politics
Defense Contractor Breaks Ground on New Mexico Missile Plant
A California startup selected New Mexico for a 1,000-acre hypersonic missile factory after comparing sites in three states. The project follows a Pentagon shift toward fixed-price contracts that place production risk on contractors.
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A defense startup broke ground in January on a 1,000-acre manufacturing campus in Sandoval County, New Mexico, about 30 miles north of Albuquerque. The company, Castelion, raised more than $550 million in private capital to build a vertically integrated plant capable of delivering at least 500 missiles per year.
It is operating under contracts that pay a set price regardless of the company's production costs.
Company executives evaluated locations in Arizona, Tennessee and New Mexico before choosing the New Mexico site. Officials cited available land, existing defense-industry infrastructure and workforce access from Sandia and Los Alamos National Laboratories as decisive factors.
State and local governments coordinated permitting across party lines, according to a site-selection consultant who assisted with the project. The company said the New Mexico location allowed faster construction than expanding its existing California or Texas facilities.
The Pentagon has moved away from cost-plus contracts that reimbursed expenses plus a fee. Under the new approach, contractors must absorb cost overruns while meeting fixed delivery prices. Castelion executives said the model requires designs that can be manufactured in the thousands at unit costs measured in hundreds of thousands of dollars.
The company has agreements to supply its first weapon system, called Blackbeard, to multiple service branches.
