The United States Navy (U.S. Navy) has signed a contract worth $25 billion with Raytheon for the purchase of SM-6 interceptor missiles. These multi-role missiles are designed for long-range air defense and have the capability to destroy cruise missiles, drones, and ballistic missiles. Additionally, these missiles are also used as anti-ship missiles, which are less expensive compared to SM-3 missiles.
The Necessity of Securing Weapon Supplies
Following the intensified phase of the war with Iran this year, the global reserves of the United States military for all advanced interceptor missiles (Patriot, THAAD, SM-3, and SM-6) have significantly decreased. Estimates suggest that the United States has likely used between half to two-thirds of its stockpile of these munitions since June 2025.
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The volume and multi-year structure of the new contract are designed to compensate for this shortfall and provide a long-term outlook for defense contractors to increase production. However, Congress still needs to approve the funding for this contract and similar agreements. It is expected that the ongoing resolution environment will continue until early December, and the FY2027 defense budget will not be approved.
Contract Details and Implications
According to the FY2025 budget request, the price of each SM-6 missile is estimated to be approximately $6 million (while the CBO estimate puts the price lower, around $4 million). Assuming a similar cost structure in the future, this contract provides a production rate significantly higher than previous contracts, which was 125 units per year.
Adm. Daryl Caudle, Chief of Naval Operations, stated, "The credibility of combat operations depends on having sufficient weapons produced at the speed and scale required by the fleet." He added, "This SM-6 contract provides a signal of demand and stability for the industry to expand production and build the depth of munitions reserves that our fleet needs."
In a parallel but larger contract, the United States Army has committed to paying up to $59 billion for additional Patriot interceptor missiles, which are considered the most critical missile defense munitions for coastal applications. Additionally, the Army is significantly enhancing its anti-ship capabilities and is investing in a new class of long-range missiles capable of tracking and striking moving maritime targets.
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