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U.S. defense firm L3Harris Technologies received a $4.7 billion contract from Lockheed Martin to produce propulsion systems for the U.S. military’s PAC-3 MSE air defense interceptor.

The seven-year indefinite-date contract award is the largest PAC-3 propulsion contract in L3Harris’ history. It will support the production of key components for the Patriot air defense system’s advanced interceptor.

The contract will cover the production of the PAC-3 Missile Segment Enhancement (MSE) interceptor’s advanced two-pulse solid rocket motor, attitude-control motors, and a fragment explosive device known as a “lethality enhancer.”

The two-pulse motor provides the interceptor with propulsion during its flight, while the attitude-control motors help guide and maneuver the missile. The lethality enhancer is designed to increase the interceptor’s ability to destroy incoming threats.

The award is an indefinite-delivery contract, meaning the final terms and pricing will be established later. However, the seven-year agreement gives L3Harris a major role in supporting the long-term production of the interceptor. The company said the award is its largest PAC-3 propulsion contract to date.

Production Target Rises From 600 to 2,000 Missiles

The contract comes as Lockheed Martin and the U.S. military seek to expand PAC-3 MSE production. In January, Lockheed Martin announced a seven-year framework agreement aimed at increasing annual PAC-3 interceptor production from 600 to 2,000 missiles.

The increase would more than triple the previous yearly production target and represents a major expansion of the U.S. missile defense industrial base.

The PAC-3 MSE is the most advanced version of the Patriot interceptor. It is designed to counter a range of threats, including ballistic missiles, cruise missiles, and aircraft.

The interceptor uses hit-to-kill technology to destroy incoming threats through direct impact, rather than relying primarily on a large explosive warhead.

L3Harris Expands Manufacturing Capacity

L3Harris is also expanding its manufacturing capacity to support the higher production target. In June, the company broke ground on two new facilities in Arkansas that will produce propulsion systems for the Army’s PAC-3 interceptors. Both facilities are expected to become operational by 2027.

The new plants are intended to help L3Harris increase production capacity and support the larger number of interceptors required by the U.S. military and its allies.

The expansion reflects wider efforts to increase the output of critical missile defense components, which have become increasingly important as demand for air defense systems grows. The production increase comes as the U.S. military faces growing demand for advanced air defense missiles.

The Army already uses PAC-3 MSE interceptors in its Patriot air defense system. Earlier this spring, the Navy also announced plans to integrate the interceptor into its Aegis Combat System for the first time.

The move would expand the use of PAC-3 MSE beyond land-based Patriot batteries and introduce the missile into the Navy’s broader air and missile defense architecture.

Demand has also been affected by the wars in Ukraine and Iran, where missile and drone attacks have highlighted the need for effective air defense systems.

According to an August report from the Center for Strategic and International Studies (CSIS), requests for PAC-3 MSE interceptors from the U.S. Army and Navy increased sharply between fiscal years 2026 and 2027.

The report said the services’ combined requests rose from 341 interceptors in fiscal year 2026 to 3,203 in fiscal year 2027. That represents an increase of approximately 839%.

The figures highlight the gap between the number of interceptors the U.S. military is requesting and the production capacity available to supply them.

Production Expansion Faces Industrial Challenges

Despite the planned increase in production, experts warn that the U.S. defense industry may struggle to meet current demand for PAC-3 MSE interceptors.

A May report from the Foreign Policy Research Institute examined the challenges facing Patriot production and the wider U.S. missile defense industrial base. The report warned that even expanded production plans may not be enough to meet the military’s current requirements.

The challenge is not limited to the number of complete missiles produced. PAC-3 MSE production depends on a large network of suppliers producing rocket motors, guidance components, control systems, and other specialized parts.

Expanding one part of the production chain does not automatically remove bottlenecks elsewhere. The new L3Harris facilities in Arkansas are therefore part of a wider effort to increase the capacity of the entire production network.

High Cost of Intercepting Low-Cost Drones

The growing demand for PAC-3 MSE also highlights a major challenge in modern air defense: the cost of intercepting incoming threats. A PAC-3 MSE interceptor is valued at around $4 million, while an Iranian Shahed drone can cost approximately $35,000.

This creates a significant cost imbalance when expensive interceptors are used against relatively inexpensive drones. The U.S. military and its partners face the challenge of protecting important military and civilian targets without using high-cost missiles against every low-cost threat.

However, the PAC-3 MSE is primarily designed to counter more demanding threats, including ballistic missiles. Its high price reflects the advanced technology required to intercept those weapons.

The cost comparison nevertheless highlights the importance of developing a wider range of air defense systems, including lower-cost interceptors and other methods of countering drones.

PAC-3 MSE Production Becomes a Priority

The $4.7 billion L3Harris contract is part of a broader effort to expand U.S. missile defense production at a time when demand is rising. The seven-year award, together with Lockheed Martin’s production framework and L3Harris’ new Arkansas facilities, is intended to support higher output of PAC-3 MSE interceptors.

The Army’s continued reliance on Patriot, the Navy’s planned integration of PAC-3 MSE into Aegis, and the growing demand linked to recent conflicts are increasing pressure on the U.S. missile defense industry.

The planned production increase to 2,000 interceptors per year is a major step, but the size of military requests shows that the industry still faces a significant challenge in meeting demand.

As the U.S. military expands its air and missile defense requirements, the ability to produce interceptors and their propulsion systems at scale will remain an important part of its defense planning.