Speaking during the briefing, Lockheed Martin Chairman, President and CEO Jim Taiclet welcomed the Department’s approach and said the company appreciated “the Department’s leadership in bringing commercial business practices to increase the speed and efficiency of producing critical munitions.” He added that these practices were essential to ensure US forces had the capabilities needed “to defend the United States and deter armed conflict around the world.”
Taiclet described the agreement as a direct outcome of the Department of War’s acquisition transformation strategy, calling it “one of the most innovative and substantial reforms to U.S. government acquisition in decades.” He said it directly supported Lockheed Martin’s objectives to accelerate delivery of capability, strengthen supply chain resilience and drive innovation through commercial standards.
At the core of the framework, Taiclet explained, is a new commercially inspired model for how the Department of War interfaces with industry. He said it provides “reliable, long-term demand expectations that enable industry to invest robustly, expand capacity and drive operational efficiencies across the entire defense industrial base.”
Under the seven-year framework, annual production capacity for PAC-3 MSE interceptors is expected to rise from approximately 600 to 2,000 units. Taiclet stated: “That’s more than tripling the production rate and supporting U.S. forces, allies and partner nations in today’s increasingly complex geopolitical environment.”
He noted that Lockheed Martin was already positioned to execute the expansion, having increased PAC-3 MSE production by more than 60% over the past two years alone. This included delivering “a record breaking 620 missiles in 2025,” which he cited as evidence of the company’s ability to scale.
Taiclet said the framework would allow Lockheed Martin to invest with confidence in its facilities, workforce and supplier network. He added that these investments were expected to generate cost savings and efficiencies that would deliver value both to taxpayers and to company shareholders.
The CEO emphasised that the agreement would strengthen the broader defence industrial base, including small and medium-sized businesses across the supply chain. He said it would support thousands of American jobs while enabling suppliers to scale through new technology, automation and training.
Addressing concerns about risk and funding stability, Taiclet highlighted provisions designed to protect industry if government plans change. He said that if the seven-year framework were adjusted, “there’s provisions in the agreement… that industry will be rateably reimbursed for any sort of non-absorbed, non-recurring expense,” ensuring companies are made whole.
Taiclet also outlined how production would ramp up to reach the 2,000-per-year target by the end of 2030. He said this would involve “a full court press” across production elements, including new advanced tooling lines, additional workforce hiring, increased automation and expanded use of existing factory floor space.
Supplier diversification was another key element of the plan, according to Taiclet. He said lower-performing suppliers would be replaced or supplemented by second and third sources, with time and cost for this transition already built into the company’s operational planning.
On financial structure, Taiclet explained that the framework acknowledges inflation over the seven-year period and includes escalation mechanisms to address rising operating costs. He added that the government had agreed to negotiate financing arrangements so that the scaling effort would be “cash neutral, year by year,” for participating companies.
Taiclet stressed that Lockheed Martin would fund non-recurring investments itself, while advanced payments and timing mechanisms would prevent negative cash impacts. He said the objective was that “there will be no negative impact… from a cash perspective, in the current year or the coming years.”
He also linked the agreement to real-world operational experience, noting that PAC-3 MSE had been used to defeat missile attacks against US and allied forces. As a result of this proven performance, he said, global demand for the system “continues to grow.”
Taiclet described the framework as a “groundbreaking example” of how government and industry can modernise acquisition while delivering operational outcomes. He concluded that Lockheed Martin was proud to partner with the Department of War and remained focused on executing “with urgency, discipline and accountability” as the framework moves towards an initial contract award, subject to future appropriations.
Under Secretary of War for Acquisition and Sustainment Michael P. Duffey echoed the importance of the new model during the briefing. He said it represented a decisive shift away from slow and bureaucratic processes and aligned industry incentives with national security needs.
