The Defense Department on Tuesday announced it has agreed to invest $1 billion in L3Harris Technologies’ solid rocket motor production in a first-of-its-kind deal.
L3Harris will spin off its Missile Solutions business into a separate company as part of the direct-to-supplier partnership, the company and the Pentagon said in their respective statements announcing the signing of a letter of intent on the deal.
The Pentagon said its investment will support Missile Solutions’ — a division formed after the company’s 2023 acquisition of Aerojet Rocketdyne — effort to expand capacity on critical missile programs such as the Army’s PAC-3, or Patriot Advanced Capability, and THAAD, or Terminal High Altitude Area Defense system, and the Navy’s Tomahawk and Standard Missile.
The investment will provide up-front cash and stability that the new L3Harris spinoff will need to increase its solid rocket motor production, modernize its facilities and improve industrial resilience, the Pentagon said. And the department said this partnership will allow it and L3Harris to negotiate multiyear procurement framework agreements.
The Pentagon said this new approach is part of Defense Secretary Pete Hegseth’s new acquisition transformation strategy, which calls for negotiating and investing directly with critical suppliers to save money and time.
“We are fundamentally shifting our approach to securing our munitions supply chain,” Michael Duffey, undersecretary of defense for acquisition and sustainment, said in the Pentagon’s statement. “By investing directly in suppliers we are building the resilient industrial base needed for the arsenal of freedom. This direct-to-supplier model is a crucial step toward replenishing stockpiles, rebuilding our military and reestablishing deterrence by ensuring the availability of critical components.”
L3Harris said the partnership will help “significantly increase capacity to build solid rocket motors that power vital U.S. and allied missiles.” Solid rocket motors have become increasingly important as conflicts like the war in Ukraine rage on, consuming scores of missiles and straining the defense industrial base’s ability to churn out more.
The Pentagon and the U.S. defense industry have been looking for ways to accelerate the nation’s ability to produce more solid rocket motors, and previously have taken several steps to address the problem.
L3Harris, for example, paid $4.7 billion for Aerojet Rocketdyne to expand into the engines and propulsion market. And in February 2025, L3Harris announced it had broken ground on four new solid rocket motor production facilities at its Camden, Arkansas campus, as part of a $215.6 million Defense Production Act program agreement.
The newest agreement, however, is more than four times as large an investment — and could have a major impact on both the solid rocket motor industry and how the Pentagon approaches acquisitions.
The Pentagon said it will be the anchor investor in the new Missile Solutions company, with its $1 billion investment from its Industrial Base Analysis and Sustainment authority. An initial public offering for the new spinoff company is planned for the second half of 2026.
L3Harris said the department’s investment, a convertible preferred security, would automatically convert into common equity following the IPO later this year. L3Harris plans to keep a controlling interest in an independent Missile Solutions business.
L3Harris chief executive Chris Kubasik told investors in a Tuesday call that Pentagon officials have been meeting with defense industry representatives since summer 2025, and stressed the need to increase both speed and capacity of the industrial base. Over a span of dozens of meetings, Kubasik said, L3Harris and Pentagon officials homed in on the idea of a publicly traded spinoff company with a major government investment.
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