HUNTSVILLE, Ala. — The U.S. Missile Defense Agency (MDA) is withholding a $419 million interceptor missile production contract from Lockheed Martin until the firm can remanufacture and test a faulty component, the agency’s top official said Aug. 18.

Dallas-based Lockheed Martin Missiles and Fire Control is the prime contractor for the MDA’s Terminal High Altitude Area Defense (THAAD) system, designed to destroy ballistic missiles in and above the Earth’s atmosphere.

Lockheed is under contract to deliver 50 THAAD interceptors and was expected to receive a production order for 48 more. However, an optical safety switch built by one of Lockheed’s subcontractors, Moog Inc., has repeatedly failed in testing, resulting in a production delay of at least six months, U.S. Army Lt. Gen. Patrick O’Reilly, the MDA’s director, told reporters at the Space and Missile Defense Conference here.

“It’s very frustrating. After 10 years of development of this version of THAAD we’re down to one small component,” O’Reilly said. “I’m sure half of the Lockheed workforce would like to personally rebuild it themselves.”

Lockheed was expected to begin production under the new contract in March, O’Reilly said. The bad safety switch also is holding up delivery of some of the previous batch of 50 missiles that are otherwise complete, Lockheed Martin spokeswoman Cheryl Amerine said.

A redesigned safety switch has been built and is undergoing qualification testing, O’Reilly said. Though testing of the redesigned safety switch will not be fully complete until next February, the MDA and Lockheed have come to an unconventional arrangement in order to minimize the delay. If the first three new safety switches pass preliminary testing in September, MDA will allow Lockheed Martin to enter production in exchange for a warranty on all of the interceptors built under this contract, O’Reilly said.

“Lockheed has committed to me they will warranty the entire production line,” he said. “So if there is a stoppage because that component fails later on in a subsequent test, Lockheed will take liability for any setbacks financially. After we are into production, we will look at ways to ramp up production to recover from the delays.”

Quality control problems have dogged the MDA for years, the THAAD program in particular. In a THAAD test last December, an air-launched target missile failed to ignite and plummeted into the ocean. The MDA had no recourse to penalize the target’s manufacturer, Coleman Aerospace of Orlando, Fla., a subsidiary of L3 Communications, except to stop buying their targets, O’Reilly said.

Currently the MDA is relying solely on Lockheed Martin for all of its air-launched targets, which is an undesirable position, O’Reilly said. Coleman Aerospace has since made significant changes to its targets and its management, realigning under another sector of L-3.

“I’m waiting to see results,” O’Reilly said. “We have a test coming up [the] early part of next year for them to demonstrate they’ve made all the corrective actions necessary and they’re producing a reliable product.”