The Army has awarded Lockheed Martin [LMT] a multiple-year deal for procurement of Joint-Air-to-Ground Missiles (JAGM) and Hellfire missiles that could be worth up to $4.5 billion, the company said Monday.
“Not only does this contract award support sustained production, but this is the first joint production contact award from the U.S. government for JAGM and Hellfire,” Joey Drake, Lockheed Martin Missiles and Fire Control’s program management director for air-to-ground missile systems, said in a statement. “This contract award, along with last year’s JAGM full-rate production decision, shows the Army’s confidence in our product’s combat effectiveness and defensive capabilities, including its potential for longevity due to the support for increased production.”
The Army officially awarded the multiple-year deal to Lockheed Martin on March 31, with the first year valued at $439 million.
“Because it’s a multiple-year award, the contract offers three additional follow-on awards starting in late 2023, allowing for a total contract value of up to $4.5 billion over the next four years,” the company wrote.
The Army approved JAGM to move into full-rate production this past September, following the successful completion of operational testing with the weapon on the service’s AH-64E and the Marine Corps’ AH-1Z Viper helicopters (Defense Daily, Sept. 8 2022).
Lockheed Martin said it anticipated a “significant increase” in international interest for JAGM, adding the new contract “provides maximum flexibility to facilitate the procurement of both systems to multiple domestic and international customers, allowing for the future expansion of both Hellfire and JAGM’s global footprint.”
The Army’s contract announcement on March 31 said the deal includes funds for Foreign Military Sales with Australia, Czech Republic, France, South Korea and Thailand.
Doug Bush, the Army’s top acquisition official, told reporters last week the Army was getting “very close to being ready to announce” new multi-year munitions deals, for FY ‘23 that would not require specific appropriations language to execute.
Multi-year deals differ from “multiple-year” contracts, such as the new Lockheed Martin award, since they involve a buy of more than one year’s requirement without requiring options to be exercised for each subsequent year.
Army officials have noted the service will require specific approval language from the appropriations committees to enter into such multi-year deals above $500 million.
Army Secretary Christine Wormuth confirmed last month the service plans to seek congressional approval to award multi-year procurement contracts for GMLRS rockets and Patriot Advanced Capability (PAC)-3 missiles, both built by Lockheed Martin, in fiscal year 2024, citing cost savings and industrial base stability as key factors in the pitch to lawmakers (Defense Daily, March 16).
Bush said last week the Army’s aim for using multi-year deals to procure GMLRS rockets and PAC-3 missiles is to get a cost savings percentage in the “high single digits” as compared to annual purchases for those munitions (Defense Daily, March 28).