Lockheed Martin Wins Contract to Support THAAD Missile System

by: Matthew Potter
February 7, 2012

Category: Business Line, Companies, Contract Additions, Contract Awards, Countries, Department of Defense, development program, Events, Lockheed Martin, MDA, missile defense, production program, Raytheon, Services, U.S. Army, UAE, United States | RSS 2.0

One of the advantages of being the prime contractor on a major program is that after it is designed and developed and begins production you receive contracts to continue to upgrade and support the system. Lockheed Martin (LMT) the main contractor for the U.S. Army’s Terminal High Altitude Area Defense (THAAD) system was awarded a contract to provide support to future upgrades to the land based missile defense system.

The THAAD is the bigger, longer ranged part of the Army’s missile defense program. The modified air defense missile system, PATRIOT, is the shorter ranged component. THAAD will be used to provide defense of larger areas and more potential targets then PATRIOT which is normally used to provide close in defense. The PATRIOT radar and C3I system is made by Raytheon (RTN) while the PAC-3 missile is manufactured by Lockheed.

The contract which is an Indefinite Delivery / Indefinite Quantity (ID/IQ) one has the potential value of over $500 million if all work is awarded. It provides for development, integration and testing of upgrades as well as work on improving all parts of THAAD. This includes the missile, launcher, radar and C3I components.

Because it is an ID/IQ contract there is no guarantee that any work will be awarded under it. Lockheed will be awarded individual task orders which might provide for research into a better rocket motor, its integration and then testing. These kind of contracts allow the government, here the Missile Defense Agency (MDA), to pick and choose what work and how much it wants.

If the government does not buy all of the technical data for the THAAD a policy which it has pursued on many different programs as a cost savings measure then it will have to rely on Lockheed for most of the future support as that company developed it. Owning the tech data would allow a contract be awarded to another vendor or contractor who could then be given the data to support there work.

THAAD has been developed over the last several years and entered production recently. It has been deployed in limited numbers and sold to the United Arab Emirates (UAE) as its first foreign military sale. As the system gets made in larger numbers there will be efforts to upgrade and improve its capability and take advantage of new technology. Right now Lockheed is well placed to gain a great deal of that work.

Photo from U.S. Missile Defense Agency flickr photostream.

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