BAE Systems has signed a long-term framework agreement with the US Department of War to expand production capacity for its Advanced Precision Kill Weapon System (APKWS) laser-guidance kits, with the potential to manufacture up to 35,000 units annually.
The agreement establishes a framework for up to seven years of multi-year procurement, as the defense contractor and the Pentagon negotiate a multi-year contract. BAE Systems says it plans to increase production to meet growing demand for precision-guided munitions, including weapons used to counter unmanned aerial systems (UAS).
The arrangement is intended to strengthen the US supply of relatively low-cost precision weapons while giving the manufacturer room to respond to changing operational requirements. However, the framework agreement itself is not the same as a finalized multi-year purchase contract.
How APKWS makes rockets precision weapons
APKWS kits convert unguided 2.75-inch (70-millimeter) rockets, including the Hydra 70, into laser-guided munitions. Rather than replacing the entire rocket with a more expensive purpose-built missile, the system adds a guidance section that directs the weapon toward a laser-designated target.
According to BAE Systems, its Distributed Aperture Semi-Active Laser Seeker (DASALS) uses optics mounted on the rocket’s four guidance wings to acquire and track designated targets after launch. The company says the design supports precision strikes while reducing the risk of collateral damage.
The system can be used against a range of targets, including soft and lightly armored vehicles, and has also been adapted for counter-drone missions. Its flexibility allows it to be deployed in air-to-surface, surface-to-surface, surface-to-air, and air-to-air engagements.
APKWS kits are already fielded by the US Air Force, Army, Marine Corps, and Navy, and are available to US allies. BAE Systems said it has produced the system since 2008 and has sold more than 100,000 units worldwide.
Production could exceed 25,000 kits annually
BAE Systems currently reports manufacturing capacity of at least 25,000 guidance kits per year, with production taking place at facilities in Hudson, New Hampshire, and Austin, Texas.
Under the new framework, the company aims to expand that capacity to as many as 35,000 kits annually. That would represent a potential 40 percent increase over its stated baseline capacity, giving the company more room to respond to demand surges.
BAE Systems has also invested more than $100 million in infrastructure improvements to support production. The company said its manufacturing network benefits from a largely US-based supply chain, established industrial partners, and the ability to increase output when required.
The agreement aligns with the Pentagon’s Acquisition Transformation Strategy, which seeks to strengthen the defense industrial base and accelerate the delivery of military equipment. The framework provides a structure for longer-term procurement, although the final multi-year contract is still under negotiation.
Why affordable precision weapons matter
The production push comes as militaries increasingly face threats from relatively inexpensive drones and other aerial systems. Using high-end missiles against low-cost targets can create an unfavorable cost exchange, making more affordable weapons an attractive option when they can perform the required mission.
APKWS offers one way to address that challenge. By adding guidance to an existing rocket design, it provides precision-strike capability without requiring every engagement to use a larger, more expensive missile. Its ability to operate from multiple platforms also gives military services and allied forces flexibility in how they deploy it.
However, APKWS is not a universal substitute for dedicated air-defense interceptors or other guided weapons. Its effectiveness depends on the target, engagement conditions, and the capabilities of the platform employing it. The new agreement signals an effort to expand production capacity before future demand exceeds available supply.