Pentagon Triples Size of Raytheon's Standard Missile Contract on Wednesday

Adds $350 million to a contract awarded in January, and awards BAE Systems a small contract as well.

Mar 5, 2014 at 7:43PM

The Department of Defense awarded only five defense contracts Wednesday, but with a combined value of $818.1 million, it packed a lot into them.

Publicly traded companies claimed only two of these contracts. Raytheon (NYSE:RTN) was the day's big winner, winning a sole-source modification to an undefinitized contract action to produce Standard Missile-3 Block IB missiles, first announced on Jan. 9, 2014. The modification adds up to $350.2 million to the value of the original award (which was $156 million), which funds will be used to pay Raytheon to produce additional SM-3IB missiles for the U.S. Missile Defense Agency. Delivery of all missiles is still due in September 2016.

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.

The day's only other winner (among publicly traded companies) was Britain's BAE Systems (NASDAQOTH:BAESY) (LSE:BA). BAE was awarded a $6.9 million contract modification to supply the U.S. Army with spare parts for self-propelled howitzers, and also with 18 ammunition carrier tracked vehicles. Delivery is due Sept. 30, 2015.

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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