The U.S. Department of Defense announced two contracts on Friday worth a combined $1.3 billion to Raytheon, a division of RTX Corporation (NYSE: RTX). The awards cover missile defense systems for both U.S. and allied forces, underscoring sustained demand for advanced guided missile systems amid elevated global defense spending.

SM-3 Block IIA Contract: $745.4 Million

The larger award is a $745.4 million contract for the manufacture and assembly of Standard Missile-3 (SM-3) Block IIA All-Up Rounds. The contract supports U.S. government requirements as well as Japan Ministry of Defense foreign military sales.

The SM-3 Block IIA was co-developed by the United States and Japan under a bilateral agreement and is designed to intercept intermediate-range ballistic missiles during the midcourse phase of flight. The missile is launched from Aegis-equipped naval vessels, forming a sea-based layer of the broader U.S. ballistic missile defense architecture.

The Missile Defense Agency, based in Huntsville, Alabama, issued the noncompetitive, undefinitized contract. At the time of award, the agency obligated $275.6 million in fiscal 2026 procurement funds and $277.7 million in Japan Ministry of Defense foreign military sales funds, totaling over $553 million committed upfront.

Boom. Voyager awarded massive Raytheon SM-3 contract! "Our propulsion technology adds to the nation's missile defense architecture, enabling higher precision, greater reliability and safer operation than legacy systems," – Matt Magaña, president, Space, Defense & National… pic.twitter.com/Z3jQ2MdCPP
— Wealthmatica (@wealthmatica) August 6, 2026

Work on the SM-3 contract will be split between Tucson, Arizona and Huntsville, Alabama, with an estimated completion date of February 28, 2031.

The Missile Defense Agency confirmed the SM-3 contract base value at $745.9 million in a separate notice, slightly above the $745.4 million figure cited in the DoD's daily contract announcement.

The Japan component of the deal reflects the ongoing expansion of the U.S.-Japan defense cooperation framework in recent years, as both nations deepen collaboration on regional missile defense capabilities.

TOW Weapon System Modification: $536 Million

The second award is a $536 million modification to an existing contract for the TOW (Tube-launched, Optically tracked, Wire-guided) Weapon System. The modification covers full-rate production and engineering services.

The TOW system has been in continuous production since the 1970s and remains one of the most widely fielded anti-armor guided missile systems in the world, in service with the U.S. military and dozens of allied nations. Successive upgrades, including wireless guidance variants, have kept the production line active.

Army Contracting Command at Redstone Arsenal, Alabama, issued the modification, which obligates $54.9 million in fiscal 2026 other procurement (Army) funds at the time of award.

With this modification, the total cumulative value of the TOW contract rises to $750.8 million. Work will be performed in Tucson, Arizona, with a completion date of August 31, 2027.

Contract Details and Stock Performance

Both contracts were awarded on a noncompetitive basis, meaning Raytheon was the sole awardee without an open bidding process. Fiscal 2026 funds are being used across both awards, combining procurement and foreign military sales financing on the SM-3 side.

For RTX, one of the largest U.S. defense contractors by revenue, individual contract awards of this scale represent a portion of the company's ongoing order flow across its missile and defense system portfolios. The combined $1.3 billion adds to a backlog that RTX has reported in its quarterly results as global demand for missile defense and precision-strike capabilities continues to grow.

RTX stock closed down 0.10% on Friday despite the contract announcements.