Washington’s $22.9bn Tomahawk Push Tests US Missile Production
The United States is trying to rebuild missile inventories while increasing output on a scale its industrial base was not sized to support.
This week in Market Watch: Aerospace, Defence & Security, we look at the $22.9bn Tomahawk production contract, new SM-3 framework agreements and what they mean for Washington’s wider effort to increase munitions supply.
Larger and longer-term orders give manufacturers more reason to invest. The harder problem is turning those commitments into weapons quickly enough to rebuild depleted inventories.
Visiongain Top Takeaways
- The US Navy has awarded Raytheon, an RTX business, a $22.9bn seven-year Tomahawk contract, supporting plans to increase annual output from about 60 missiles to more than 1,000.
- New seven-year framework agreements with Boeing and RTX target key SM-3 Block IB and Block IIA components, allowing Boeing to increase output before a formal multi-year award is completed.
- Production remains the harder constraint. FY2027 Tomahawks face an estimated 34-month lead time, while Standard Missile orders take roughly 36 to 39 months to begin arriving.
- Tomahawk and SM-3 are part of a wider procurement shift, with multi-year authority now covering eight critical munitions and similar arrangements extending into PAC-3 MSE and THAAD supply chains.
Washington Turns to Long-Term Tomahawk Production
On 17 August, the US Navy awarded Raytheon, an RTX business, a $22.9bn seven-year contract for Tomahawk production and support. The agreement supports plans to expand annual production capacity to more than 1,000 missiles.
The Pentagon is using the longer contract to give industry greater certainty to invest in workforce, manufacturing and supply chains. Under Secretary of War for Acquisition and Sustainment Michael P. Duffey said RTX had answered the Department’s call to “expand munitions production and capacity”.
The increase follows years of relatively small orders. CSIS estimates that Tomahawk procurement averaged just 86 missiles per year between FY2015 and FY2026, leaving industry little incentive to sustain output at the levels Washington now requires.
The 2026 conflict with Iran brought the pressure on inventories into sharper focus. CSIS estimates that US forces expended more than 1,000 Tomahawks, roughly a third of its estimated pre-war inventory. Under current delivery projections, those stocks are not expected to return to their pre-war level until late 2030.
The new agreement represents a substantial increase from previous production plans. Navy budget documents put maximum Tomahawk capacity at 600 All-Up-Rounds a year. Under the new multi-year procurement, annual capacity rises to 1,068 rounds from FY2027, comprising 718 new-production missiles and 350 recertified rounds.
Maintaining that rate depends on steady orders across the Navy, Army and foreign military sales customers. The multi-year structure also allows materials to be ordered further in advance from suppliers, giving companies deeper in the supply chain greater certainty over future volumes.
The order is much larger, but industry still needs time to turn it into delivered missiles.
SM-3 Production Push Moves Down the Supply Chain
The SM-3 agreements address a different constraint: component production.
On 14 August, the Department of War announced seven-year framework agreements with Boeing and RTX covering key components for the SM-3 Block IB and Block IIA interceptors. Boeing supplies avionics and ejector assemblies to prime contractor Raytheon. Both variants operate with the Aegis Ballistic Missile Defense System and are designed to intercept ballistic missiles outside the atmosphere.
Duffey said the agreements were intended to stabilise supply chains and put the defence industrial base “on a wartime footing”.
The agreements are not yet multi-year procurement contracts. Boeing can begin increasing component output while a formal multi-year deal is negotiated, although neither the financial value nor final production quantities have been disclosed.
The frameworks sit alongside funded procurement. Four days earlier, the Missile Defense Agency awarded Raytheon a $745m contract for production and sustainment of SM-3 Block IIA interceptors for the United States and Japan.
Starting Boeing’s production ramp before the wider multi-year award is settled is intended to prevent avionics and ejector assemblies from constraining higher SM-3 output. It also shows Washington intervening further below prime-contractor level, where a shortage of a relatively small number of specialist components can slow an entire weapons programme.
Rebuilding Missile Inventories Will Still Take Years
Larger orders do not translate quickly into larger stockpiles. Tomahawks funded in FY2027 face an estimated 34-month production lead time, with deliveries not expected to begin until March 2030. CSIS puts lead times for FY2027 Standard Missile orders at roughly 36 to 39 months.
Allied demand adds another pressure. Japan’s order for 400 Tomahawks may be delayed as the Pentagon prioritises rebuilding US stocks, showing how additional production must still be divided between domestic requirements and foreign customers.
The strategic implications extend beyond Iran. Tomahawks, Standard Missiles, Patriot and other weapons used during the campaign would also be important in a Western Pacific conflict. Several key inventories are expected to take years to return to pre-war levels, leaving less depth available if the United States faces another major contingency before replenishment is complete.
Washington can increase procurement considerably faster than industry can rebuild those inventories.
What It Means for the Defence Industrial Base
The clearest commercial opportunities will be in areas where capacity is scarce, qualification takes time or alternative sources are difficult to add. Specialist components can hold back missile output even when final assembly capacity is available.
Propulsion is one example. Solid rocket motors are already attracting direct government and private investment as Washington tries to increase output and reduce dependence on a small number of established suppliers.
Tomahawk and SM-3 are also part of a wider procurement shift rather than isolated cases. Similar approaches are being used across programmes including PrSM, PAC-3 MSE and THAAD, with longer commitments increasingly reaching component manufacturers as well as prime contractors.
Framework agreements still carry more risk than funded production contracts. Companies adding facilities, tooling or workforce ahead of firm orders are effectively betting that today’s higher procurement volumes will last long enough to justify the investment.
Market Outlook
Congress has authorised multi-year procurement for eight critical munitions, showing that longer-term contracting is spreading across priority weapons programmes. Yet manufacturing lead times for some of those weapons still run from roughly two to more than four years.
Funding continuity will therefore matter as much as headline contract values. Permanent expansion becomes easier to justify if higher-order volumes survive successive budget cycles and shifts in political priorities.
Visiongain Insight: What happens after US stockpiles are rebuilt will matter more than today’s contract headlines. A lasting move towards multi-year orders would leave the United States with a larger and more resilient missile-production base. A return to shorter procurement runs would put much of today’s expansion at risk.
