Summary

  • The Pentagon targets per-round missile cost through programs such as the Low-Cost Containerized Missiles initiative, but the effort leaves production throughput constraints — exemplified by RTX’s year-long Tomahawk build cycle and Lockheed Martin’s two-year Patriot production timeline — unresolved.
  • The acquisition system’s incentive structure — in which unpredictable congressional funding, Pentagon micromanagement, and modification-driven contractor revenue sustain one another — has produced missile production plants that CSIS defense-contracting expert Jerry McGinn characterized as “essentially handmade munitions.”
  • Achieving lower per-round costs risks accelerating munitions consumption on commercial supply chains not provisioned for Defense Production Act-level surge, shifting the primary constraint from unit cost to industrial throughput.
  • The Army’s target of more than 10,000 missiles by 2030 requires annual production rates of roughly 2,000 to 3,000 units — manufacturing capacity that does not currently exist at any of the four competing firms.

The Pentagon has begun pursuing cheaper, faster-produced missiles to address a stockpile drawn down by more than 1,000 Tomahawk launches in the Iran war this year, but the initiative’s primary metric — per-round cost — does not resolve the industrial throughput constraints that determine whether the United States can sustain munitions expenditure in prolonged conflict. Defense experts and industry executives have described a production system in which structural incentives, not technical limitations alone, perpetuate the slow, expensive manufacturing the new programs seek to circumvent.

The Production Condition

The U.S. military has expended more than 1,000 Tomahawk cruise missiles in the Iran war at a cost of at least $2.5 billion. CSIS estimates that RTX requires at least one year to produce each Tomahawk. Lockheed Martin’s newest Patriot surface-to-air interceptors take more than two years to make and cost approximately $4 million each — a figure that recent production-contract data suggests may understate the cost of the latest PAC-3 MSE variant. McGinn, describing the state of high-end missile manufacturing, characterized production plants as facilities that “often share more in common with specialized workshops than factory assembly lines.” The current production base is, by this account, closer to artisanal manufacturing than industrial output.

The Incentive Architecture

The article’s sources identified a system in which unpredictable congressional funding, Pentagon micromanagement, and contractor incentives operate in concert. Unpredictable funding destabilizes production runs, which undermines the business case for automation investment. Pentagon program managers, operating under an oversight framework in which the Government Accountability Office, inspectors general, and congressional committees can pursue officials for program failures but rarely for program delays, default to adding requirements and extending timelines — a posture that insulates individual careers but increases per-unit complexity and cost. Each modification generates new revenue for the contractor, creating what amounts to a cost-plus dynamic that rewards complexity. The system, as the article notes, “works for defense contractors, which generate billions of dollars in annual revenue from munitions sales and also benefit from contracts that bring new revenue with each modification.”

Government watchdogs have alleged overcharging by some defense contractors. President Trump and Defense Secretary Pete Hegseth have pledged to scrutinize contractor performance. As of the article’s publication, officials had not publicly penalized any underperforming companies — a gap between stated intent and observable action that reinforces the durability of the existing incentive structure.

McGinn’s observation that missile production plants resemble specialized workshops is, in this framing, not a description of contractor choice but a description of what the acquisition system selects for over repeated program cycles.

The Proposed Solution

The Pentagon’s response involves three service-level initiatives. The Army’s Low-Cost Containerized Missiles program requires per-round costs below $500,000; a separate Army air-defense project targets costs under $250,000 per round; and the Air Force aims to procure tens of thousands of less-costly missiles over coming years. The Army has set a target of more than 10,000 missiles by 2030.

Four companies are competing for the Army program: CoAspire, Anduril Industries, Leidos Holdings, and Kongsberg subsidiary Zone 5. The programs rely on nonstandard “other transaction authority” contracts rather than conventional Federal Acquisition Regulation vehicles. CoAspire founder Doug Denneny, a former Topgun instructor and Boeing executive, stated that the OTA contract gives the company flexibility to build a missile it can make today rather than delaying production months or longer to meet rigid program requirements. CoAspire’s Ghost missile, which uses off-the-shelf commercial components and 3-D-printed parts, has not yet completed flight testing; Denneny told the Journal testing would begin this year. “In the missile business, you are constantly having to make changes, to fix flight-test failures or improve capabilities,” Denneny said, adding that an “open and frank dialogue” with customers such as the Army and Air Force speeds timelines.

Leidos plans to produce 3,000 containerized cruise missiles over three years by modifying an existing weapon with features such as a booster rocket. Leidos defense-technology chief Doug Jones characterized the approach as building “10 Honda Accords” instead of “one Cadillac.” Neither Leidos nor any other competitor has demonstrated the ability to produce missiles at the scale the Army’s timeline requires. The 10,000-missile-by-2030 target implies annual production rates of roughly 2,000 to 3,000 units within approximately three and a half years.

The Unit-Cost Paradox

A pre-mortem analysis reveals a specific failure pathway embedded in the initiative’s logic. If cost targets are achieved — if $250,000 air-defense missiles replace $4 million Patriot interceptors in some engagement profiles — the lower per-round cost shifts the operational calculus toward more frequent use. A $4 million Patriot is rationed; a $250,000 missile is not. The stockpile depletes more rapidly than the higher-cost stockpile it partially replaces. The article’s sources do not describe any plans to pair lower-cost munitions with proportional consumption controls. Without such controls, use-rate escalation remains the default operational assumption.

The production lines the Pentagon envisions depend on commercial supply chains not provisioned for surge demand. The bottleneck moves from unit cost to industrial throughput, and the throughput constraint is hidden from a program whose primary performance metric is missile cost per round. RTX’s year-long Tomahawk production time is, in this framing, a throughput problem manifesting as a cost problem — one not solved by cost reduction alone.

The “Good Enough” Standard and Its Erosion Risk

The premise that commercial off-the-shelf components and simplified designs can deliver militarily adequate performance assumes that the threat environment remains stable enough for a “good enough” standard to hold. Todd Harrison of the American Enterprise Institute stated that the envisioned weapons “don’t need to be perfect.” Adversaries develop countermeasures against fielded capabilities, however, and weapons designed to a “good enough” standard may find that standard shifting beneath them as threat environments evolve. If cheap missiles require expensive mid-production upgrades to remain effective against evolving countermeasures, the cost advantage erodes and the program risks reproducing the modification-driven cost spiral it was designed to escape — the same dynamic that, per the article’s sources, contributed to high-end missile costs in the first place.

Structural Resistance from the Incumbent Industrial Base

Programs that succeed in fielding cheaper weapons at scale would redirect billions in annual munitions revenue away from incumbent prime contractors. Established defense firms possess extensive lobbying capacity, deep relationships with congressional defense committees, and the ability to acquire or partner with startups in ways that absorb rather than disrupt the existing model. This is a description of institutional incentive dynamics, not an allegation of misconduct: the industrial base has structural reasons to prefer the current cost structure and equally structural means of sustaining it.

OTA Flexibility and the Risk of Reabsorption

The OTA contract vehicle provides flexibility during development and initial production, routing around the standard acquisition system’s requirements and oversight mechanisms. The Army’s 10,000-missile target, however, implies a transition to production-scale contracting, which historically reverts to standard Federal Acquisition Regulation oversight and its attendant incentive dynamics. The article gives no indication that the Pentagon intends to extend OTA-like flexibility into full-rate production. The risk that startup-led programs get reabsorbed into the system they were designed to bypass remains unresolved.

Probabilistic Assessment

Drawing on reference classes of comparable Pentagon acquisition outcomes, the probability of the Army fielding the full 10,000-missile target by 2030 is estimated at 15 to 25 percent. U.S. DoD efforts to stand up high-volume, low-cost munition production lines using non-traditional contractors and commercial supply chains have historically fallen short of initial volume goals. Broader Pentagon major acquisition programs have consistently delivered fewer units than planned on longer timelines. The base rate for on-time delivery of such programs is likely in the range of 15 to 25 percent.

Inside-view adjustments push in both directions. Combat urgency historically accelerates acquisition. OTA contracts reduce bureaucratic friction. Competition among four companies increases the probability that at least one achieves meaningful production. On the unfavorable side, no competing firm has demonstrated mass-production capability, the timeline is compressed, congressional funding may remain unpredictable, and Pentagon micromanagement may migrate into the new programs as they mature.

The probability of fielding a meaningful quantity — 1,000 or more lower-cost missiles across all competing programs by 2030 — is estimated at 45 to 60 percent, reflecting Leidos’s stated plan for 3,000 units over three years and plausible incremental production from other competitors. The width of both ranges reflects genuine uncertainty about the durability of institutional reforms under combat pressure.

What to Watch

Several leading indicators will clarify which trajectory the initiative follows. CoAspire Ghost flight-test results, expected this year, will reveal whether commercial-components-based designs achieve adequate military performance. Army contract awards and production milestones in 2027 will show whether any competitor is on a trajectory toward scale. Congressional appropriations in fiscal years 2027 and 2028 will indicate whether political support translates into sustained funding. The behavior of incumbent primes — whether they compete aggressively for the new programs, acquire the startups, or focus on defending existing product lines — will signal whether the industrial base is adapting or resisting. Whether congressional defense committees hold hearings focused specifically on production throughput metrics rather than program-level budget lines would indicate whether oversight attention is shifting to match the problem’s actual structure.

The Structural Tension

The deepest challenge is institutional rather than technical. The same acquisition ecosystem that produces expensive, slowly manufactured missiles also produces the political and industrial constituency that sustains that model. Whether the urgency of active combat operations is sufficient to overcome that structural tension — or whether the tension reasserts itself as acute pressure subsides — is the question on which the initiative’s long-term viability depends. Absent observable markers of genuine institutional shift, such as primes restructuring for unit-cost competition or congressional committees focusing on throughput metrics, the structural dynamic persists regardless of how many startup-led programs the Pentagon launches.

Analytical techniques used in this piece

This analysis applies the methods below. Each links to a short, plain-English explainer you can read and reuse.

Pre-Mortem (Action Plan)
Imagines the plan has already failed, then works backward to find out why.
Probabilistic Forecasting
Puts calibrated probabilities on what happens next.
Root-Cause Analysis
Traces a symptom back along its causal chain to the conditions that actually generated it.