Lockheed Martin wins $35B Pentagon deal to boost THAAD production
What's the story
Lockheed Martin has been awarded a contract worth up to $35 billion by the Pentagon. The contract is aimed at increasing the production of Terminal High Altitude Area Defense (THAAD) interceptors. The move comes as part of an effort to replenish missile defense stockpiles and ramp up output amid rising global tensions and military operations in Iran.
Strategic discussions
Trump to convene munitions makers at White House
US President Donald Trump will meet munitions makers at the White House on Wednesday. This is the second such meeting, following a similar one in March. The earlier meeting had CEOs and other officials from major defense firms such as BAE Systems, Northrop Grumman, RTX Corp., Boeing, Honeywell Aerospace, and L3Harris Technologies. The focus of these meetings is to discuss strategies for ramping up weapons production.
Acceleration efforts
Pentagon's push for production speed-up
The Pentagon is pushing contractors to speed up their production processes. This comes after tentative production agreements were struck earlier this year. These include a deal with Lockheed Martin to triple the production of Patriot interceptors and quadruple the output of THAAD interceptors. The latter are specifically designed to intercept ballistic missiles.
Expansion plans
Multiyear deals signed with RTX Corp.
The Pentagon has also signed multiyear deals with RTX Corp. These contracts are aimed at increasing the production of Tomahawk cruise missiles and AMRAAM air-to-air missiles. However, these "framework agreements" have not yet been converted into formal contracts. Five defense industry executives, speaking on condition of anonymity, welcomed the agreements but stressed that Congress must first appropriate funding before companies can invest more heavily in components and production capacity.
Production focus
US administration's pressure on defense contractors
The US administration has been putting pressure on defense contractors to focus more on production than shareholder payouts. In January, Trump signed an executive order to identify contractors who are underperforming on government contracts but continue to distribute profits to shareholders. GM Defense, the automaker's defense business unit, and Lockheed have said that the US Department of Defense facilitated their partnership due to rising demand for additional production capacity.