Pentagon signs up to $6.3bn multi-year deal with Raytheon to restock SM-3 Block IB interceptors

The Pentagon has awarded Raytheon a multi-year contract worth up to $6.3 billion to build and sustain Standard Missile-3 Block IB interceptors, the ship- and land-based missiles designed to destroy short- to intermediate-range ballistic missiles in the middle of their flight. The Department of War and RTX announced the award on 8 October. It covers five years with two further option years, and production will take place mainly at Raytheon plants in Tucson, Arizona, and Huntsville, Alabama.

Breaking Defense reported that the base value of the five-year contract is $4.4 billion, with options worth nearly $2 billion more over the two extra years. The announcement did not say how many missiles are being ordered. The Missile Defense Agency is the contracting agency for the deal.

Restocking after combat use

RTX said the contract supports the urgent replenishment of a missile defence inventory that has been used successfully in combat. Raytheon President Phil Jasper said the SM-3 Block IB had proven its relevance in combat and that the award would help the US Navy, the Missile Defense Agency and their partners refill their inventories and keep pace with evolving threats.

Michael Duffey, the under secretary for acquisition and sustainment, said in the department's release that the contract gives the defence industrial base production certainty, breaks manufacturing bottlenecks among lower-tier suppliers and ensures that fleets and combatant commands have the interceptors they need. The Pentagon also said the deal would push investment directly into assembly lines, solid-rocket motor makers and domestic sub-tier vendors, according to The Hill.

The Block IB was first fired in combat in 2024, when the US destroyers Arleigh Burke and Carney used it to intercept Iranian missiles aimed at Israel, Defense News reported, and The Hill said US destroyers have relied on SM-3s against Iranian ballistic missiles in the current conflict. The Center for Strategic and International Studies listed the Block IB in April among seven critical munitions facing shortages, alongside Patriot, THAAD, Tomahawk and the Precision Strike Missile.

Part of a wider munitions push

The award follows a framework agreement that the Pentagon and Raytheon signed in February to pave the way for multi-year buying. In recent weeks the two sides have also agreed a $24.4 billion deal to speed up Standard Missile-6 production, a $22.9 billion contract to raise Tomahawk output to 1,000 rounds a year and a deal worth up to nearly $20.7 billion for AMRAAM air-to-air missiles, Breaking Defense reported.

The interceptor matters well beyond the Middle East. RTX describes it as part of the US Navy's extended-range air and missile defence alongside the SM-3 Block IIA, and Japan's Aegis destroyers have also test-fired the Block IB, including the JS Atago during a 2018 flight test with the Missile Defense Agency, Defense News noted. Analysts warned in March that heavy interceptor use in the war with Iran could create strategic risks for core defence capabilities if the fighting turned into a long conflict.