AeroVironment Wins Army’s $96M Contract, Shakes Up U.S. Missile Monopoly

AeroVironment has secured a $96 million U.S. Army contract to produce Freedom Eagle counter-drone missiles, marking a historic shift in American defense manufacturing. The California-based company beat RTX—the world’s second-largest defense contractor—to win the Next-Generation Counter-UAS Missile program.

This breakthrough ends decades of dominance by a handful of traditional missile manufacturers. “For the first time in our lifetimes, there’s a new missile manufacturer on the street,” Jimmy Jenkins, AeroVironment’s executive vice president of precision strike and defense systems, told Axios.

Freedom Eagle Interceptor Targets Modern Drone Threats

The Army will receive 80 prototype Freedom Eagle-1 (FE-1) interceptors over two years for testing and evaluation. The kinetic missile system is designed to neutralize Group 2 and Group 3 drones—military classifications covering drones weighing 21 to 1,320 pounds (9.5 to 599 kg)—as well as subsonic cruise missiles.

These mid-sized tactical drones represent the fastest-growing threat on modern battlefields, as evidenced by extensive use in Ukraine and recent attacks on U.S. forces in the Middle East.

The FE-1 features a dual-thrust solid rocket motor enabling engagement beyond 12.4 miles (20 km) and altitudes exceeding 10,000 feet (3,048 m). Unlike traditional systems, it operates on network data and doesn’t require dedicated radar pairing—a key advantage for rapidly deploying forces.

BlueHalo Acquisition Pays Off for AeroVironment

Freedom Eagle originated at BlueHalo, the Arlington-based defense technology company that AeroVironment acquired in May 2025 in a $4.1 billion all-stock transaction. The combined entity now employs over 3,750 people and operates manufacturing sites across more than 40 states.

“If you wanted to build a missile, you had to go to five places, in general,” Jenkins explained. “Now you’ve got a nimble, young company that can do things at a rate that gives us options as a nation.”

Manufacturing Ramps Up in Alabama and Beyond

Most FE-1 production will take place in Huntsville, Alabama, with additional work in Arkansas, Arizona, and Florida. The modular design leverages government-owned intellectual property from years of military avionics development, enabling rapid scaling to meet growing counter-drone demands.

The contract comes as China reportedly ordered one million kamikaze drones for delivery by 2026, underscoring the urgent need for affordable, scalable counter-UAS solutions.

DroneXL’s Take

Here’s the irony defense contractors don’t want to talk about: AeroVironment built its reputation making drones, not killing them. The company supplies some of the U.S. military’s most widely used small unmanned systems—the RQ-11 Raven for squad-level reconnaissance, the Puma for all-weather operations, and the Switchblade loitering munition that’s seen extensive combat in Ukraine. Now that same drone expertise is being turned on its head to defeat the very threats AeroVironment helped pioneer.

That’s not a contradiction—it’s a competitive advantage. Understanding how military drones operate, what makes them vulnerable, and how operators employ them in the field gives AeroVironment insights traditional missile manufacturers can’t match. When a drone maker designs a drone killer, the result is purpose-built lethality that addresses real operational gaps rather than retrofit solutions from Cold War-era air defense systems.

AeroVironment’s victory over RTX validates this approach. RTX’s Coyote interceptor has been the Army’s counter-drone weapon for years, fielded widely through the LIDS program. Beating an entrenched, combat-proven system from a defense giant signals the Army’s willingness to embrace innovation when it delivers genuine capability advantages. The Freedom Eagle’s network-capable, modular design addresses what drone operators know intimately: threats evolve faster than traditional procurement cycles can respond, and expensive proprietary systems can’t scale to meet mass-produced attack drones.

However, 80 prototypes over two years won’t stem the tide flooding modern battlefields. The real test is whether AeroVironment can apply its drone manufacturing expertise—rapid iteration, modular design, scalable production—to the missile business while maintaining the cost advantages that likely won the competition. If successful, this could reshape how America develops counter-UAS capabilities: not by repurposing legacy air defense systems, but by leveraging the drone industry’s own innovation playbook against itself.

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