Lockheed Martin unveiled its PAC-3 ACE interceptor on 20 July 2026, positioning it as a high-volume, lower-cost answer to the Patriot stockpile depletion grinding through both the Ukraine war and the Middle East conflict. The new missile is priced at less than half the unit cost of the existing PAC-3 MSE, which runs at about $4.2 million per missile.
PAC-3 ACE Interceptor and the Patriot Cost Crisis
Tim Cahill, president of Lockheed Martin Missiles and Fire Control, described the weapon as ‘battle-tested and budget-smart,’ saying it builds on the performance of the PAC-3 MSE. The company says the PAC-3 ACE retains the PAC-3 software used inside the MSE and is compatible with Raytheon’s PAC-3 fire control system and Northrop Grumman’s Integrated Battle Command System (IBCS), meaning it can slot into existing Patriot networks without requiring new infrastructure.
The missile is designed to counter air-breathing, cruise, and ballistic threats. Lockheed says the design ‘speeds up development, testing, and deployment far beyond traditional programmes,’ and it is collaborating with European defence industry partners on production, an arrangement already in place for the PAC-3 MSE. Components of that missile are currently built in Germany, the Netherlands, Poland, and other NATO countries.
The timing reflects genuine strain on Western air-defence inventories. Iranian drones and missiles have depleted an estimated one-third of Patriot stockpiles, with the US and Gulf states launching over 1,100 interceptors during that conflict alone. Ukraine, meanwhile, has repeatedly said its Patriot batteries cannot cope with the scale of Russian missile attacks. The expenditure rate has raised serious questions about whether the US can sustain stockpiles in a prolonged high-intensity campaign.
Production Ramp and the Race to Rebuild Stocks
Lockheed Martin delivered a record 620 PAC-3 MSE missiles in 2025, a more than 20% increase over the prior year and a more than 60% increase over the previous two years. The company currently produces approximately 600 MSEs annually.
That pace is set to accelerate sharply. On 6 January 2026, Lockheed and the US Department of War signed a seven-year framework agreement to raise annual PAC-3 MSE production capacity from approximately 600 to 2,000 missiles per year. The Department of War said the agreement is subject to Congressional authorisation and appropriations and establishes the basis for negotiating a full seven-year supply contract.
Even so, delivery pressure is building. The Kyiv Post reported in early June 2026 that Lockheed Martin had warned it could not guarantee PAC-3 interceptor delivery timelines, citing a $4.7 billion Pentagon contract under which it is working to scale output from roughly 650 missiles to 2,000 by 2033.
The PAC-3 ACE is intended to ease that burden. By cutting unit cost below the $2.1 million implied by the “less than half” threshold, the missile should allow the Pentagon and allied governments to buy more interceptors per dollar, filling gaps that the MSE’s price point makes expensive to plug at scale. Jane’s noted at the Farnborough 2026 airshow that the PAC-3 ACE continues to use the PAC-3 software from the MSE, which reduces development risk and keeps integration costs down.
Raytheon is also moving fast on its older PAC-2 line. The US Army awarded Raytheon a $442 million contract modification on 30 April 2026 for PAC-2 GEM-T missiles in support of Operation Epic Fury, the first domestic GEM-T production order in over 30 years, according to The War Zone. RTX chief executive Christopher Calio told investors the company booked over $5 billion of GEM-T orders in Q2 of fiscal year 2026 from international customers, producing a book-to-bill ratio of 2.4.
Raytheon has also secured a $3.7 billion German-funded contract to supply Ukraine with PAC-2 GEM-T interceptors, with production running partly through the COMLOG joint venture facility in Schrobenhausen, Germany. The report-level figure of roughly 200 PAC-2 missiles annually is set to climb to about 600 at a new Bavarian plant under a partnership with German firm MBDA.
Whether the PAC-3 ACE can reach meaningful volumes quickly enough to change the supply calculus depends on how fast Lockheed Martin can bring its expanded production lines online. Congressional authorisation for the MSE framework is still pending, and the PAC-3 ACE itself is described as still in development and testing, with no confirmed delivery schedule disclosed.