Sent to newspapers 10/2/2026
Restocking the magazines
This week, multi-year contracts were signed with RTX for accelerated production of the Advanced Medium-Range Air-to-Air (AMRAAM) missile and the Standard Missile-6 (SM-6). This follows a contract award earlier in the summer to RTX to ramp up production of Tomahawk missiles from around 60 units per year to more than 1,000.
The interesting thing about this massive acceleration of missile production is not the scale, but the framework. The Pentagon executed framework agreements back in early February with the largest defense manufacturers that forced them to direct capital into plant expansion. The agreements, which followed a January executive order, (Executive Order 14372, “Prioritizing the Warfighter in Defense Contracting”) specifically prohibit underperforming contractors from executing stock buybacks or paying dividends to shareholders and they cap executive compensation, tying it directly to contract delivery.
The incentive? Multi-year accelerated delivery contracts that stabilize production lines and guarantee revenues across Congressional budget cycles. Part of the cost creep that bloats weapons systems is the added cost of delays caused by the annual budget process that invariably is weeks or months late every year dating back more than three decades.
A missile production line would like to work like a commercial automotive assembly line with standard quantities, known budgets and regular demand. When you are only making 60 of a thing a year, like the Tomahawk missile, they become less of a commodity and more of a bespoke luxury item.
Similar agreements were made for Patriot components, THAAD interceptors, SM-3s and lower-cost munitions. Additionally, other elements of the supply chain for high-end munitions like rocket motors were reviewed and additional manufacturers have been brought online.
The same limitations on buybacks, dividends and executive compensation outlined in the executive order and the framework agreements are in the Senate version of the National Defense Authorization Act (NDAA) with wide bipartisan support, largely a progressive-populist coalition. These provisions of the NDAA will face more resistance in the House as pro-business, pro-defense industry members will see this as overreach.
Me? I am torn. As a defense contractor myself, I can tell you compliance as a tiny business is hard. It raises my cost to comply with Federal Acquisition Regulations (FAR) and Defense Contract Audit Agency requirements, and many of them aren’t suitable for small businesses. Sometimes large competitors will push for them to apply to all firms to try and crowd out competitors. Sometimes contracting officials just don’t care.
So one on hand I’m not a fan of more government scrutiny into how businesses operate. On the other, I recall how the airlines reacted to their pandemic bailouts: they took the money, promised not to reduce their workforces, then paid dividends and reduced their workforces. Or how the USS Gerald Ford (CVN 78) took two decades to build and the shipyard got paid for every delay and cost overrun.
The Pentagon is asking Congress for $1.5 trillion this year. Some accountability from industry – and these contractors in the framework agreements are all on the top ten list of largest defense contractors by annual billing – means someone is looking out for our tax dollars.
Much of the credit for these framework agreements as well as the entire overhaul of the FAR, goes to the Undersecretary of War*/Defense for Acquisition and Sustainment, Michael P. Duffey. He has charged the team executing the rewrite of the government’s contracting regulations to strip the FAR down to only statutory requirements and procurement essentials while cutting red tape and speeding timelines.
I waited three years from market research to contract award for my last major procurement. In that time, everything about the requirement had changed, making it nearly impossible to propose. So far, Duffey’s work in this arena has been top-notch.
In 2026, many, including this author, have been counting missiles. It’s clear from the timeline of the framework agreements that the Pentagon has had a plan to replenish our stocks before launching Operation Epic Fury. We won’t see a thousand new Tomahawks by Thanksgiving, but progress is being made.
Lockheed Martin, fueled by multi-year THAAD and Patriot Advanced Capability-3 Missile Segment Enhancement contracts (PAC-3 MSE), is taking the Pentagon prescription to heart. In the second quarter, it completely reversed its stock buyback position by 100%, reporting purchases of zero. Lockheed has directed between $8 and $9 billion of its own capital into plant expansion to tackle its record $260 billion-plus backlog.
RTX has also halted buybacks. Its infusion of cash into physical plant has changed its profile and helped keep its stock price relatively flat (2026 is possibly a good year to buy defense stocks) despite the award of these massive contracts.
The most interesting thing about this quiet transformation of the defense industrial base is that it is so quiet.
I watched Pete Hegseth’s State of the Force address on Wednesday. In an hour-long event, this effort was given approximately 90 seconds. It was not one of the six initiatives that headlined Hegseth’s remarks. It was not part of his he-man “patriotic cowboy” opening where he said with no irony that America’s military was now “testosterone on top.” It was a brief moment of relevance that I decided to research further.
Fixing military procurement – one of the largest single line items in our country’s massive budget – could be one of the greatest successes of this administration and this Pentagon chief. I’m not sure if we will ever hear about it.
*Renaming the Department of Defense to the Department of War has yet to be approved by Congress.
Merritt Hamilton Allen is an executive and former Navy officer. She appeared regularly as a panelist on NM PBS and is a frequent guest on News Radio KKOB. A Republican for 36 years, she became an independent upon reading the 2024 Republican platform. She lives amicably with her Democratic husband north of I-40 where they run one head of dog, and one of cat. She can be reached at merritt@merrittocracy.news.