Raytheon's $30.7B in multi-year missile contracts signals a defense supply base under pressure to double or quadruple output

The details

RTX’s Raytheon received two multi-year awards in October:

• SM-6 (U.S. Navy): up to $24.4 billion, announced Oct. 1, with a five-year base and an option to seven. Annual production is set to rise above 500 interceptors.
• SM-3 Block IB (Missile Defense Agency): $6.3 billion, announced Oct. 8, with the same five-plus-two structure. Production is to accelerate, with no figure given.

Work is centered in Tucson, Arizona, and Huntsville, Alabama. The awards follow five framework agreements signed in February that call for munitions output two to four times existing rates. Earlier awards this year include $22.9 billion to ramp Tomahawk production and $20.7 billion for AMRAAM. The broader agreements target more than 1,000 Tomahawks and at least 1,900 AMRAAMs a year.

Policy is pushing in the same direction. In August, Deputy Defense Secretary Steve Feinberg asked contractors for production acceleration plans within 21 days. A Sept. 15 memo directs the department to remove accounting, audit and compliance barriers that keep commercial companies out of defense work, including a shift from Cost Accounting Standards toward generally accepted accounting principles.

Other awards this year point to the same supplier pressure. In August, the Missile Defense Agency awarded Raytheon $745 million to build SM-3 Block IIA rounds for the U.S. and Japan, and days later the Pentagon awarded Boeing and Raytheon contracts to increase SM-3 component production.

Raytheon says it has grown its workforce, built partnerships across the defense industrial base and automated production. “SM-6’s multi-mission capability is vital to our customer, and Raytheon is intensely focused on meeting the demand,” Raytheon President Phil Jasper said. The company did not name suppliers or provide current production rates. RTX reported 2025 sales above $88 billion and has more than 180,000 employees.

What the missiles do and who else is involved. SM-6 engages air and surface threats and is integrated with the Army’s Typhon launcher, the Navy’s F/A-18 Super Hornet and Navy warships, according to Manufacturing Dive. SM-3 Block IB intercepts short- to intermediate-range ballistic missiles in midcourse flight; Raytheon says it was first used in combat in 2024. Boeing is a named partner on the separate SM-3 component work. Feinberg’s August request asked contractors for production acceleration plans with delivery schedules, as the Pentagon tries to replenish depleted munitions stockpiles.

The scale of this year’s missile awards

Adding the awards named above, Raytheon has received about $75 billion of missile production contracts in 2026: up to $24.4 billion for SM-6, $22.9 billion for Tomahawk, $20.7 billion for AMRAAM, $6.3 billion for SM-3 Block IB and $745 million for SM-3 Block IIA. That is our tally of the announced values, several of which are ceilings rather than guaranteed orders, and it runs over multiple years. For comparison, RTX reported total 2025 sales above $88 billion across all its businesses.

How a production ramp travels down the supply chain

A prime contractor raising output two to four times needs every tier beneath it to do the same. The first tier, which makes major assemblies, usually gets advance notice and investment support. The bottlenecks tend to appear two or three tiers down, at castings, forgings, circuit boards, connectors and specialty materials, where suppliers are smaller, serve many industries and can’t add capacity quickly. Multi-year contracts help because they give those suppliers enough certainty to invest, but new capacity still takes one to two years to come online. In the meantime, suppliers allocate what they have, and defense programs with priority ratings under the Defense Priorities and Allocations System can move ahead of commercial orders.

Where the demand flows

Missile production draws on suppliers that also serve commercial aerospace, automotive, electronics and industrial customers. Our read on where the overlap is likely to show up:

Raytheon has not named suppliers, so this is our assessment of exposure, not reported data.

What procurement teams should do

• If you supply defense primes: Expect requests for capacity commitments and longer-term agreements. Price multi-year commitments with escalation tied to published indexes.
• If you share suppliers with defense programs: Ask key suppliers of electronics, castings, forgings and specialty metals whether defense demand will affect your lead times or allocations in 2027.
• Watch the compliance shift. Lower accounting barriers may bring new commercial suppliers into defense, which can loosen some constrained categories over time.
• Build allocation clauses. In constrained categories, secure priority and allocation terms now rather than during a shortage.

Questions to ask suppliers you share with defense programs

1. What share of your capacity serves defense programs today, and how will that change in 2027?
2. Do you receive rated orders that take priority over commercial work?
3. Which of your inputs, such as castings, forgings or electronic components, are already on allocation?
4. Are you investing in new capacity, and when will it be qualified?
5. Will you commit to allocation or lead-time terms for our parts?

What to watch next

• Supplier awards. Raytheon has not named suppliers; sub-tier contracts and capacity investments will follow.
• Commercial access rules. The shift away from Cost Accounting Standards may bring more commercial suppliers into defense work.
• Shared inputs. Watch lead times for energetics, castings, electronics and specialty metals that serve both defense and commercial customers.

The bigger picture

Defense production is ramping at a pace not seen in decades, and multi-year contracts give primes the demand signal to invest. The capacity has to come from a sub-tier base that is also serving commercial aerospace, energy and automotive customers. Procurement teams in those industries should treat defense demand as a structural factor in supplier capacity planning.