Army, Lockheed ink potential $4.5B deal for JAGM, Hellfire missiles

CORRECTION 4/4/2023 at 5:05 pm ET: After publication, the Army clarified that “multiple-year” deals, like this one, and “multi-year” deals are contractually distinct. This report has been updated throughout to reflect that correction.

WASHINGTON – The Army and defense giant Lockheed Martin inked a new deal with high-end missiles that may end up being worth an eye-watering $4.5 billion over several years, Lockheed announced today.

The deal, for AGM–179 Joint-Air-to-Ground Missiles (JAGM) and Hellfire missiles, is worth $439 million for the first year but could soar towards $4.5 billion by the end of year four. The company did not disclose how many of each weapon it has now been tasked with producing.

“Because it’s a multiple-year award, the contract offers three additional follow-on awards starting in late 2023,” Lockheed wrote in the announcement.

The original version of this report described the arrangement as a “multi-year” deal, an acquisition tool for which Congress recently gave the military more flexibility to use for munition buys like these in hopes of reassuring industry producers and more quickly refilling American stockpiles. On Tuesday, however, Army officials contacted Breaking Defense and drew a technical distinction between what Lockheed called a “multiple-year” deal and a “multi-year.” (Multi-years, acquisition regulations say, allow services to buy material or service for additional years “without establishing and having to exercise an option for each program year after the first.”)

Still, in its Monday announcement Lockheed touted the contract as providing “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.” Lockheed noted that this contract could support what it expects to be a “significant increase” in international demand for the JAGM, while the legacy Hellfire has more than 30 foreign military sales customers.

The service greenlit full-rate production last year for the JAGM, which is designed to replace the legacy Hellfire weapon. Both missiles have parts in common and are developed in Orlando, Fla. before being assembled in Troy, Ala.

When it comes to multi-year deals, Army acquisition chief Doug Bush recently said the service would be pursuing two of them in fiscal 2023, but did not identify the deals.

He is eyeing two more multi-year deals with Lockheed in FY24, one for Patriot Advanced Capability (PAC)-3 missiles, and the other for Guided Multiple Launch Rocket System (GMLRS). Although the Army was not able to include these two weapons on their FY24 budget request due to lingering questions from the Office of Management and Budget, Bush has said the service is working with lawmakers to have both included in the budget and the cost savings for these deals could be in the “low-single digits.”

“For the FY24 ones, ultimately, Congress decides [since] we need appropriate language,” Bush said at AUSA’s Global Force conference last week in Alabama. “I think the Hill and members have shown interest and we’ve provided data for them to consider but that’s there for them to consider.”