Lockheed Martin to raise PAC-3 MSE production to 2,000 interceptors annually under U.S. Department of War deal

The agreement is a direct outcome of the Department of War’s Acquisition Transformation Strategy and introduces a new acquisition model designed to provide long-term demand certainty. This approach is intended to enable industry investment, increase production rates and improve operational efficiency while maintaining initial cash neutrality through a collaborative financing structure.

Under the framework, Lockheed Martin is expected to build on recent production growth, having increased PAC-3 MSE output by more than 60% over the past two years. In 2025, the company delivered 620 interceptors, an increase of more than 20% compared with the previous year.

Global demand for PAC-3 MSE interceptors has increased following recent operational use, with the agreement expected to more than triple production capacity. Lockheed Martin said the programme will add thousands of US jobs across the supply chain and strengthen the resilience of the defence industrial base through predictable, sustained production.

“We appreciate the Department of War’s leadership in advancing acquisition reform,” said Jim Taiclet, Lockheed Martin chairman, president and chief executive officer. “This first-of-its-kind approach builds on years of advocacy and collaboration to bring commercial practices to major acquisition programs.”

“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,” Taiclet added. Lockheed Martin said it will continue working with the US government towards an initial contract award, expected following final fiscal year 2026 congressional appropriations.