Lockheed Martin has been awarded a $17 billion contract by the U.S. Missile Defense Agency to develop the Next Generation Interceptor (NGI), which is designed to protect the United States against intercontinental ballistic missile attacks.
This program is crucial for addressing both current threats and potential future advancements by nations like North Korea and Iran.
The contract is particularly significant for Lockheed Martin, following the U.S. government’s decision to cut back on F-35 orders and the discontinuation of the Future Attack Reconnaissance Aircraft program, for which Lockheed had proposed a design.
The NGI project is part of the broader Ground-Based Midcourse Defense (GMD) system, which includes a network of radars and interceptors aimed at detecting and neutralizing incoming missiles.
The first operational interceptor under this new program is expected by 2028.
According to Sarah Hiza, the general manager of Strategic and Missile Defense at Lockheed, the company is “committed to delivering reliable interceptors.”
The contract announcement led to a 0.60% increase in Lockheed’s stock price, closing at $462.08.
The competition for the NGI contract was initially between Lockheed and Northrop Grumman, with both firms receiving separate contracts in 2021 to develop preliminary designs.
The decision to award the contract to Lockheed follows the Pentagon’s previous cancellation of a Boeing contract due to technical issues with their “kill vehicle” design, leading to a restart of the bidding process.
The NGI program is estimated to be worth about $17.7 billion over its lifetime, with the Biden administration requesting $28.4 billion for missile defenses in the fiscal 2025 budget.
The GMD system, which began in the late 1990s and was declared operational in 2004, has had a mixed success rate in interception tests.
Despite these challenges, the need for advanced missile defense capabilities remains critical, especially in light of recent geopolitical tensions that have spurred increased demand for U.S. military equipment. In 2023, sales of U.S. military gear to foreign nations surged by 16% to a record $238 billion.
Amidst these developments, Lockheed has indicated a 1% reduction in its workforce in 2024 to streamline operations and reduce costs, despite forecasting a lower profit than anticipated due to ongoing challenges in its largest aeronautics segment.