Defense & Military
Lockheed Martin C-130J Contract Raised to 25 Billion Amid Allied Demand
The U.S. increases Lockheed Martin’s C-130J contract ceiling to $25B, extending production and support through 2035 due to growing allied demand.
This article summarizes reporting by Reuters.
The United States government has authorized a significant expansion of its logistical Military-Aircraft agreement with Lockheed Martin, increasing the cumulative value of an existing contract by $10 billion. As reported by Reuters, the modification raises the total Contracts ceiling from $15 billion to $25 billion, securing long-term production and engineering support for the C-130J Super Hercules program.
The announcement was issued on Tuesday, December 23, 2025, by the Department of War, the agency formerly known as the Department of Defense, recently rebranded under a new executive directive. The contract modification ensures that Lockheed Martin’s Aeronautics division in Marietta, Georgia, will continue to deliver, develop, and sustain the C-130J platform through July 2035.
According to official contract data, this is not a single purchase order but an administrative expansion of an Indefinite-Delivery/Indefinite-Quantity (IDIQ) vehicle originally awarded in 2020. The adjustment accommodates a growing backlog of international orders from key allies in the Indo-Pacific and Europe.
The modification, identified as P00014 to contract FA8625-20-D-3000, reflects the enduring relevance of the C-130J airframe in modern military logistics. The Department of War stated that the work will encompass the “delivery, development, integration, and engineering” of the aircraft.
Key details of the agreement include:
While the Reuters report highlighted the top-line financial increase, further analysis of the contract vehicle reveals that this funding ceiling supports Foreign Military Sales (FMS). The Pentagon noted “known congressional interest” in the deal, likely due to the scale of the modification and the strategic importance of the allied nations involved.
The $10 billion increase is largely driven by a surge in demand from international partners seeking to modernize their airlift capabilities. As geopolitical tensions rise in both the Indo-Pacific and the Arctic, nations are standardizing on the C-130J to ensure interoperability with U.S. forces.
Australia has emerged as a primary driver of this backlog. In 2023, the Australian Department of Defence committed approximately $9.8 billion to expand its fleet from 12 to 20 C-130J aircraft. This acquisition is designed to bolster logistics chains across the vast distances of the Pacific. Similarly, New Zealand has begun taking Delivery of new Super Hercules aircraft to replace its aging C-130H fleet, and the Philippines is modernizing its airlift capacity to support maritime security in the South China Sea. In Europe, the focus remains on interoperability and Arctic readiness. Norway is upgrading its fleet to the Block 8.1 standard, which enhances navigation and communication systems for operations in the High North. Meanwhile, Germany and France have operationalized a unique joint C-130J squadron based in Évreux, France, sharing costs and maintenance burdens to fill the gap left by the retired C-160 Transall.
This contract announcement comes during a period of significant administrative change within the U.S. government. The release was issued under the header of the “Department of War,” reflecting a 2025 executive order that reverted the agency’s name to its pre-1947 moniker. Secretary Pete Hegseth has championed this rebranding as part of a broader initiative to “refocus on warfighting.”
Despite the magnitude of the contract, market reaction was muted. Lockheed Martin stock (NYSE: LMT) closed slightly down (-0.21%) on the day of the announcement. Market analysts have largely maintained a “Hold” rating on the defense giant, balancing the long-term revenue security of the C-130J program against concerns over high valuation multiples in the defense sector.
The decision to raise the contract ceiling by such a drastic margin, $10 billion, signals that the U.S. government expects the C-130J to remain the global standard for tactical airlift well into the 2040s. While next-generation vertical lift platforms are in development, they have yet to match the payload-range economics of the Super Hercules.
For the workforce in Marietta, Georgia, this modification provides a decade of stability. However, the explicit mention of “congressional interest” suggests that lawmakers are closely watching how the newly rebranded Department of War manages these mega-contracts. The shift in terminology to “War” is more than cosmetic; it aligns with a more aggressive posture in foreign military sales, prioritizing speed of delivery to allies over traditional bureaucratic hurdles.
What is an IDIQ contract? Why is the agency referred to as the Department of War? Which countries are buying these aircraft?
Lockheed Martin C-130J Contract Ceiling Raised to $25 Billion Amid Surge in Allied Demand
Contract Specifications and Scope
Global Demand Drives Production
Indo-Pacific Deterrence
European Modernization
Strategic Context and Market Impact
AirPro News Analysis
Frequently Asked Questions
Indefinite-Delivery/Indefinite-Quantity (IDIQ) contracts provide for an indefinite quantity of services or supplies during a fixed period. They allow the government to place orders as needed without negotiating a new contract each time. The $25 billion figure represents the maximum value (ceiling) of orders that can be placed, not a guaranteed payout.
In the timeline of this report (December 2025), the Trump administration issued an executive order reverting the Department of Defense to its original name, the Department of War, to emphasize a shift in military philosophy.
The primary international customers driving this contract increase include Australia, Germany, Norway, New Zealand, the Philippines, and Egypt.Sources
Photo Credit: PACOM