Defense contractor

Raytheon

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said it received a three-year $881.4 million contract from the Navy to continue development of the sea-based missile Standard Missile-3 (SM-3).

Shares of Raytheon were gaining 34 cents to $31.34 Monday afternoon. SM-3 features a third-stage rocket motor, GPS guidance and a kinetic warhead to intercept and destroy short- and medium-range ballistic missiles in space, and it is a component of the Missile Defense Agency's Aegis Ballistic Missile Defense program.

Raytheon heads the SM-3 team, which is supported by

Boeing

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and

Alliant Techsystems

(ATK)

, who provide major subsystems.

The company said that last December, President Bush announced the administration's intention to deploy missile defense capabilities in 2004-05. The proposal calls for up to 20 sea-based interceptors employed on existing Aegis ships.

Raytheon, based in Lexington, Mass., had sales of $16.8 billion in 2002.