Acting Navy Secretary Hung Cao announced Monday that the U.S. Navy has awarded a $22.9 billion contract to Raytheon. The agreement is intended to accelerate the production of Tomahawk cruise missiles following reports of munitions shortages during the ongoing conflict with Iran.
The contract follows reports that the U.S. military has significantly depleted its stocks of long-range missiles and interceptors. According to Reuters, the U.S. Army has used nearly all of its surface-to-surface munitions, including Tactical Missile Systems and Precision Strike Missiles. Additionally, CNN reported that the Pentagon has expended approximately 80 percent of its terminal high altitude area defense interceptors and half of its Patriot interceptors during more than six months of airstrikes.
Under the terms of the seven-year deal, Raytheon will increase its annual Tomahawk production from 60 missiles per year to more than 1,000. Raytheon President Phil Jasper stated the company is investing in its workforce and facilities to meet the increased demand. The Navy stated the contract will reduce procurement lead times to support rapid capability fielding goals and maintain maritime superiority.
The concrete day-to-day change will be felt within the defense manufacturing sector and by military personnel. Workers at Raytheon facilities will see increased activity as the company expands its supply chain and technology investments to hit the 1,000-unit annual target. Navy and Marine Corps forces will see a gradual restoration of strike capabilities, which news reports indicate are currently so low that they have limited President Trump's ability to authorize further major combat operations. This restoration of inventory is expected to occur over the seven-year life of the contract.
The knock-on effects include a broader shift in Pentagon policy toward multi-year deals with major contractors to stabilize the munitions supply. The Pentagon has recently signed similar agreements with Lockheed Martin and Northrop Grumman to triple or quadruple the production of other missile parts. What happens next depends on congressional oversight; Rep. Don Bacon (R-Neb.) stated that lawmakers expect more transparency regarding the depth of these shortages when they return from recess on August 31. The seven-year production schedule begins immediately under the terms of the award.