Because of Iran: The Pentagon will purchase Patriot interceptors for $58.9 billion

The US Department of Defense has signed one of the largest procurement contracts in its history with Lockheed Martin for the purchase of Patriot interceptors for a sum of $58.9 billion.

The contract is intended to dramatically increase the US inventory of interceptors, which has been depleted against the backdrop of the wars in Iran and Ukraine, and assessments of a possible future conflict with China. The US is already delaying shipments of interceptors to Ukraine and has postponed shipments to Switzerland until 2032, in order to prioritize the protection of US forces in the Gulf and Gulf states that have purchased Patriot systems.

This is a multi-year contract that regulates the acceleration of production for the years 2026-2032. Today, Lockheed produces about 600 interceptors per year, and the contract is expected to increase the number to 2,000, which will require Lockheed and the suppliers of rocket motors, homing heads, and warheads to expand their production lines. Lockheed has already announced that it will invest about $9 billion by 2030 in production lines in Alabama and Arkansas, and will hire more than 1,000 additional employees.

The Pentagon did not include numbers in its announcement, but the contract includes more than 10,000 interceptors, and is also expected to slightly lower their high price, at least to $4 million each. For comparison, a parallel David's Sling interceptor produced by Israel's Rafael costs about $1 million.

The pace of defense production in the US has dropped significantly since the end of the Cold War, and the Pentagon is pressuring the US defense industries to invest more in their production lines, at the expense of stock buyback programs intended to raise their price on the market and provide superior returns for investors, and also for managers who receive stock options.

Ukraine is already struggling to deal with ballistic missile attacks from Russia, after the US stopped shipments of Patriot interceptors due to the need to serve the war in Iran. In another attempt to ease the shortage, the Pentagon even recently ordered from Raytheon Patriot interceptors of the old type, PAC-2, which it had not purchased for 30 years. The deal, worth $441 million, will provide interceptors that are not designed to deal with missiles, but can intercept aircraft and UAVs. These are cheaper and faster-to-produce missiles, and adding them back to the inventory will allow saving more advanced PAC-3 interceptors for intercepting ballistic missiles.