The U.S. Navy awarded Raytheon, an RTX business, a five-year contract worth up to $24.4 billion to accelerate production of Standard Missile-6 interceptors, the Pentagon said, in one of the largest munitions awards ever signed as Washington works to replace stockpiles drawn down during the Iran war.
The award joins a run of large deals this year from the same pressure point. Pentagon spending on munitions has grown sharply since February, when the United States and Israel launched the operation that became known as Epic Fury. The department’s inspector general said last month that munitions expenditure on the operation had created strategic inventory shortfalls and exposed industrial base bottlenecks in resupply, a rare public finding that set the tone for contracts signed since.
Raytheon signed a multiyear AMRAAM deal worth up to $20.7 billion in late September, described as more than doubling current production rates. In July, Lockheed Martin took a $58.6 billion Patriot interceptor award, the largest in the company’s history. Together, the three contracts commit the Pentagon to well over $100 billion in future air defense orders, stretching defense budgets and marking a supply-led shift in how the armed services plan procurement.
Why the SM-6 matters
The SM-6 is used across Navy destroyers and cruisers for air defense, ballistic missile defense and anti-surface warfare, giving a single fleet weapon several mission profiles. Raytheon says the missile is the only combat-proven weapon covering all three of those roles when fired from Navy ships or from land-based launchers. Production has been scaling up steadily since 2022 at Raytheon facilities in Tucson, Arizona, with the company adding staff, tooling and automation over the past two years.
Under the new deal, output is set to rise above 500 missiles per year, more than triple the rate running at the start of 2023, according to an Army Recognition analysis of the award. Raytheon built a new production facility in Tucson for the program last year, which became operational this summer. The multiyear structure gives suppliers room to invest in shared production capacity rather than building single-order runs, since Raytheon can pass long-term volume signals through its own industrial base.
What comes next for Raytheon and the Navy
Two option years could extend the deal beyond the primary five-year period, pushing SM-6 deliveries well into 2031 if fully exercised. Raytheon subcontracts to a network of smaller firms across several states, including suppliers in Alabama, Maryland and Texas, meaning more work is likely to be spread across the industrial base than a single state. A significant portion of the work will be in Tucson, where Raytheon already employs thousands on the SM-6 and AMRAAM lines, the Phoenix Business Journal noted in its coverage of the award.
The Pentagon has leaned on multiyear contracts across several munitions lines to smooth production cycles and tempt suppliers into faster capacity expansion, a shift defense officials have described as moving away from single-year buys that created start-stop churn in factories. Defense Secretary Pete Hegseth singled out munitions production as a priority in early 2026, directing the services to place multiyear orders where possible rather than the traditional year-to-year approach.
“SM-6’s multi-mission capability is vital to our customer, and Raytheon is intensely focused on meeting the demand,” said Raytheon President Phil Jasper, in the announcement.
The national security argument sits alongside a commercial one. RTX stock rose in the months since the Iran operation began, and the announcement drew attention from investors across the defense sector, sharing a pattern seen in other primes as budgets tilt toward munitions. Raytheon has now landed three contracts worth more than $20 billion within two months, a pace the Phoenix Business Journal described as unprecedented for the Tucson-based unit.
Funding requires annual appropriations, so the Pentagon has to ask Congress yearly to confirm the outlays within the multiyear ceiling. Congress holds the cap through the appropriations cycle, and each year’s budget sets how much of the agreed order moves to firm commitments. House and Senate defense subcommittees have already flagged munitions as a priority area for the coming fiscal year, giving the award a strong budget tailwind into 2027.
The Navy is also watching how quickly Raytheon can raise the number of missiles available for its own fleet requirements, which include commitments to allied navies operating Aegis ships. Australia, Japan and South Korea all field Aegis-equipped vessels that can fire the SM-6, and foreign military sales add a second line of demand on the same production lines. How the Pentagon balances those orders alongside domestic stockpile rebuilding will shape delivery schedules through the end of the decade.
Pentagon acquisition officials have said the multiyear awards are designed to give industry the long-term predictability needed to expand workforce capacity and secure supply chains, language repeated in the SM-6 announcement itself. The same guidance applies across the FY2026 to FY2031 window, where munitions accounts have grown faster than almost every other procurement line in the defense budget.
For Raytheon’s competitors, the award raises the bar on what customers now expect from a multiyear commitment. Lockheed Martin’s Patriot award shows how quickly the model has spread across the surface-to-air portfolio, and both companies have said they are hiring aggressively in missile production hubs. Whether the industrial base can sustain output at these levels through the full contract period remains the open question, and Pentagon officials have acknowledged the bottlenecks could persist even with the added funding.