Lockheed Martin wins $1.2 billion Army contract for PrSM Increment 2
The award follows a second successful maritime test and adds a multimode seeker for moving land and sea targets
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The Army has awarded Lockheed Martin a $1.2 billion contract to produce Precision Strike Missile (PrSM) Increment 2, following the system's second successful maritime test. The new increment adds a multimode seeker designed to hit moving targets on land and at sea. Additional flight tests are scheduled for 2027.
The contract is an indefinite-delivery, indefinite-quantity award, with work locations and funding to be set by individual task orders, and an estimated completion date of September 13, 2031, according to ExecutiveBiz. The Defense Post reports the deal is expected to produce 120 Increment 2 missiles in 2026 and 2027, with initial operational capability targeted for 2028. The Army has not disclosed how many missiles have been ordered under this award or when production will begin, though defence-industry.eu reports the contract includes a follow-on option at a fixed price.
PrSM Increment 1, the missile's earlier version, saw its first combat use during the early days of the Iran war, and Breaking Defense reports the US has since drawn down nearly all of its Increment 1 stock. Lockheed is also developing further increments: a variant tested this summer that can fly more than 1,000 kilometers, an Increment 3 with a more destructive warhead, and an Increment 4 with a range of roughly 1,000 kilometers, according to DefenseScoop, positioning PrSM to eventually replace the shorter-range ATACMS system.
The award extends a run of accelerated missile production across Lockheed Martin's portfolio and reflects steady Pentagon demand for precision strike weapons that can hit moving targets, in line with the administration's push on defense modernization and industrial base capacity. For investors, the main question is execution: Lockheed's chief financial officer has previously flagged margin lumpiness across its programs, and how smoothly this contract is delivered will matter more than its headline size.