U.S. military modernization, Lockheed Martin Corp., based in Grand Prairie, Texas, has secured a nearly $5 billion contract to produce a new generation of high-precision missiles for the Army. The deal, valued at $4,937,045,400, was announced by the Department of Defense and centers on the development and delivery of the Precision Strike Missile (PrSM) in its initial phase, known as Increment One. Awarded through a firm-fixed-price agreement, the contract emerged from an online bidding process that drew just one offer, with work expected to wrap up by the spring of 2030.
Overseen by the Army Contracting Command at Redstone Arsenal in Alabama, the project underscores a broader push to enhance the nation’s long-range strike capabilities amid evolving global threats. The announcement signals a major investment in a weapon system designed to give the Army a technological edge on future battlefields. Specific details about production sites and funding allocations remain fluid, with decisions to be made as individual orders are placed over the coming years.
For Lockheed Martin, a titan in the defense industry, the contract reinforces its role as a key partner in America’s military advancements, building on decades of experience with projects like the F-35 fighter jet and earlier missile systems. The Precision Strike Missile, designed to replace the aging Army Tactical Missile System (ATACMS), offers greater range and precision. While exact specifications remain classified, military officials have indicated that this first version of the missile can strike targets well beyond 300 miles, surpassing its predecessor’s reach.
The Army has been testing prototypes since at least 2019, with successful launches demonstrating the missile’s ability to hit targets with pinpoint accuracy, a capability deemed essential for countering modern adversaries equipped with advanced air defenses.
The significance of this contract extends beyond its dollar value. It arrives at a time when the United States is recalibrating its military posture to address challenges from nations like China and Russia, both of which have invested heavily in their own long-range missile technologies. Analysts point to the 2019 withdrawal from the Intermediate-Range Nuclear Forces Treaty, which had restricted the U.S. from developing ground-based missiles with ranges between 310 and 3,400 miles, as a pivotal moment that cleared the way for systems like the PrSM. That decision, coupled with rising tensions in regions like the Indo-Pacific and Eastern Europe, has fueled a sense of urgency within the Pentagon to deploy cutting-edge weaponry.
Military experts see the PrSM as a game-changer because of its compatibility with existing launch platforms. The missile can be fired from the M270 Multiple Launch Rocket System and the lighter, more mobile HIMARS, both widely used by the Army. Unlike the ATACMS, which takes up a full launch pod, the PrSM’s smaller design allows two missiles to fit in the same space, effectively doubling the firepower of each unit.
“This is about giving commanders more options,” said retired Lt. Gen. Thomas Spoehr, a defense analyst with the Heritage Foundation. “You’re not just extending range—you’re increasing flexibility and lethality in a single package.”
The road to this contract began years ago, as the Army sought a successor to its Cold War-era missile arsenal. Development of the PrSM kicked off in earnest in 2017, with Lockheed Martin emerging as the lead contractor after a competitive phase that initially included rival defense giant Raytheon. Early tests showed promise, with a notable milestone in 2021 when the missile struck a target over 300 miles away during a demonstration in New Mexico. Subsequent trials refined its guidance systems, ensuring it could adjust mid-flight to hit stationary targets with minimal collateral damage—a feature that aligns with modern warfare’s emphasis on precision over sheer destructive power.
Lockheed Martin has remained tight-lipped about the specifics of the production timeline, but company spokesperson Jared Adams offered a glimpse into the broader vision. “This contract represents a commitment to delivering a capability that meets the Army’s needs today while laying the groundwork for tomorrow,” Adams said in a statement.
The reference to “tomorrow” hints at future iterations of the PrSM, which could expand its role beyond land-based targets. The Army has already outlined plans for later phases, or increments, that might enable the missile to strike moving objects, such as ships, or incorporate advanced sensors to penetrate electronic jamming.
The nearly $5 billion price tag has raised eyebrows among some lawmakers, who question whether such investments align with fiscal priorities. Yet defenders of the program argue that the cost reflects the complexity of developing a system that must operate reliably in contested environments. According to a 2023 Congressional Budget Office report, modernizing the Army’s missile inventory is part of a larger $34 billion effort to upgrade artillery and rocket systems over the next decade.
Comparisons to rival systems offer additional context. Russia’s Iskander-M missile, for instance, boasts a range of about 310 miles and has been deployed in conflicts like Ukraine, showcasing its ability to strike deep behind enemy lines. China’s DF-26, dubbed a “carrier killer,” extends even farther, with estimates suggesting it can reach targets up to 2,500 miles away. While the PrSM’s initial range falls short of these benchmarks, its focus on precision and integration with U.S. platforms gives it a distinct edge, analysts say.
“It’s not just about distance—it’s about hitting what you aim for,” noted Melissa Dalton, a senior fellow at the Center for Strategic and International Studies. For the Army, the PrSM fits into a doctrine known as multi-domain operations, which envisions coordinated strikes across land, sea, air, space, and cyberspace. The missile’s ability to reach deep into enemy territory could disrupt an opponent’s command structure or supply lines, buying time for ground forces to maneuver.
The contract’s structure—a firm-fixed-price deal—places the financial risk largely on Lockheed Martin, ensuring that cost overruns won’t automatically burden taxpayers. This approach, favored in recent Pentagon acquisitions, contrasts with older cost-plus contracts that often ballooned beyond initial estimates. Still, the single-bid nature of the process has sparked debate. Defense procurement expert Michael O’Hanlon of the Brookings Institution suggested it might reflect limited competition in a highly specialized field. “When you’re dealing with bleeding-edge technology, the pool of players shrinks,” O’Hanlon said. “But it’s worth asking whether that lone bid was truly contested.”
As production ramps up, the economic ripple effects will likely be felt beyond Texas. While exact work locations remain undecided, Lockheed Martin operates facilities across the country, from California to Florida, that could contribute components or expertise. Past projects of this scale have supported thousands of jobs, a point often highlighted by the company in its dealings with Congress. The Army, meanwhile, will begin integrating the PrSM into its arsenal as units become available, with full operational capability expected by the late 2020s.
The completion date five years from now offers a window into the Pentagon’s planning horizon. The PrSM’s adaptability—its potential to evolve through future increments—positions it as a long-term asset, capable of addressing threats that don’t yet exist. For now, though, the focus remains on delivering the first batch, a task that will test Lockheed Martin’s engineering prowess and the Army’s strategic foresight.
