Raytheon Technologies secured a major undefinitized contract from the Missile Defense Agency to produce Standard Missile-3 Block IB All-Up Rounds. The base contract value is $4.4 billion, with total potential value reaching $6.3 billion through October 2034.
What's happening
- RTX received a five-year undefinitized contract action for SM-3 Block IB All-Up Rounds with base value of $4.4 billion and options extending the total value to $6.3 billion.
- Work will be performed at RTX facilities in Tucson, Arizona and Huntsville, Alabama, with contract completion expected by October 2034.
- At the time of award, $454 million was obligated to initiate production.
Why it matters
- SM-3 Block IB provides critical naval air defense capability for guided-missile cruisers and other naval platforms in the U.S. and allied fleets.
- The multi-year production commitment secures continuity of the interceptor supply chain and establishes stable production rates through the mid-2030s.
- The award consolidates missile production at two major RTX facilities, supporting hundreds of defense manufacturing jobs in Arizona and Alabama.
Financial impact
- RTX will recognize revenue over the five-year base period and potential two-year option period through fiscal 2034, with $454 million in obligated funds at award in October 2026.
- The contract adds to RTX's backlog of orders, supporting operating cash flow from production deliveries beginning in the base contract year.
- Undefinitized contract structure allows RTX to invoice for costs plus a negotiated profit as final terms are definitized, affecting gross margin timing and working capital.
The fine print
- Contract is undefinitized, meaning final terms, pricing and statement of work will be negotiated after award.
- Total value of $6.3 billion assumes exercise of all option years and includes base value of $4.4 billion.
Source: Defense Daily · Oct 8, 2026 · Drafted with Claude, reviewed by Industrial Base Alpha.
