The Pentagon on Thursday announced a multiyear contract worth up to $6.3 billion for Raytheon to build and sustain the Standard Missile-3 Block IB, a ship- and land-launched interceptor built to stop short- and intermediate-range ballistic missiles in the middle of their flight. The five-year award carries a base value of $4.4 billion, and options could add nearly $2 billion more over two additional years.
The Missile Defense Agency handled the contracting, and Defense Daily reported that the agency issued the award as an undefinitized contract action, a category that defense acquisition rules define as one whose terms, specifications or price are not agreed upon before work begins. Neither the Pentagon's announcement nor Raytheon's release said how many missiles are on order. Raytheon said the work will be done mostly at its plants in Tucson, Arizona, and Huntsville, Alabama; Defense Daily reported that it is expected to be finished by October 2034.
"This contract provides production certainty to our defense industrial base, breaks sub-tier manufacturing bottlenecks, and ensures that our fleets and combatant commands have the interceptors required to dominate the battle space," Michael Duffey, the under secretary of defense for acquisition and sustainment, said in a Pentagon release.
Raytheon said the contract is meant to quickly replenish an interceptor inventory that has seen combat use, and the company says the SM-3 IB was first fired in combat in 2024. Reuters reported that the award comes as the Pentagon tries to refill stockpiles depleted by conflicts in the Middle East. "SM-3 Block IB has proven its relevance in combat and this contract helps ensure we can replenish inventories and keep pace with the evolving threats the U.S. Navy, MDA and their partners face around the world," said Phil Jasper, Raytheon's president.
The SM-3 IB is among the weapons the Pentagon's Munitions Acceleration Council deems critical, according to fiscal 2027 budget documents that list 14 munitions as the focus of the council's plan to ramp up production and sign multiyear deals. Raytheon said Thursday's contract is part of the framework agreements it reached with the Pentagon in February. Those five agreements, each lasting up to seven years, cover the Tomahawk cruise missile, the AMRAAM air-to-air missile, the SM-6 and two versions of the SM-3. Under them, the company said it would raise annual output to more than 1,000 Tomahawks and at least 1,900 AMRAAMs while speeding up SM-3 IB production.
The SM-3 order is the latest in a string of similar deals between the government and Raytheon. In recent weeks the company has also secured a contract worth up to $24.4 billion for SM-6 interceptors and a deal worth up to nearly $20.7 billion for AMRAAM production. Reuters described the agreements as part of the Trump administration's effort to expand U.S. weapons production by encouraging contractors to add manufacturing capacity.
In April, Jules Hurst, who was performing the duties of the Pentagon comptroller, said the plan was to spread munitions money over several years through multiyear contracts, with contractors required to pay for capital expenditures and penalized if they miss the production ramp rates they agree to. "We're making them put skin in the game," he said. Raytheon said it has already spent heavily to expand capacity and speed up production of critical munitions, including the Standard Missile family. Industry executives have warned, though, that a shortfall in congressional funding could hold up investment in facilities and supply chains, Reuters reported.