Pentagon signs framework deals to expand PAC-3, Thaad production over 7 years
The Pentagon, headquarters. Image courtesy: Wikimedia Commons
New Delhi: The Pentagon has signed two framework agreements with General Dynamics Ordnance and Tactical Systems (GD-OTS) and Lockheed Martin to expand production of critical components for PAC-3 MSE and Thaad interceptors. The agreements will initiate seven-year multiyear procurement contracts aimed at supporting higher production rates for the two missile-defence programmes.
The agreements are intended to support a sharp increase in production capacity for the Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) and Terminal High Altitude Area Defense (Thaad) programmes, according to the Pentagon.
Under the production plans, annual PAC-3 MSE capacity is expected to rise from about 600 interceptors to approximately 2,000, while Thaad output is planned to increase from 96 to 400 interceptors a year. The Pentagon did not disclose a dollar value for the latest framework agreements.
What the agreements cover
GD-OTS will expand production of specialized components required for the PAC-3 MSE and Thaad programmes. The Pentagon identified motor cases, seeker housings and midsections, and shroud deployment systems among the components covered by the manufacturing expansion.
The agreements provide for guaranteed minimum annual procurement quantities, which the Pentagon said would give general dynamics and lower-tier suppliers greater certainty to increase their workforce, purchase materials in bulk and upgrade manufacturing facilities.
The under secretary of war for acquisition and sustainment, Michael P Duffey, said the arrangements were intended to shorten acquisition timelines and rapidly expand domestic manufacturing capacity. The Pentagon did not identify the GD-OTS facilities where the additional components will be produced or announce specific new delivery dates under Monday’s agreements.
Lockheed Martin is the prime producer of the PAC-3 MSE and Thaad interceptors under separate multiyear procurement contracts, while the latest framework agreements are aimed at scaling supplies of critical subcomponents required to sustain the higher production rates.
PAC-3 MSE capacity targeted at 2,000 a year
The supplier agreements support an existing Pentagon plan to increase PAC-3 MSE production capacity from about 600 interceptors annually to approximately 2,000. Lockheed Martin said in July that it had received a seven-year undefinitized contract modification for up to $53.86 billion for PAC-3 MSE production.
Combined with a $4.7 billion first-year award announced earlier, Lockheed Martin placed the total potential value of the multiyear PAC-3 MSE programme at up to $58.62 billion. That amount relates to the separate PAC-3 MSE prime-production programme and is not the value of the framework agreements announced on August 31.
Lockheed Martin has said the multiyear programme is expected to allow it to more than triple PAC-3 MSE production capacity by the end of 2030. The company’s facility in Camden, Arkansas, carries out final all up round production for PAC-3 MSE interceptors. Lockheed Martin has said employment at the site could rise from about 1,200 to around 1,850 as production expands.
Thaad production planned to rise to 400 a year
The Pentagon is also working with Lockheed Martin to increase annual Thaad interceptor production from 96 to 400. In June, Lockheed Martin Missiles and Fire Control received a multiyear Thaad production contract valued at about $35.33 billion.
The Pentagon said work under that contract would run from March 2026 through June 2032, with production spread across facilities in Dallas, Texas; Sunnyvale, California; Troy, Alabama; and Camden, Arkansas. The $35.33 billion Thaad contract is also separate from the latest framework agreements.
Lockheed Martin had earlier said the seven-year Thaad production programme was intended to quadruple interceptor output, while additional manufacturing capacity would be developed to support the higher production rate.
The Pentagon said the latest agreements were designed to give manufacturers and lower-tier suppliers a stable long-term demand signal, allowing them to expand their workforce, secure materials in larger quantities and invest in production facilities.
The agreements are expected to support the higher PAC-3 MSE and Thaad production rates as the Pentagon moves ahead with the two multiyear procurement programmes.
