Pentagon, Lockheed Martin announce plans to triple PAC-3 production

WASHINGTON — The Defense Department and Lockheed Martin have cemented a deal to more than triple PAC-3 Missile Segment Enhancement production over seven years, with the company now due to increase production capacity to 2,000 a year.

Although a framework agreement has been reached in principle, the contract award is still forthcoming, with Lockheed projecting an initial award as part of fiscal 2026 defense appropriations.  

The deal comes as the Defense Department seeks to overhaul its acquisition apparatus to prioritize speed and as top officials have promised industry steady demand signals — and bigger awards — if companies make deeper investments into developing new products and expanding infrastructure.

“We will give longer, larger, more predictable contracts to companies that deliver on time and on budget, companies that invest in their people, that invest in more capability and more capacity, not companies that invest in stock buybacks or CEO salaries or more dividends,” Defense Secretary Pete Hegseth said Monday during a speech at HII’s Newport News Shipbuilding in Virginia.

“For those who can’t adapt, who are too comfortable with the old slow ways of doing business, we wish them well in their other future endeavors, because we will find new partners who will adapt, who will invest, who will take care of their people, who will move at speed and at scale,” he added.

Under the terms of the agreement, Lockheed “will support necessary investments to drive the production increase, and both the Department of War and Lockheed Martin will participate in the cost savings opportunity enabled by long-term demand certainty,” Lockheed said in a statement, using the administration’s preferred nomenclature for the Pentagon.

The size of that investment — and whether that will involve hiring additional employees or building alternate sites for PAC-3 production — was not disclosed in the news release.

The Pentagon will also work with key PAC-3 suppliers to cement seven-year subcontracts that will allow those companies to expand production facilities, the department said.

“This framework agreement marks a fundamental shift in how we rapidly expand munitions production and magazine depth, and how we collaborate with our industry partners,” said Michael Duffey, the department’s undersecretary for acquisition and sustainment. “Lockheed Martin’s willingness to help pioneer this transformative acquisition model is a win-win for the taxpayer, our national security, and the rebuilding of the industrial base needed for the Arsenal of Freedom.”

The Pentagon said in a statement that it plans to use the same facilitization strategy for multiple munitions procurement contracts over the next year “pending Congressional appropriations,” which would allow the department “to replenish our stockpiles, rebuild our military, reestablish deterrence and strengthen and grow our defense industrial base.”

But congressional approval is not assured. In December, Sen. Chris Coons — the top Democrat on the Senate Appropriations defense subcommittee — told reporters that Deputy Defense Secretary Stephen Feinberg had briefed subcommittee leaders on a multi-billion-dollar munitions request that the department wanted to add late into the FY26 budget process.

“It reflects a lack of seriousness about the role of Congress in oversight and in funding,” Coons said then.

Since Russia’s invasion of Ukraine in 2022, weapons makers have been racing to speed up weapons production, with Lockheed previously announcing plans to ramp annual PAC-3 production to 650 missiles. In 2025, the company delivered 620 missiles, a 20 percent increase over the previous year.

Tom Karako, a missile defense expert with the Center of Strategic and International Studies, said it was no surprise why the Pentagon prioritized PAC-3 for a munitions ramp up.

“The demand signal is massive among multiple US services, the other 17 nations globally that operate Patriot, and a handful more who want to. Moving from 600 to 2000 per year is by no means high or excessive relative to demand — it’s more likely a reflection of the limits of the possible,” he said.