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

By Rich Smith - Mar 5, 2014 at 7:43PM

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

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 ( 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 ( BAES.Y -1.09% ) (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.

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