interceptors in 2025, surpassing its previous year’s output by over 20% and representing an increase of more than 60% over two years.
Cost savings generated by long-term predictable demand will be shared between Lockheed Martin and the DoW, the company said in a press statement.
The PAC-3 programme’s growth is expected to add thousands of jobs across the US supply chain.
The agreement is also expected to support the resilience of the US defence industrial base by encouraging supplier investment and ensuring steady production levels.
In 2025, Lockheed Martin delivered more than 24,000 Missiles and Fire Control products to America and allied countries.
The company said that it will continue working with the US government towards an initial contract award, which is subject to fiscal year 2026 Congressional appropriations.
In September last year, Lockheed Martin secured a $9.8bn contract from the US Army for PAC-3 MSE interceptors.
