Lockheed Martin has announced a landmark agreement with the U.S. Department of War (DoW) to dramatically increase production of its advanced Precision Strike Missile, or PrSM.
This new framework aims to quadruple the annual production capacity, ramping up from the current target of about 400 missiles per year to a steady state of approximately 1,600. This isn't just a large order; it represents a fundamental shift in how the government procures critical munitions, providing long-term stability that encourages investment.
The decision is driven by a confluence of three main factors. First and foremost is the DoW's new 'acquisition transformation' model. Instead of short-term, annual contracts, the government is providing a reliable, seven-year demand forecast. This gives Lockheed Martin and its vast network of suppliers the confidence to make significant capital investments in factories, tooling, and workforce expansion, knowing the orders will be there. This same successful model was recently applied to the PAC-3 and THAAD missile systems.
Second, recent real-world events have created a sense of urgency. In March 2026, the PrSM was used in combat for the first time during strikes in Iran, proving its effectiveness and creating an immediate need to replenish stockpiles. Just days later, Lockheed successfully tested the next-generation PrSM Increment 2, which features a new seeker capable of hitting moving targets, such as ships at sea. This successful test expanded the missile's potential missions and further solidified the Army's long-term demand.
Finally, this massive expansion is built on a solid foundation laid in previous years. The program officially transitioned from development to full-scale production in mid-2025, followed by a multi-billion dollar contract that established the initial production ramp. With budget certainty provided by Congress in early 2026, all the pieces were in place for this major acceleration. This move is expected to generate an additional $1.9 to $4.2 billion in annual revenue for Lockheed Martin once full production is reached.
- PrSM (Precision Strike Missile): A next-generation, long-range surface-to-surface missile being developed for the U.S. Army to replace older systems.
- Acquisition Transformation: A new U.S. government procurement strategy focused on providing long-term, stable demand signals to the defense industry to encourage investment in production capacity and efficiency.
- IDIQ (Indefinite Delivery, Indefinite Quantity): A type of contract that provides for an unspecified quantity of goods or services over a fixed period, allowing for flexibility in ordering.