Raytheon [RTN] is restarting its Standard Missile-2 (SM-2) production line after four international customers pooled $650 million in funds for a bundle purchase in foreign military sales (FMS), the company said on June 21.
The Netherlands, Japan, Australia, and South Korea are purchasing over 280 SM-2 Block IIIA and IIIB missiles with deliveries set to start in 2020, the company said.
On June 16, the U.S. Naval Sea Systems Command awarded the company a $618 million firm-fixed-price and cost-plus-fixed-fee contract for fiscal year 2017 procurement of the missiles at full-rate production requirements with spares for the U.S. and allied foreign navies. If all of the options are exercised, the value would rise to about $653 million.
Raytheon highlighted it and the U.S. Navy will use the restart as an opportunity to modernize production and testing processes inside the SM-2 factory. The Defense Department said work is expected to be completed by March 2022. $20 million of 2017 Navy and FMS funding will expire at the end of fiscal year 2017.
The company ended the production line in 2013 when it did not have enough international orders to keep it going. “That’s changed now, and we’ll continue producing SM-2s well beyond 2035,” Dr. Taylor W. Lawrence, president of Raytheon’s missile systems division, said in a statement.
The SM-2 is mostly used by the U.S. and allied navies for air defense and ship self-defense at ranges of 90 nautical miles and 65,000 feet. It targets anti-ship missiles and aircraft.
International customers for the SM-2 include Australia, Canada, Germany, Japan, Korea, the Netherlands, Spain, and Taiwan. Maintenance facilities for the SM-2 are in Australia, Japan, the Netherlands, South Korea, Taiwan, and the U.S. Section-level maintenance is performed in the U.S. when required.