The Department of Defense awarded 10 new defense contracts Thursday, worth $1.094 billion in total. Raytheon (NYSE:RTN) didn't win the biggest of these contracts -- but it did win the third biggest.

Not to exceed $156 million in value, the award in question went to Raytheon Missile Systems in the form of a sole-source, undefinitized "contract action, with a hybrid contract structure with firm-fixed-price and cost reimbursable contract line item numbers."

Under this award, Raytheon will supply the U.S. Missile Defense Agency with eight Standard Missile-3 Block IB "missile material and all up round build up."

The SM-3IB is a new version of Raytheon's venerable Standard surface-to-air missile, which aims to enhance the original Standard Missile's effectiveness with enhanced, two-color infrared target seeking, and the ability to use short bursts of precision propulsion to steer the missile toward incoming targets. The SM-3IB is scheduled to begin deployment in 2015, but this new contract modification will have Raytheon continuing to deliver missiles to MDA through September 2016.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Raytheon Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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