Raytheon [RTN] on Thursday said it has agreed to a $1 billion strategic sourcing agreement with Aerojet Rocketdyne [AJRD] for the supply of propulsion systems for Standard Missile (SM) programs over the next five years, a deal that replaces an annual contract.
Raytheon said the multi-year arrangement with Aerojet is the “centerpiece” of its supply chain efforts following recent multi-year contracts for the SM program, which include separate $1 billion production awards last December from the Missile Defense Agency for SM-3 Block IIA missiles and the Navy for SM-6 missiles.
Raytheon said the strategic sourcing contract with Aerojet will result in savings for the Defense Department.
“Moving to multi-year, rather than annual-year contracting enables Raytheon and its supply chain to deliver even more value to our Missile Defense Agency and U.S. Navy customers, and the taxpayer,” Eugene Jaramillo, vice president of Global Supply Chain Management for Raytheon’s Missile Systems sector, said in a statement. “These multi-year agreements also allow our suppliers to transform the way they do business with Raytheon.”
Aerojet Rocket provides most of the solid rocket motors for the SM-2 missile, SM-3 interceptor, and SM-6 missile, and the company also provides the divert and attitude control system for the SM-3.
“This significant agreement on multi-year contracts strengthens our current relationship and positions Aerojet Rocketdyne favorably for future business opportunities and continued growth,” Eileen Drake, president and CEO of Aerojet Rocketdyne, said in a statement.