U.S. Navy and Raytheon Enhance Munitions Production Through SM-6 Missile Deal

Raytheon's unit of RTX has secured a deal worth up to $24.4 billion to accelerate the production of interceptor missiles for the U.S. Navy, according to Bloomberg.

The U.S. Navy stated in a statement on Thursday that the contract extends for 5 years, with the possibility of a 2-year extension, and aims to increase supplies of the SM-6 missile.

This is the second major deal that RTX has obtained from the Pentagon this week, following an agreement worth $20.7 billion to double the production of air-to-air missiles.

U.S. President Donald Trump has pushed major defense contractors to expand their production capabilities for weapons, as military planners work to rebuild stockpiles that have been depleted due to the war with Iran.

The deal is based on 5 framework agreements that RTX signed with the Pentagon in February, aimed at increasing production capacity and accelerating the delivery of key weapons.

The U.S. Department of Defense has signed several framework agreements with other defense companies, including Lockheed Martin, to help increase weapons production.

Historically, defense companies have been reluctant to invest in large expansions of their production capacities without confirmed financial commitments from the military to purchase weapons over a period of time, according to Bloomberg.

The framework agreements aim to overcome those constraints that hinder production increases.

In August, Northrop Grumman and Lockheed Martin announced agreements to expand production capacity for key components, in an effort to increase the production of intercept missiles by between 3 and 4 times.

Industry executives noted that Congress has not yet allocated the necessary funding for these contracts, meaning that contractors may not be able to invest widely in components and facilities until lawmakers take the necessary actions.

RTX announced that it has invested heavily to keep up with the increasing demand, as it has increased its skilled workforce and strengthened partnerships across the defense industrial base with the aim of significantly boosting production to meet needs in both the near and long term.

Raytheon stated that the SM-6 missile is the only weapon that has proven its ability to perform air warfare missions, strike surface targets, and defend against ballistic missiles. It has been launched from Navy ships and ground launch platforms.