Pentagon, BAE Systems Sign Deal for 25,000 Guided Munition Kits a Year
BAE Systems and the Pentagon signed a framework agreement for up to 25,000 APKWS laser-guidance kits annually, with capacity to expand to allied nations as munitions demand surges.
The Pentagon and BAE Systems signed a framework agreement for up to 25,000 Advanced Precision Kill Weapon System (APKWS) guidance kits a year, according to Defense News. The deal, which runs up to seven years, is designed to keep production lines running at capacity as the U.S. military works through elevated demand for precision munitions.
The agreement is a framework rather than a fully funded contract, meaning the annual order volume still requires congressional appropriation before kits are built against it. Alongside the 25,000 units earmarked for U.S. forces, the framework includes capacity for an additional 35,000 kits a year that could be sold to allied nations through the Foreign Military Sales program, Defense News reported.
APKWS kits convert unguided 2.75-inch rockets into laser-guided munitions used across all four U.S. military services. The system has become a lower-cost alternative to air-to-air missiles for counter-drone operations, a role that has taken on added weight as militaries confront cheap, mass-produced drone threats in multiple theaters.
Pentagon undersecretary Michael Duffey said the agreement “keeps production lines running at capacity, provides our forces with interceptor inventory” while improving cost efficiency, according to Defense News. BAE Systems has already delivered 100,000 APKWS kits as of February 2026, underscoring how far production has scaled since the system’s introduction.
The new framework builds on a separate five-year Navy contract awarded in August 2025 worth up to $1.74 billion for 55,000 kits. No dollar figure has been publicly announced for the latest framework agreement.
Part of a broader production surge
The APKWS deal fits into a wider Pentagon push to expand munitions manufacturing capacity across multiple weapons programs, a priority that has intensified as U.S. forces and partner nations draw down interceptor and precision-munition stockpiles faster than planned replenishment schedules anticipated.
That pressure has been visible across several fronts this year. Houthi missile attacks in Yemen, including a strike on a military training camp in Shabwa province that killed more than 50 security recruits, have kept regional air-defense and strike-interdiction demand high. U.S. and allied forces operating in the Middle East have drawn repeatedly on interceptor and guided-munition stocks to respond to drone and missile threats, a pattern that defense officials have cited as justification for locking in multi-year production commitments rather than relying on one-off orders.
The counter-drone mission in particular has reshaped procurement priorities. Laser-guided rocket kits like APKWS cost a fraction of traditional air-to-air missiles, making them attractive for engaging swarms of low-cost drones without depleting more expensive interceptor inventories — a tradeoff that has become central to Pentagon budget planning as adversaries field growing numbers of one-way attack drones.
The framework’s allied-sales component also reflects how the U.S. defense industrial base is being positioned to supply partner militaries facing similar drone and rocket threats, rather than treating foreign military sales as a secondary market. Expanding capacity to 35,000 additional units a year for allies would mark a significant increase in the program’s export footprint if congressional funding and allied orders materialize at that scale.
Congress has not yet acted on funding tied to the new framework. Until appropriations are approved, the 25,000-unit annual figure represents planned capacity rather than a guaranteed production schedule.
Found this useful? Share it.
