Pentagon takes $1 billion stake in solid rocket motor supply chain with rare direct investment

The Pentagon on Tuesday announced a groundbreaking direct-to-supplier move that will see the federal government invest $1 billion in a new company, to be spun off from defense industry giant L3Harris, that will produce solid rocket motors.

It’s the first time the Defense Department has entered into such an arrangement with a private defense company and effectively makes the government the first investor in what is effectively a new business venture. Defense officials said that L3Harris’ Missile Solutions business will become a separate company as part of the deal, with an initial public offering planned for later this year.

The announcement underscores the Trump administration’s aggressive approach to using the leverage and the financial resources of the federal government to advance key national security priorities through partnerships with private industry.

Solid rocket motors are key components of advanced missile systems. America’s stockpile of those systems has been dramatically reduced because of U.S. arms transfers to Ukraine, Israel and other allies. Replenishing the nation’s stockpile has become a top priority for the Pentagon and policymakers on Capitol Hill, who have warned that the U.S. risks being dangerously short on key weapons systems in the event of a major conflict.

Pentagon officials said this move will help address that problem.

“We are fundamentally shifting our approach to securing our munitions supply chain,” Michael Duffey, under secretary of war for acquisition and sustainment, said in a 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.”

The “Arsenal of Freedom” refers to Defense Secretary Pete Hegseth’s push to transform the country’s defense industrial base and overhaul the way in which the Pentagon identifies capabilities it needs, pays for them, and works with private companies to ensure they’re delivered quickly.

In a statement, L3Harris Chairman and CEO Christopher Kubasik said the move underscores the company’s commitment to grow its production operations.

“We’re taking action to build today’s ‘Arsenal of Freedom’ by launching a pure-play missile solutions provider,” he said. “Recent Trump administration actions have placed renewed emphasis on strengthening the defense industrial base and reinvigorating competition following a 30-year wave of consolidation. … This new company will serve as a key partner to the [Pentagon] in supporting efforts to deter and defeat America’s adversaries.”

In its press release, the Defense Department said the government’s $1 billion investment in L3Harris’ Missile Solutions business will put the Pentagon in a unique position to negotiate multi-year procurement framework agreements for solid rocket motors. Officials said the new company’s IPO is planned for the latter half of 2026, meaning the government could turn a profit from the arrangement.

“Under the framework of this unique strategic investment model, the Department of War will make a $1 billion convertible preferred equity investment as the anchor investor in L3Harris’ new Missile Solutions company,” the Pentagon said in a statement. “The terms of the agreement establish the basis for the creation of the new, publicly traded company focused purely on missile solutions. This direct investment from the Industrial Base Analysis and Sustainment (IBAS) authority resources solid rocket motor production, a critical node in the munitions supply chain.”

The Pentagon said the investment will directly support the production of the Tomahawk missile systems, Terminal High Altitude Area Defense or THAAD systems, and other key capabilities.