The Pentagon and Lockheed Martin have reached a major agreement aimed at dramatically increasing production of the Patriot PAC-3 Missile Segment Enhancement (MSE) interceptor, with output expected to more than triple over the coming seven years.
The framework agreement would raise annual production from approximately 600 missiles to nearly 2,000, reflecting the Department of Defense’s push to secure long-term industrial capacity under its Acquisition Transformation Strategy. The approach is designed to give manufacturers clear demand signals and support investment in facilities, labor, and supply chains.
A key element of the strategy is a collaborative financing structure intended to keep early cash flows neutral, allowing industry to expand capacity without assuming excessive financial risk.
Despite the agreement being in place, the planned production increase remains subject to additional FY 2026 funding approval by Congress. Pentagon officials said there is broad alignment with lawmakers, though the funding request is still being evaluated.
The PAC-3 MSE, a core component of the Patriot air and missile defense system, is in service with 17 countries, including Bahrain, Poland, and Ukraine. The interceptor improves on earlier models through a dual-pulse motor, increased agility, and advanced hit-to-kill capabilities against ballistic, cruise, and emerging hypersonic threats.
Lockheed Martin has already accelerated production, boosting output by more than 60 percent in the past two years and delivering 620 missiles in 2025—about 20 percent higher than in 2024. The company also secured a $9.8-billion contract from the US Army in September 2025 to produce nearly 2,000 interceptors and partnered with Diehl Defence to strengthen supply chain robustness.
Executives emphasized that sustaining further growth will require advanced manufacturing technologies, workforce expansion, and broader supplier networks. The Pentagon noted that similar long-term procurement models may be extended to other PAC-3 suppliers and applied across additional munitions programs facing high demand.
