Lockheed Martin missile contract boost to extend production in Arkansas

Lockheed Martin Corp.’s was recently awarded a $198.7 million boost to a previous multimillion dollar contract that will enhance production on an anti-ballistic system that President Obama recently touted as a deterrent to North Korea’s nuclear threat.

According to the U.S. Department of Defense, Lockheed Martin’s Missile and Fire Control (MFC) division based in Grand Prairie, Texas, received the multimillion dollar adjustment to a previously awarded fixed-price contract for production of 20 additional Lot 8 Interceptors and associated production support efforts for the Pentagon’s so-called Missile Defense Agency’s Terminal High Altitude Area Defense (THAAD) project office in Huntsville, Ala.

With those changes, the total cumulative face value of the contract was revised upward by 29% to $882 million from the previous aware of $683.3 million, DOD officials said.  The work on the THAAD system will be performed at Lockheed Martin’s MFC manufacturing locations in East Camden; Grand Prairie, Texas; and Huntsville, Anniston and Troy, Alabama.

“This contract modification extends THAAD canister production in Camden by about two months, and will be serviced by the existing employee base,” said Lockheed Martin spokesman William Sudlow.

The work on the contract is expected to be completed by Sept. 30, 2019, but procurement funds in the amount of nearly $200 million were obligated at time of award in late January.

The upgrade to the THAAD contract is key given President Obama’s signaled this week that he wants to send the anti-missile defense system to South Korea “as quickly as possible” in response to North Korea’s recent nuclear provocations. However, China and Russia have voice strong objections to having the U.S. anti-missile system so close to their borders.

According to video and marketing materials on Lockheed Martin’s website, THAAD is capable of defining countries and entire regions against short and medium range ballistic missiles by basically knocking them out of the sky and rendering them useless. THAAD interceptors employ Lockheed Martin’s proven “hit-to-kill” technology to destroy missile threats inside and outside the atmosphere, the company said.

“When enemies attack, governments must be ready to defend their soldiers, citizens and infrastructure. That’s where THAAD comes in – one of the most advanced missile defense systems in the world,” Lockheed Martin boasts on its website.

Earlier this week, the White House said President Obama spoke by phone with President Park Geun-hye of the Republic of Korea to discuss North Korea’s recent launch using ballistic missile technology. The two leaders condemned the launch, and they agreed that it represents yet another destabilizing and provocative action by North Korea in flagrant violation of numerous United Nations Security Council resolutions.

And because the United States is committed to its regional allies’ security, “We will take all necessary steps to defend ourselves and our allies and respond to North Korean provocations,” Pentagon Press Secretary Peter Cook said in a news release.

Based on North Korea’s evolving threats, the U.S.-South Korea alliance will examine its missile defense posture and the feasibility of U.S. Forces Korea operating a THAAD system as soon as possible, Cook said.

In Lockheed Martin’s recent fourth quarter earnings report, the company’s MFC division saw net sales increase by $106 million to nearly $2 billion, up 6% from $1.86 billion in the same period in 2014. MFC’s Camden Operations facility manufactures THAAD ground vehicles and missile canisters, the Patriot Advanced Capability-3 (PAC-3) missile system, and the Guided Multiple Launch Rocket System (GMLRS).

According to Lockheed Martin, officials, the U.S. Army recently activated the fifth of seven programmed THAAD batteries at the end of 2015. Lockheed Martin delivered the 100th THAAD interceptor earlier in 2015. If the anti-ballistic system is purchased by South Korea, the country would be the second U.S. ally to deploy the system. The United Arab Emirates was the first international partner to procure the THAAD system with a contract awarded in 2011.