The Pentagon’s effort to dramatically ramp up interceptor missile production to replace stocks depleted by the Iran and Ukraine wars has begun reaching deeper into the supply chain of the U.S. defense industrial base.
The California-based company Karman Space and Defense announced this week that it had secured a $218 million deal with Lockheed Martin, which won a more than $35 billion contract in June to quadruple production of Terminal High Altitude Area Defense (THAAD) interceptors over the coming seven years.
Under the new Karman-Lockheed deal, Karman will produce “shrouds” for THAAD interceptors, a key component that protects the inner mechanisms and fuel of the missile before being shed with precise timing in flight.
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The deal could be key to helping Lockheed meet its stated goal of increasing production from 96 to nearly 400 THAAD interceptors per year.
U.S. military officials say THAAD, an air defense interceptor consistently used in the Iran war, is a critical defense mechanism against rocket-powered drones and incoming ballistic missiles.
While the Pentagon has consistently claimed that stockpiles are secure, reports by the Center for Strategic and International Studies (CSIS) place the inventory at fewer than 300 interceptors, following heavy use by U.S. forces and allies at the beginning of the conflict.
Replenishing THAAD and other heavily used weapons stocks to prewar levels will take three years or more at current production rates, according to CSIS estimates.
“Demand for missile defense capabilities is accelerating, and meeting that demand will require significantly more capacity across the industrial base,” Jon Rambeau, chief executive officer of Karman, said in a statement. “This long-term agreement deepens our partnership with Lockheed Martin and enables us to support increased THAAD production for years to come.”
Lockheed Martin has promised to maintain a fixed price with the Pentagon for THAAD interceptors through 2032.
Karman’s $218 million is less than 1% of the roughly $35 billion prime contract. Many other critical suppliers down the supply line will also have to increase their production for Lockheed Martin to hit the promised 400-a-year mark.
Defense industry sources say more long-term contracts from the Pentagon, like the seven-year deal with Lockheed Martin, will support lower-level suppliers.
In August, Karman said it was negotiating three long-term defense agreements with a combined potential value of more than $1 billion. The company, which employs more than 1,700 people across the United States, expects all three of the agreements to become firm contracts by the end of 2026.
Other smaller suppliers may not be ready for similar contracts, according to a report by the Pentagon’s office of the inspector general released in September.
The report said Operation Epic Fury — the joint U.S.-Israel military campaign against Iran — has created “strategic inventory shortfalls and revealed industrial base bottlenecks for munitions resupply.”
A key problem, according to industry analysts, centers on the production of chemicals for the solid rocket motors that power interceptor missiles like those used in the THAAD system.
Solid rocket motor producer L3Harris recently announced plans to expand its facilities in Camden, Arkansas, for increased solid rocket motor production. The production will center mostly on rocket motors used in larger surface-to-surface missiles.
However, at the end of September, L3Harris also announced that it had sealed a contract with Lockheed Martin worth more than $6 billion over the next seven years for THAAD propulsion systems.
“Our planned facility expansions, along with ongoing investments across our propulsion portfolio, will ensure we remain ready to support the nation’s most important missile defense missions,” Ken Bedingfield, president of L3Harris’ Missile Solutions business said in a statement at the time.
He said the expansions will “continue to enable a wartime footing” for the United States.
The challenge for the broader industrial base will be delivering on the promises of speed and cost that the seven-year deal requires. Defense industry sources have told Threat Status at The Washington Times that the next 18 months will determine if the longer seven-year contract model is actually able to stabilize the industry.
Questions also loom over the extent to which the Pentagon’s current production push may be impacted by the upcoming U.S. midterm elections and defense funding debates on Capitol Hill.
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