The Pentagon has awarded AeroVironment a $500 million contract to procure commercial counter-drone technology for the U.S. military over the next three years, the Defense Department disclosed in its July 1 contract announcements. The deal is one of the largest counter-UAS awards to date and lands days after the company reported record fourth-quarter revenue.
Closing the Counter-Drone Gap
The award, listed under the Army section with Army Contracting Command Detroit Arsenal as the contracting activity, contains few public details; locations and funding will be determined with each order. Its intent, however, is clear: build out defenses against small uncrewed aerial systems after the Iran war exposed gaps in the U.S. military's ability to defeat cheap drones. Officials have repeatedly warned about a "cost curve" problem — firing multimillion-dollar interceptors at threats like Iran's Shahed one-way attack drones.
The Pentagon's counter-drone task force, Joint Interagency Task Force 401, has been rapidly channeling money into the space, from DroneShield's $24.9 million award to CACI's SkyValor validation at Yuma.
Lasers at $3 Per Shot
AeroVironment has positioned its LOCUST directed-energy system as the cost-curve answer, with CEO Wahid Nawabi saying the laser's cost-per-shot can be as low as $3. JIATF 401 tested LOCUST at White Sands Missile Range earlier this year, and the Pentagon and FAA signed an April safety agreement clearing such lasers for use in American airspace after two high-profile border incidents in February.
Record Quarter, Rising Demand
The contract caps a strong stretch for the Virginia-based company, whose shares surged nearly 19% after Monday's earnings call and climbed again on the award. "AV is well-positioned to capture the rising global demand across lethal and non-lethal drones, counter-UAS, space and advanced technologies," Nawabi said in the earnings release. The company showcased its Halo_Shield counter-drone framework at Eurosatory 2026, which integrates LOCUST lasers, Switchblade loitering munitions and RF effectors into a single layered architecture.
The award adds to a booming counter-UAS market that has seen Allen Control Systems raise $200 million for its Bullfrog gun system and the Pentagon hand a matching $500 million deal to Perennial Autonomy in May.
Reporting based on coverage from DefenseScoop.