Tucson-based Raytheon Missile Systems has won a $535 million contract for production of air-combat missiles, with about half of the production for foreign sales to Oman and Saudi Arabia.

The sole-source Air Force contract for production of the AIM-120 Advanced Medium-Range Air-to-Air Missile (AMRAAM), announced Friday by the Pentagon, will run through 2015. Fifty-one percent of the work is for sales of AIM-120C-7 missiles for Oman and Saudi Arabia, the latest version available for foreign sales.

The AMRAAM, made by Raytheon in Tucson, is the main long-range air-combat weapon used by the Navy and the Air Force, and 36 nations have procured versions of the missile.

The next generation of the AMRAAM, the longer-range AIM-120D, is in operational testing ahead of deployment with the Air Force and Navy, after a series of development delays.

The AIM-120D was supposed to be in operational testing by 2008 but was delayed by software and, more recently, rocket-motor problems, prompting the Air Force to suspend missile deliveries and more than $600 million in payments to Raytheon.

New rocket motors were developed by Norway-based Nammo Group and approved by the Air Force last fall, and payments to Raytheon were resumed in December, according to the Air Force.

Raytheon says it has met all renegotiated delivery schedules and that the program is back on track.

However, under contracts revamped in the wake of the technical problems, Raytheon will compensate the Pentagon and foreign governments between $27 million to $33 million for delays stemming from the late rocket motor deliveries, Air Force spokesman Ed Gulick said.

The compensation includes free installation of software upgrades, added warranty coverage and free repairs, Gulick said.

The Pentagon's fiscal 2014 budget request calls for procurement of 199 AIM-120D AMRAAMs for the Air Force and 54 for the Navy.

During the 2014 fiscal year, the Air Force plans to complete operational testing of the AIM-120D and field the missile on the Navy's F/A-18 Super Hornet and the Air Force's F-15 Eagle fighter-attack aircraft, according to Air Force documents.

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.