Raytheon Company
The Raytheon Standard Missile-3 Block IIA.

Raytheon Reportedly Seeks More Navy Missile Purchases

April 12, 2016
The push for more of the weapons — Raytheon wants to sell the Navy 17 more SM-3 IB missiles, which are used to destroy short-to-intermediate range missiles — comes after a $12 million missile was lost early in flight during an Oct. 31 intercept test.

Raytheon Co. is asking Congress to increase purchases of a U.S. Navy missile interceptor even as the Pentagon investigates the defensive weapon’s failure in a test, according to people familiar with the contractor’s efforts.

The company wants congressional defense committees to add 17 SM-3 IB missiles — at a cost of $179 million — to the Missile Defense Agency’s request for 35 of the “hit-to-kill” weapons for the fiscal year beginning in October, according to four people who asked not to be identified discussing the behind-the-scenes lobbying.

“Raytheon supports stable and economical production quantities for fiscal 2017, as funded in prior and current years,” spokesman Michael Doble said via e-mail when asked about the request. He didn’t comment on whether Waltham, Massachusetts-based Raytheon was seeking an increase.

The push for more of the weapons — fired from Navy ships to destroy short-to-intermediate range missiles — comes after a $12 million missile was lost early in flight during an Oct. 31 intercept test. The Missile Defense Agency is still reviewing the incident, and an official said the cause appears to be a bad component that inadvertently made it through the quality acceptance process.

“It looks like we potentially had a component in the missile that just slipped through acceptance testing,” Rear Admiral Johnny Wolfe, head of naval missile defense for the agency, said. “You never want to have production issues but unfortunately, those things happen.”

Doble of Raytheon said the missile, which was declared operational in 2014, “has an impressive flight test record. These interceptors are deployed worldwide protecting the U.S. and its allies against ballistic missile threats. We are working closely with our Missile Defense Agency customer to fully resolve issues that surfaced during” flight testing.

Before the failure, the missile formally known as the Standard Missile-3 IB had seven consecutive successes in its most recent string of tests, according to agency data.

Last year, the agency planned to seek 52 of the missiles in fiscal 2017, but the request was scaled back for budgetary reasons. The initial test of whether Raytheon will get a boost over the budget request will come later this month when the House Armed Services Committee, the first of four panels now considering the increase, completes its fiscal 2017 blueprint.

The Missile Defense Agency’s “failure review board” examining the mishap has almost completed its work. It also has a 90-day review under way of Raytheon’s Tucson, Arizona, SM-3 production line with the company’s support, Wolfe said. “The team is in Tucson but will cover all aspects of production,” including the final assembly done in Huntsville, Alabama, Wolfe said.

Missile Defense Agency officials may be asked about the missile failure this week during three hearings by House and Senate subcommittees examining the agency’s budget request.

The SM-3 IB model that’s on U.S. vessels is also to be deployed to Romania as part of a planned land-based U.S. missile defense. It has improved capabilities with a more advanced infrared seeker to identify and discriminate among missiles and upgraded steering and propulsion to hit an adversary’s weapon.

Raytheon has millions of dollars of sales at stake in the outcome of the missile failure review and the broader inspection of its production process. The Pentagon hasn’t yet approved full-rate production of the missile, the most lucrative phase for a contractor.

That approval, which was to have occurred last year, is now contingent on the failure review findings and two test flights next month to validate fixes for third-stage rocket motor flaws that caused two earlier SM-3 IB failures.

The Missile Defense Agency plans to buy as many as 246 missiles through fiscal 2021 for about $2.6 billion, according to its budget. Most immediately, the agency hasn’t yet awarded a fiscal 2016 contract option for 49 missiles valued at as much as $500 million, Wolfe said.

“It does not look like it was a systemic issue” that caused the missile failure, he said. “Fundamentally, we believe we’ve got a good design,” Wolfe said. “We just want to make sure that as we’re producing that design we’ve got all the right things in place because we are delivering a lot of these.”

The impact on Raytheon’s production line depends on the problem’s source, according to Cristina Chaplain, director of missile defense oversight for the U.S. Government Accountability Office.

“We do not have the final details about the problem yet, but it appears to be an issue with a component known as the safety switch,” she said in an e-mail. “If this is confirmed, the impact should not be too significant and production of other components can proceed as the issue is addressed. If the problem is tied to a manufacturing process or design, the impact could be more substantial.”

By Tony Capaccio

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