Lockheed to Quadruple THAAD Output in $35bn Deal

The US Government's Department of War (DoW) has awarded Lockheed Martin an undefinitised contract action worth up to US$35.33bn over seven years.

According to the DoW, the aerospace and defence company will use the funds to quadruple production of Terminal High Altitude Area Defense interceptors.

The contract is one of the first multiyear procurement agreements executed under the Department of War's Acquisition Transformation Strategy.

The DoW describes this initiative as an overhaul of its acquisition system, though the agreement requires additional Congressional funding before finalisation.

THAAD interceptor production

The procurement award seeks to expand Terminal High Altitude Area Defense (THAAD) production capacity at multiple Lockheed Martin facilities across the US.

Tim Cahill, President of Lockheed Martin Missiles and Fire Control, says: "This award reflects our shared vision with the Department of War to strengthen America's Arsenal of Freedom through a transformational shift to multiyear procurement.

"This new approach propels our efforts to strengthen the defence industrial base, expand production and deliver capabilities to the American warfighter at unprecedented speed and scale."

The Wall Street Journal says that undefinitised awards require additional funding from Congress to deliver the manufacturer a final agreement.

The work will be performed at Lockheed Martin sites in Dallas, Texas, Sunnyvale, California, Troy, Alabama and Camden, Arkansas. The DoW says the performance period runs from March 2026 through June 2032.

Spending increases

According to the DoW's Fiscal Year 2027 Budget Program Acquisition Cost by Weapon System report, the DoW investment request totals US$413.1bn for procurement in FY 2027.

The report shows THAAD spending is set to increase substantially over the coming fiscal year.

The report lists FY2026 spend for THAAD as US$1.326bn, set to to increase to US$12.489bn in FY2027.

According to the report, the funds for the DoW's FY2027 programme support the procurement of 857 THAAD interceptors. 

Supply constraints

The Centre for Strategic and International Studies noted in May 2026 that a 39-day bombing and air defence campaign against Iran had depleted inventories of key US munitions stockpiles.

The US bipartisan thinktank said the time needed to rebuild those inventories has become a concern.

President Donald Trump invoked the Defence Production Act of 1950 to shore up US munitions supply chains. The act grants the president authority to influence domestic industry.

He wrote in the June 11 document: "I hereby find that conditions exist which may pose a direct threat to the national defence or its preparedness programs. In particular, systemic constraints in the munitions industrial base, including limited production capacity, fragile supply chains, long-lead dependencies and related production bottlenecks, may impair the ability of the United States to produce, sustain and expand the availability of munitions, missiles and equipment required for the national defence."

Expanding production

President Trump proposed an increase to the US defence budget to US$1.5tn for the year 2027. Reuters reported on June 24 that President Trump had met with munitions makers at the White House to replenish weapons stockpiles.

Lockheed Martin is rapidly increasing production to meet demand by the US Government. In January 2026, Lockheed Martin and the DoW signed a framework designed to quadruple the production capacity of THAAD interceptors and an additional framework to accelerate PAC-3 Missile Segment Enhancement interceptor output.

The award follows Lockheed Martin breaking ground on a new munitions production centre in Troy, Alabama. The company has committed more than US$9bn in investment through 2030.