RTX Corp. (NYSE:RTX) unit Raytheon has secured a contract worth up to $6.3 billion to produce and sustain Standard Missile-3 Block IB interceptors as the Pentagon rebuilds missile-defense inventories depleted by combat operations.
Pentagon Targets Rapid SM-3 Inventory Replenishment
The five-year agreement includes two option years and authorizes work to begin in Tucson, Arizona, and Huntsville, Alabama. Raytheon said the award supports "urgent replenishment" of a system first used in combat in 2024.
"Our warfighters must never face a fair fight, and the SM-3 Blk IB has proven its operational superiority to dominate any adversary across the globe," Under Secretary for Acquisition and Sustainment Michael P. Duffey said in a Pentagon announcement. He added that the contract provides production certainty and ensures forces have the "interceptors required to dominate" the battlespace.
The SM-3 Block IB operates from Aegis-equipped ships and Aegis Ashore sites. The Missile Defense Agency says SM-3 interceptors defeat short- to intermediate-range ballistic missiles during their midcourse phase. Raytheon equips the Block IB with an enhanced two-color infrared seeker and upgraded steering and propulsion.
Iran Conflict Highlights Missile Defense Strain
The replenishment push follows U.S. missile-defense use during the Iran conflict. The Congressional Budget Office estimated the fighting had cost the Pentagon about $38 billion through Aug. 1, including replacement of expended munitions. CBO called the large expenditure of missile-defense interceptors the Pentagon’s main opportunity cost and warned inventories could remain reduced "for several years."
The Pentagon had already moved to expand the SM-3 supply chain. In August, it announced framework agreements with Boeing and RTX to increase production of key components for SM-3 Block IB and Block IIA interceptors.
Raytheon Expands Missile Production Across Programs
Raytheon President Phil Jasper said SM-3 Block IB has "proven its relevance in combat" and that the award will help "replenish inventories and keep pace with the evolving threats" facing the Navy, Missile Defense Agency and partners.
The contract comes one week after Raytheon received a $24.4 billion SM-6 award and follows a $20.7 billion AMRAAM deal in September. RTX says it has invested in expanding Standard Missile manufacturing capacity, while the Pentagon said the latest agreement will channel capital toward assembly lines, solid-rocket-motor suppliers and sub-tier vendors.
Price Action: RTX shares were trading 0.37% higher at $185.00 in pre-market trading on Friday.
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