During the opening week of the war with Iran, American forces were shooting down cheap enemy drones — some costing as little as $30,000 — with missiles that cost more than $1 million apiece. In May, the Department of Defense laid out a plan to stop that math from breaking the budget, announcing framework agreements to buy more than 10,000 low-cost cruise missiles over three years. Under Secretary of Defense for Research and Engineering Emil Michael said the effort would “deliver affordable mass for our warfighters at unprecedented speed.” This month, the military begins buying test versions to see which ones actually work.
The problem is simple to state and expensive to live with. America’s best missiles are extraordinary machines, but they cost a fortune and take years to build. A single THAAD interceptor ran about $12.77 million in 2025, according to Pentagon figures. A Tomahawk cruise missile costs roughly $3.5 million and takes about two years to deliver. When a war suddenly demands thousands of these weapons, the shelves empty faster than factories can refill them.
That is exactly what happened. The war with Iran, which began on February 28 and which Washington and Tehran agreed to end on Sunday, burned through American stockpiles at a startling pace. Navy ships fired large numbers of missiles defending against attacks and launching strikes, raising hard questions about how fast those weapons could be replaced. THAAD has not received a new interceptor delivery since July 2023, and a backlog of about 100 interceptors is not expected to start arriving until April 2027.
The drone problem made the squeeze worse. Cheap, slow-flying attack drones — like the Iranian-style Shahed, which costs roughly $30,000 to $50,000 to build — can be launched by the dozen. Knocking each one down with a multimillion-dollar interceptor is a losing trade, even when it works. Army Secretary Dan Driscoll told lawmakers the Army rushed to buy 13,000 cheaper interceptors called Merops at about $15,000 each in the first days of the conflict to close that gap.
So here is the fix. Instead of relying only on a handful of exquisite, costly weapons, the Pentagon wants a deeper magazine: large numbers of cheaper missiles that can be bought in bulk, fired at easier targets, and held in reserve so the expensive ones are saved for the hardest jobs. The military calls it a “high-low mix.”
The centerpiece is the Low-Cost Containerized Missiles (LCCM) program. Rather than turn only to the traditional defense giants, the Pentagon signed agreements with four newer companies — Anduril, CoAspire, Leidos, and Zone 5 Technologies — each expected to deliver roughly 3,000 missiles and launchers between 2027 and 2029. Anduril will supply a surface-launched missile called the Barracuda-500M and plans to build as many as 1,000 annually. The weapons are designed to fit inside standard shipping containers, allowing them to be moved by truck, ship, or aircraft and quickly deployed from mobile launchers.
A separate effort targets the high end of the market. The Pentagon agreed to buy at least 500 Blackbeard hypersonic missiles annually from startup Castelion once testing is complete and is seeking approval to acquire more than 12,000 over five years. Under Secretary of Defense for Acquisition and Sustainment Michael Duffey said the strategy is intentionally “moving beyond the traditional prime contractors to expand our industrial base.”
That shift has triggered a race throughout the defense industry. New entrants such as Anduril and Castelion are seeking a permanent place in a sector long dominated by Lockheed Martin and RTX. Established contractors are investing heavily to defend their positions. RTX has said it plans approximately $3.1 billion in capital spending during 2026, while Lockheed Martin says it has invested more than $7 billion since President Donald Trump’s first term to expand production capacity. Lockheed Martin has also agreed to quadruple production of THAAD interceptors.
The challenge is whether industry can deliver. The Pentagon’s 2027 budget request seeks a 188% increase in missile procurement, a jump many defense analysts say exceeds current manufacturing capacity. Becca Wasser of Bloomberg Economics described the effort as a generational investment intended to rebuild stockpiles that may be needed for years. The new fixed-price contracts also place much of the risk for delays and cost overruns on contractors rather than taxpayers.
For now, the real test begins this month as the first batch of low-cost missiles heads to military testing ranges. If the weapons perform as expected, the Pentagon may finally have a way to fight prolonged conflicts without exhausting its inventories — or spending billions of dollars destroying threats that cost only a fraction as much to build.
JBizNews Desk
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