Raytheon has been awarded a $258 million contract to advance the engineering, manufacturing, and development of the Standard Missile 2 (SM-2) Block IIICU All Up Round, the Department of Defense announced.
The deal covers the follow-on integration and test phase of a program already under contract and includes options that could raise its value to $263.1 million.
The majority of the work—about 72%—will take place in Tucson, Arizona, with additional production and development spread across facilities in the United States and the United Kingdom. Completion is expected by September 2031, according to the Pentagon.
Funding for the project includes $52 million from the Navy’s fiscal 2025 research, development, test, and evaluation accounts, $18.4 million from Canada through Foreign Military Sales, and $9 million from the Navy’s fiscal 2024 research and development funds. The contract was not competitively awarded, with the Navy citing Raytheon as the sole responsible source capable of meeting requirements under U.S. Code 3204(a)(1).
Barbara Borgonovi, president of Naval Power at Raytheon, said the award underscores the missile’s role in maritime security.
“This contract signals the increased demand given the critical role these interceptors are playing for the U.S. and our allies,” Borgonovi said. “The SM-2 Block IIICU variant incorporates several upgrades and will provide the U.S. Navy with a more capable and versatile missile for modern naval defense operations.”
The SM-2 has long been a key component of layered shipboard air defense, designed to counter high-speed, maneuverable anti-ship missiles and aircraft. The missile can be launched from the MK-41 Vertical Launch System and MK-57 Advanced VLS, and it will remain a primary anti-air warfare weapon for U.S. Navy Aegis destroyers and cruisers for decades to come.
More than 12,000 SM-2s have been delivered to the U.S. and allied navies. International operators include Australia, Canada, Germany, Japan, South Korea, the Netherlands, Spain, and Taiwan. Chile and Denmark are set to join the list of customers.
The missile has already seen operational use in contested waters. In early 2024, the U.S. Navy confirmed that SM-2 interceptors were fired in the Red Sea to defend commercial vessels against anti-ship missiles and drones launched by Houthi forces in Yemen.
The new Block IIICU variant incorporates enhanced capabilities, although specific technical details remain limited. As with other SM-2 models, the system integrates with shipboard combat systems to engage aerial threats at extended ranges.
Work on the program will be carried out at multiple locations, including manufacturing and integration in Simsbury, Connecticut; Wolverhampton, United Kingdom; and Salt Lake City, Utah, among others. Each site will contribute specialized components and expertise to the production process.
Naval Sea Systems Command in Washington, D.C., is overseeing the contract. The work is expected to run over the next six years, with production schedules tied to testing and integration milestones.
For the U.S. Navy, SM-2 remains a cost-effective, combat-proven solution, bridging current capabilities while newer systems such as SM-6 expand the fleet’s layered defense options.