Lockheed Martin Wins $17B Contract To Shield US From North Korea, Iran Missile Threats

In a significant development for the defense sector, Lockheed Martin LMT has clinched a substantial contract with the U.S. Missile Defense Agency, marking a pivotal moment for the company amidst recent budgetary adjustments and competitive pressures.

What Happened: Lockheed Martin has been awarded a $17 billion contract for the development of the Next Generation Interceptor (NGI), Reuters reported on Tuesday. This system is integral to the United States’ defense strategy against intercontinental ballistic missile threats.

The NGI program is designed to counter potential threats from nations such as North Korea and Iran. This contract is a significant win for Lockheed Martin following the U.S. government’s decision to reduce F-35 jet orders and the cancellation of a helicopter project that Lockheed had been involved in.

The contract will modernize the Ground-Based Midcourse Defense (GMD) system, which includes radars and interceptors to protect the U.S. from missile attacks.

Sarah Hiza, general manager at Lockheed, expressed the company’s commitment to delivering effective interceptors, with the first operational interceptor expected by 2028. The NGI is in the technology development phase and will move to product development in May, according to Lieutenant General Heath Collins.

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After Boeing Co. lost a contract for a “kill vehicle” due to technical issues, Lockheed won the bid for the entire interceptor system. The NGI program’s lifetime value is estimated at $17.7 billion, with the Biden administration requesting $28.4 billion for missile defenses in the fiscal 2025 budget.

Despite previous challenges with the GMD system and lower-than-expected profit forecasts due to supply-chain issues, Lockheed and other U.S. defense companies have seen a surge in demand for military equipment, with foreign military sales hitting a record $238 billion in 2023.

Why It Matters: The recent contract win for Lockheed Martin comes at a critical time for the company. Earlier this year, U.S. defense contractors, including Lockheed, faced declining shares due to legislative stalemates in Washington, which cast uncertainty over government spending. This contrasted with the rising stock prices of European defense firms following the global military boom.

Lockheed’s recent $4.10 billion contract from the Missile Defense Agency for the Command and Control, Battle Management, and Communications (C2BMC) system, is part of this broader effort to maintain its leadership in defense innovation and global interoperability.

With the stock closing at $453.08 on Monday, up 0.7% from the previous close, and a volume of 2,442,119, Lockheed Martin’s recent contract wins demonstrate resilience and adaptability in a changing defense landscape.

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Photo courtesy: Lockheed Martin