U.S. Department of Defense Awards BAE Systems $1.74 Billion Contract for Precision APKWS II Rockets

The U.S. Department of Defense has awarded BAE Systems a contract worth $1.74 billion for the production and delivery of the Advanced Precision Kill Weapon System II (APKWS II). The agreement covers up to 55,000 guided rockets under Full Rate Production Lots 13 through 17 and will run until December 2031.

The contract, overseen by the Naval Air Systems Command at Patuxent River, Maryland, supports the U.S. Navy, U.S. Army, and Foreign Military Sales (FMS) partners. No funds were obligated at the time of award, with financing to be allocated through individual delivery orders. The award was issued on a non-competitive basis, reflecting the APKWS II’s status as the only U.S. program of record for 2.75-inch/70mm guided rockets.

Production and Facilities

Work will take place across a wide industrial base:

• Hudson, New Hampshire – 31%

• Whippany, New Jersey – 22%

• Plymouth, United Kingdom – 16%
  Additional component and assembly operations will be carried out in Texas, Pennsylvania, New York, Ontario, Maryland, and California.

BAE Systems has invested more than $100 million in infrastructure upgrades to meet rising demand. Its factories in New Hampshire and Texas alone are capable of producing 25,000 rockets annually, with proven ability to scale output if required.

Affordable Precision

The APKWS II transforms standard Hydra 70 unguided rockets into laser-guided precision munitions by integrating a mid-body guidance unit. This system, equipped with Distributed Aperture Semi-Active Laser Seeker (DASALS) optics, can lock onto stationary or moving targets at ranges beyond six kilometers.

The rockets are lighter, cheaper, and easier to handle than larger precision weapons. At roughly one-third the cost and weight of other laser-guided systems, they provide a cost-effective “surgical strike” capability. Loading times are also faster, with ordnance crews able to prepare APKWS rounds in a quarter of the time needed for heavier weapons.

Combat-Proven & Evolving

Since its first deployment in the late 2000s, APKWS II has delivered tens of thousands of units worldwide and demonstrated the highest hit rate in its class. The system is widely used across rotary-wing and fixed-wing aircraft and is now being integrated into counter-unmanned aerial systems (C-UAS) and ground-based launchers.

A recent upgrade has improved trajectory and strike angles, enabling more lethal attacks on protected or mobile targets. In 2025, BAE also began work on a dual-mode variant, adding a passive infrared seeker to complement laser guidance—enhancing performance against drones and maneuvering threats.

Strategic Significance

For the Pentagon, the APKWS II provides:

• Precision with reduced collateral damage – critical in urban or asymmetric conflicts.

• Operational flexibility – adaptable to helicopters, jets, UAVs, and vehicle-mounted launchers.

• Industrial stability – securing long-term production capacity in the U.S. and allied nations.

The contract ensures supply stability through 2031, reinforcing U.S. and allied capabilities at a time when affordable, high-volume precision weapons are increasingly vital against emerging threats like drone swarms.