For years the cheapest way to swat a drone out of the sky has been hiding in plain sight: a 2.75-inch rocket family that dates back to the early Cold War, with a laser seeker bolted into its middle. Now the Pentagon wants that seeker by the truckload.

The Department of War, as the Pentagon now styles itself, announced on Monday 19 October that it has signed a framework agreement with BAE Systems to buy up to 25,000 Advanced Precision Kill Weapon System guidance kits a year, for as long as seven years. APKWS kits turn unguided 2.75-inch (70 mm) Hydra rockets into laser-guided munitions, and they have quietly become one of the most cost-effective counter-drone weapons in the American inventory.

There is a catch, and it is the usual one: Congress still has to authorize and fund the buy. Neither side has said what it will cost.

What the Pentagon actually signed

A framework agreement is not a contract. It is a promise of steady demand that lets a manufacturer buy long-lead parts and hire people before the paperwork is finished. BAE says it will increase output now while the two sides negotiate a multiyear contract under the framework.

The headline number is not new to anyone who has followed the program. According to Defense News, a BAE official said back in 2023 that APKWS was in full-rate production with room to grow to 25,000 units a year. The Pentagon has simply decided to fill that room.

The bigger figure is reserved for allies. The framework lays out a path to 35,000 kits a year, but output above 25,000 only comes online once partner nations formalise their demand through Foreign Military Sales Letters of Request. In other words: the line expands when the orders are on paper, not before.

BAE Systems' own overview of the APKWS laser-guided rocket and how the mid-body guidance kit turns a Hydra into a precision weapon.

Why an old rocket matters in 2026

The trick behind APKWS is modesty. Instead of a new missile, BAE slots a guidance section with folding wings and laser seekers between the rocket motor and the warhead. The result fits in the same launchers and is fielded by all four US services: the Army, Navy, Aviation et Marine Corps all helped finalise the agreement.

It started life as a helicopter weapon, and it still is one, carried by types such as the AH-64 Apache. But the reason the Pentagon wants it in industrial quantities is drones. In March 2025 US Central Command released footage of APKWS rockets destroying Houthi one-way attack drones, and an AFCENT spokesperson told The War Zone the video showed a US fighter employing the AGR-20F version of the weapon. F-16s have been loading them in the Middle East, and in May 2025 CENTCOM released a photo of a deployed F-15E Strike Eagle carrying six rocket pods in a counter-drone loadout.

The maths is the whole point. Published estimates put a complete APKWS round in the tens of thousands of dollars, while a Sidewinder or AMRAAM costs many times that. Firing a missile that costs hundreds of thousands of dollars at a cheap drone is a strategy that runs out of money and missiles at roughly the same time.

A factory that already runs hot

BAE builds the kits in Hudson, New Hampshire and Austin, Texas, and announced in February that it had delivered its 100,000th. The Navy awarded BAE a five-year contract in August 2025 worth up to $1.74 billion for up to 55,000 kits for the Navy, the Army and foreign customers, with work running to December 2031.

Foreign demand is the reason the 35,000 figure exists at all. Saudi Arabia won State Department approval in July for a possible $1.96 billion package that includes up to 20,000 APKWS kits, split evenly between air-to-air and air-to-ground versions. Italy is weighing a buy of 5,031 kits for counter-drone defence.

BAE says it is also developing upgrades and mission-specific variants alongside the capacity expansion, so the 25,000 kits a year may not all look the same by the end of the deal.

Part of a bigger munitions push

APKWS is the latest in a run of framework deals the Pentagon has signed this year to get munitions lines moving. In January, Lockheed Martin agreed to more than triple production of the PAC-3 MSE Patriot interceptor. In March, BAE and Lockheed agreed to quadruple production of seekers for the THAAD interceptor, and a separate THAAD framework signed in January led to a June contract worth more than $35 billion for the interceptors themselves.

The APKWS deal is the cheap end of that shopping list, and arguably the most telling. The war-fighting lesson of the past few years is not that the US lacks exquisite missiles. It is that it lacks enough affordable ones to shoot at everything that flies. A laser-guided rocket by the tens of thousands is the Pentagon admitting the drone problem is a volume problem.

Now Congress has to pay for the answer.

Sources: Defense News, Defence Industry Europe, U.S. Department of War statement (via Defence Industry Europe), BAE Systems, The War Zone, The Defense Post, Wikimedia Commons