The Department of War (DoW) said it has signed a seven-year framework agreement with Lockheed Martin that sets a new acquisition model designed to expand munitions production and procurement by providing long-term demand certainty and incentivizing industrial investment.
DoW said the approach is intended to increase output, reduce lead times, and improve supply-chain management efficiencies, while limiting upfront government facilitization and capacity investments. The agreement follows the Department’s broader Acquisition Transformation Strategy, which DoW said was outlined by Secretary of War Pete Hegseth during an “Arsenal of Freedom” speech at Fort McNair in November.
Under the framework agreement, Lockheed Martin plans to raise annual production of the PAC-3 Missile Segment Enhancement (MSE) interceptor from roughly 600 to 2,000, aligning capacity with long-term demand from U.S. forces as well as allied and partner nations, according to the Department.
The framework agreement establishes the basis for negotiating a seven-year supply contract, subject to Congressional authorization and appropriations. DoW said the deal includes strict delivery accountability and a mechanism for the Department and Lockheed Martin to share in enhanced profitability generated by new equipment and volume efficiencies.
DoW also said supply-chain facilitization will be a key component of scaling production, with the Department planning to work with critical PAC-3 MSE suppliers to support seven-year subcontracts aimed at ensuring component capacity expands in step with interceptor production.
The Department said the PAC-3 MSE framework agreement advances its acquisition transformation priorities and reflects work by the Munitions Acceleration Council, which it described as focused on removing structural barriers to scaling weapons production and translating urgent operational demand into executable long-term industrial capacity.
KEY QUOTES:
“We will stabilize demand signals. We will award companies bigger, longer contracts for proven systems so those companies will be confident in investing more to grow the industrial base that supplies our weapons systems more and faster.”
Pete Hegseth, Secretary of War
“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. 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.”
Michael Duffey, Under Secretary of War for Acquisition and Sustainment
