The U.S. Department of Defense announced on Friday that Raytheon, a business segment of RTX Corporation (NYSE: RTX), has been awarded two military contracts totaling approximately $1.3 billion. The agreements cover production of Standard Missile-3 (SM-3) Block IIA All-Up Rounds and a major expansion of the TOW Weapon System program.

$745.4 Million SM-3 Block IIA Production Agreement

The primary agreement, valued at $745.4 million, supports manufacturing and assembly operations for SM-3 Block IIA All-Up Rounds. The contract addresses both domestic U.S. military requirements and Japan Ministry of Defense foreign military sales needs.

The SM-3 Block IIA is the newest variant of the Standard Missile-3 interceptor, co-developed jointly by the United States and Japan to defeat short- and intermediate-range ballistic missiles during the midcourse phase of flight, when the threat missile is traveling outside the atmosphere. The Block IIA designation reflects a larger kinetic kill vehicle and enhanced discrimination capabilities compared to earlier SM-3 variants.

The Missile Defense Agency, headquartered in Huntsville, Alabama, issued the noncompetitive, undefinitized contract. Upon award, $275.6 million was allocated from fiscal 2026 procurement budgets and $277.7 million from Japan Ministry of Defense foreign military sales accounts, representing more than $553 million in immediate financial commitments.

Production activities will take place at facilities in Tucson, Arizona, and Huntsville, Alabama, with an expected completion deadline of February 28, 2031.

The Missile Defense Agency independently documented the SM-3 contract base value at $745.9 million in a separate notification, representing a minor variance from the $745.4 million figure stated in the official DoD announcement.

$536 Million TOW Weapon System Expansion

A companion modification worth $536 million extends an existing TOW Weapon System agreement, encompassing full-rate production operations and comprehensive engineering services.

The TOW system — Tube-launched, Optically-tracked, Wire-guided — has served as a primary anti-armor guided missile for U.S. forces and allied militaries since the 1970s, with modern variants incorporating wireless radio frequency guidance. The platform is deployed on ground vehicles, helicopters, and infantry tripod mounts across multiple theaters.

Army Contracting Command, based at Redstone Arsenal, Alabama, processed the modification. At the time of award, $54.9 million was committed from fiscal 2026 other procurement Army appropriations.

This modification raises the total cumulative value of the TOW program to $750.8 million. All work under this modification will occur at the Tucson, Arizona facility, with an expected completion date of August 31, 2027.

The TOW Weapon System is a proven anti-armor guided missile platform deployed extensively across U.S. military branches and partner nations worldwide.

Contract Structure and Fiscal Details

Neither contract involved competitive bidding procedures. Raytheon was designated as the sole recipient in both instances. Both agreements draw upon fiscal 2026 appropriations, combining standard procurement funding with foreign military sales financing mechanisms.

The SM-3 Block IIA missile serves as a critical component of the nation's ballistic missile defense infrastructure. The inclusion of Japanese defense requirements within the SM-3 contract reflects the deepening U.S.-Japan defense partnership, which has expanded significantly under bilateral agreements aimed at countering regional missile threats in the Indo-Pacific.

Despite the announcement of two significant Pentagon contracts on Friday, RTX stock closed the trading session down 0.10%.