The Pentagon announced Monday it has signed two seven-year framework agreements with Lockheed Martin and General Dynamics Ordnance and Tactical Systems aimed at dramatically increasing production of missile interceptors, as the United States works to rebuild stockpiles gutted by six months of war with Iran.
The Department of War said the agreements are designed to “increase production quantities and accelerate delivery schedules for critical missile subcomponents supporting the Terminal High Altitude Area Defense (THAAD) and Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) interceptor programs.”
Under the new frameworks, the Pentagon is targeting a tripling of PAC-3 MSE interceptor production capacity and a quadrupling of THAAD interceptor production capacity. The deals call for ramped-up manufacturing of essential subcomponents, including motor cases, seeker housings and midsections, and shroud deployment systems.
Under Secretary of War for Acquisition and Sustainment Michael P. Duffey framed the agreements as part of a broader shift in how the Pentagon works with defense contractors. “Today’s announcement represents an example of the evolution of how we partner with industry to expand the Arsenal of Freedom, outpace emerging threats, and ensure the Warfighter never faces a fair fight,” Duffey said. “General Dynamics and Lockheed Martin have answered the call. We are cutting red tape, shortening timelines, and rapidly scaling our domestic manufacturing capacity to deliver the advanced air and missile defense capabilities.”
Deals Come With Strings Attached to Congress
The agreements are structured as multiyear procurement contracts that guarantee minimum annual purchase quantities, a mechanism the Pentagon says gives General Dynamics, Lockheed Martin and their lower-tier suppliers the confidence to invest in workforce expansion, bulk material purchases and facility upgrades over the long term. But the funding underpinning both deals remains subject to annual congressional appropriations, meaning the full scope of the agreements is not guaranteed.
Financial terms of Monday’s agreements were not disclosed. General Dynamics Ordnance and Tactical Systems will lead the rapid scale-up of specialized interceptor components, while Lockheed Martin remains the prime contractor on both the THAAD and PAC-3 MSE programs.
A War That Has Drained the U.S. Missile Arsenal
The push to expand production comes as the war with Iran, which began with the launch of Operation Epic Fury in late February, has consumed American air-defense stockpiles at a pace the Pentagon did not anticipate. A July 27 analysis by the Center for Strategic and International Studies found that U.S. Patriot interceptor inventories had fallen from an estimated 2,330 before the war to between 759 and 827, a decline of roughly two-thirds. THAAD interceptor stocks were estimated to have dropped from 452 to between 234 and 278 over the same period, a decline of nearly half.
CSIS analysts Mark Cancian and Chris Park, authors of the report, warned that the shrinking stockpiles carry consequences beyond the Middle East. “There are no good alternatives to Patriot and THAAD for ballistic missile defense,” they wrote, adding that diminished stockpiles “may force the United States and its coalition partners to take more risks with interceptions.”
The CSIS report estimated that rebuilding both interceptor stockpiles to pre-war levels would take at least three years, with new fiscal year 2027 orders not expected to arrive until 2029. Cancian told the BBC that the production lag is a structural problem rather than one that can be solved by funding alone. “It takes several years to produce a missile,” Cancian said. “If you put money into the system today, you wouldn’t get a missile for three or four years. Sometimes even five. What we’re getting now are missiles that were funded in 2023.”
The drawdown has not gone undisputed. Following separate reporting that estimated even steeper losses, including a figure suggesting the U.S. had expended roughly 80 percent of its pre-war THAAD inventory, Defense Secretary Pete Hegseth publicly disputed the characterization, posting “not true” and “shame on you” in response.
Part of a Broader Pentagon Push to Ramp Up Missile Production
Monday’s agreements are the latest in a series of moves the Department of War has made since the start of the year to accelerate interceptor manufacturing under what it calls its “Acquisition Transformation Strategy.” Lockheed Martin was the first contractor to sign on, entering a framework agreement in January to quadruple THAAD production. That framework was converted into a formal seven-year, up-to-$35 billion undefinitized contract action in late June, a mechanism that allows manufacturing to begin before final pricing is settled.
Under that June contract, Lockheed Martin is working to raise annual THAAD interceptor output from roughly 96 to about 400 interceptors per year, a fourfold increase, with production spread across facilities in Dallas, Texas; Sunnyvale, California; Troy, Alabama; and Camden, Arkansas. Tim Cahill, president of Lockheed Martin Missiles and Fire Control, said the shift to multiyear procurement was intended to “strengthen the defense industrial base, expand production and deliver capabilities to the American warfighter at unprecedented speed and scale.”
On the Patriot side, the Army awarded Lockheed Martin a separate contract worth up to $58.6 billion on July 29 to produce PAC-3 MSE interceptors through fiscal year 2032, expanding on an earlier $4.7 billion award for accelerated PAC-3 MSE production issued in April.
Cost and Timeline of the Rebuild
CSIS estimated that a single PAC-3 MSE interceptor costs roughly $5 million under the fiscal year 2027 budget request, while a THAAD interceptor costs nearly $12 million. Using those figures, the think tank calculated that replacing the roughly 1,700 combined Patriot and THAAD interceptors expended since the war began would cost approximately $10 billion.
The Trump administration has requested $95 billion for munitions in its fiscal year 2027 defense budget, along with an additional $21 billion in a war supplemental request, funding the CSIS report described as reflecting the urgency of the interceptor shortfall.
What Comes Next
Monday’s agreements do not carry a disclosed price tag, and unlike Lockheed Martin’s June THAAD contract, they remain framework agreements rather than executed contracts, meaning final production numbers, delivery schedules and funding levels have yet to be locked in. The Pentagon has said it intends to pursue similar long-term agreements across other missile programs, arguing that defense manufacturers need multi-year certainty to justify investments in facilities and workforce that can take years to pay off.
For now, the scale of the ramp-up illustrates how far the Pentagon believes it must go to restore its missile-defense stockpiles: tripling PAC-3 MSE output and quadrupling THAAD output represents one of the most aggressive expansions of American air-defense manufacturing in recent years, undertaken in the middle of the very war that depleted the arsenal in the first place.