Pentagon awards BAE $145M counter-drone contract

The United States Department of War has awarded BAE Systems a contract with a ceiling of $145 million for the development, manufacturing, and delivery of Counter Unmanned Aerial Systems weapon systems, the department announced Feb. 11, 2026.

The contract includes an initial delivery order valued at $66,673,298 under FA8681-26-F-B012. Work will be performed in Hudson, New Hampshire. The ordering period runs from Feb. 12, 2026, through Feb. 12, 2031, and work under the first delivery order is expected to be completed by July 31, 2027.

Fiscal 2026 research and development funds totaling $26,048,932 are being obligated at the time of award. The Air Force Life Cycle Management Center at Eglin Air Force Base, Florida, is the contracting activity. The award was made as a sole-source acquisition under Federal Acquisition Regulation 6.302-1, citing only one responsible source.

The contract supports the development and production of systems designed to counter unmanned aerial threats, a growing operational concern for U.S. and allied forces. BAE Systems is widely known for its Advanced Precision Kill Weapon System, or APKWS, laser-guidance kits, which have been adapted for counter-unmanned aircraft systems missions.

APKWS converts unguided rockets into laser-guided munitions designed for precision strikes against soft and lightly armored targets. A newly developed proximity fuze for the standard M151 warhead enables the system to engage Class 2 and Class 3 unmanned aircraft, which typically weigh less than 55 pounds. The fuze retains the legacy point-detonation capability, allowing flexibility in operational use.

The laser-guidance kits are produced at BAE Systems’ manufacturing facility in Hudson, New Hampshire, where work under the newly awarded contract will take place. Systems equipped with APKWS have been integrated on fighter aircraft to counter one-way attack drones, including platforms similar to the Iranian-designed Shahed series used in recent conflicts.

By adapting existing rocket inventories with precision-guidance technology, APKWS provides a lower-cost alternative to traditional air defense interceptors. The system is designed to deliver accurate engagement of small aerial targets while reducing expenditure per shot compared to more complex missile systems.

The sole-source nature of the award reflects the Air Force’s reliance on BAE Systems’ established design and production capability for this class of guided rocket systems. The contract structure allows for additional orders over a five-year period, supporting ongoing development and delivery of counter-drone weapon systems as operational requirements evolve.

The Air Force Life Cycle Management Center, which oversees procurement and sustainment of airpower systems, will manage the program from Eglin Air Force Base.