Pentagon, Lockheed Martin agree to $4.7 billion PAC-3 interceptor deal

The Pentagon has agreed to terms with Lockheed Martin on a $4.7 billion contract for the defense giant to accelerate production of its Patriot Advanced Capability-3 Missile Segment Enhancement interceptor.

The contract, which follows a framework agreement announced in January, will allow Lockheed to “deliver record numbers of combat-proven interceptors for American and allied forces this year,” the company announced Friday.

“Our investments in our facilities, workforce and supply chain ensure we can deliver at scale and with speed,” Tim Cahill, president of Lockheed Martin Missiles and Fire Control, said in a release. “With the right tools, proven processes and skilled employees in place, we are positioned to deliver a record number of munitions in support of the warfighter and our allies.”

The PAC-3 Missile Segment Enhancement works by identifying and tracking a range of threats — using Boeing-made PAC-3 seekers — from ballistic missiles and hypersonics to hostile air platforms.

Once the seeker identifies the target, the highly maneuverable all-up interceptor round, which uses a two-pulse solid rocket motor, engages and eliminates threats via direct body-to-body contact.

Boeing earlier this month announced it had reached a framework agreement with the Defense Department to triple production of its PAC-3 seekers.

Lockheed’s framework agreement announced in January included a target of increasing annual PAC-3 interceptor production from approximately 600 to 2,000 over a span of seven years.

Recent contract announcements come as the U.S. military’s reliance on costly interceptors against cheap munitions, particularly those deployed by Iran during Operation Epic Fury, has come under increased scrutiny.

Contrast the $35,000 average cost of an Iranian Shahed drone with an estimated $4 million price tag of a PAC-3, and the cost exchange, if successfully engaged, is 114-1 in favor of Iran.

Despite the lopsided cost exchange, the Pentagon in March also announced a deal with BAE Systems and Lockheed Martin to quadruple production of infrared seekers for the Terminal High Altitude Area Defense interceptor.

That deal aligns with a contract agreement in January between the Pentagon and Lockheed to quadruple the company’s annual production of THAAD interceptors from 96 to 400.