Multiyear contracting provides production stability and cost savings to the Army
HUNTSVILLE, Ala. – Officials from the United States Army’s Program Executive Office Missiles and Space and Army Contracting Command – Redstone Arsenal executed a contract award for Fiscal Year 2024 Patriot Advanced Capability-3 Missile Segment Enhancement production. The $4.5 billion contract awarded to Lockheed Martin Missiles and Fire Control will procure 870 PAC-3 MSE missiles and associated hardware.
“This multiyear contract award for the PAC-3 MSE missile follows through on the Army’s commitment to stabilize 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” said Douglas Bush, the Army’s Assistant Secretary for Acquisition, Logistics and Technology.
“Multiyear contracts are mutually beneficial to the United States Government and our industry partners,” said Brig. Gen. Frank Lozano, Program Executive Officer Missiles and Space. “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.”
A multiyear procurement contract is used by the U.S. Department of Defense to purchase goods or services over multiple years. This type of contract allows the DoD to commit to longer-term relationships with suppliers, typically spanning up to five years. Unlike annual contracts, multiyear contracts obligate the government to procure goods or services over a period of years, subject to the availability of funds. They provide stability and predictability for both the DoD and suppliers, facilitating better planning and resource allocation.
The PAC-3 MSE is in high demand. It defends against incoming threats using hit-to-kill technology that delivers exponentially more kinetic energy on the target than can be achieved with blast-fragmentation. The PAC-3 MSE is capable of countering incoming threats including tactical ballistic missiles, cruise missiles, hypersonics, and aircraft.
This contract award is an initial step to increasing production and incentivizing innovation, while reaping the cost savings benefits of Economic Order Quantities and long-term supply chain reliability.
The contract award is led by PEO MS and executed in partnership with ACC-Redstone Arsenal.
Please contact Darrell Ames, PEO MS’ public affairs officer, at Darrell.d.ames.civ@army.mil for more information.
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