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Lockheed Martin and the US Army have signed a US$4.5 billion (AU$6.68 billion) multi-year contract to deliver Patriot Advanced Capability-3 Missile Segment Enhancement systems to provide missile defence capabilities.
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The Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) is capable of countering incoming threats including tactical ballistic missiles, cruise missiles, hypersonics, and aircraft, building on the success of the Patriot missile system.
The multi-year contract allows the US Department of Defense to work with key suppliers like Lockheed Martin and the respective branch to purchase goods or services over multiple years.
Douglas Bush, US Army assistant secretary for acquisition, logistics and technology, said, “This multiyear contract award for the PAC-3 MSE missile follows through on the Army’s commitment to stabilise and expand our production capability for this critical weapon system, which is vital to supporting the US Army and Joint Force, along with Ukraine and other allies around the world.”
Unlike annual contracts, multiyear contracts obligate the government to procure goods or services over a period of years, subject to the availability of funds, providing stability and predictability for both the DOD and suppliers, facilitating better planning and resource allocation.
This contract award is an initial step to increasing production and incentivising innovation while reaping the cost savings benefits of economic order quantities and long-term supply chain reliability.
Brigadier General Frank Lozano, program executive officer missiles and space, said, “Multiyear contracts are mutually beneficial to the United States government and our industry partners. They strive to lower procurement costs by allowing bulk purchasing and reducing administrative strain and costs associated with annual contract renewals, while also providing our suppliers with a stable demand forecast, encouraging investment in production capacity and capability improvements.”
The PAC-3 family of missiles defend against incoming threats using direct body-to-body contact that delivers exponentially more kinetic energy on the target than can be achieved with blast-fragmentation mechanisms.
The PAC-3 MSE expands the lethal battlespace with a two-pulse solid rocket motor, providing increased performance in altitude and range.
