BAE Systems secures $1.7bn US Navy deal to supply 55,000 APKWS II kits by 2031
September 1, 2025
The US Navy has awarded BAE Systems a new $1.7 billion contract to deliver the next five full-rate production lots of APKWS II, transforming unguided Hydra rockets into combat-proven precision munitions for the US military and its allies.
BAE Systems APKWS II gets a $1.7 billion vote of confidence
Under the US Navy contract, BAE Systems will produce and deliver up to 55,000 Advanced Precision Kill Weapon System II (APKWS II) guidance kits.
The agreement, which runs through December 2031, will support full-rate production of Lots 13 to 17 for the US Navy, Army, and several foreign military sales (FMS) customers.
This firm-fixed-price, indefinite-delivery/indefinite-quantity contract represents the continuation of a long-standing relationship between BAE Systems and the US Department of Defence (DoD), following a $2.68 billion deal signed in 2019 for production Lots 8 through 12.
Unlike many defence awards, this latest contract was not competitive.
APKWS II: Transforming rockets into precision tools
At the heart of this contract is the APKWS II, a combat-proven system that converts standard 2.75-inch Hydra 70 rockets into semi-active laser-guided precision munitions.
First fielded in 2008, the system provides pinpoint accuracy with significantly reduced risk of collateral damage. BAE Systems describes it as “critical lethality when it matters most.”
Equipped with innovative Distributed Aperture Semi-Active Laser Seeker (DASALS) optics on each wing, the system can lock onto targets from over six kilometres away.
A recent upgrade, dubbed the Single Variant Block Upgrade, enhances trajectory for steeper angles of attack, further improving strike effectiveness.
Multi-platform, multi-mission versatility
Designed for both rotary- and fixed-wing aircraft, the APKWS kit bridges the operational gap between unguided rockets and larger anti-armour weapons.
It has already been integrated into numerous US military platforms and is being tested on unmanned aerial systems (UAS) and ground-based vehicles.
Its low weight, high hit rate, and quick integration make it suitable for a variety of mission sets from ground-to-ground strikes and air-to-air engagements with drones to operations in urban environments where minimising collateral damage is critical.
It has also proven valuable in counter-unmanned aerial system (C-UAS) scenarios and is capable of launching from vehicle-mounted remote weapon stations.
A transatlantic production effort
While BAE’s US facilities in Hudson, New Hampshire (31%), and Whippany, New Jersey (22%) will lead production, the UK is also playing a central role.
Approximately 16% of the work will take place in Plymouth, UK, alongside other contributions from facilities in Ontario, Canada, and US sites, including Austin, Texas, and Rochester, New York.
With over $100 million invested in infrastructure improvements, BAE has ramped up its manufacturing capacity to produce at least 25,000 units annually. Its supply chain remains largely US-based, helping to maintain efficiency, reduce risk, and accelerate delivery schedules; even in recent years, it has delivered over 1,000 units ahead of schedule.
Affordable lethality, delivered at scale
The US DoD considers APKWS the only official programme of record for 2.75-inch guided rockets, underlining its status as a cornerstone in precision strike capability.
At roughly one-third the cost and weight of conventional laser-guided munitions, and with a faster load/unload time for ordnance crews, APKWS offers a cost-effective and mission-flexible option for today’s evolving combat requirements.
With over 50,000 units already delivered globally, the new contract signals both growing demand and enduring trust in BAE Systems’ ability to supply high-quality, combat-ready munitions for current and future battlefields.
