⚠ Framework Agreements Are Not ContractsModerate threat

RTX (RTX) — threat to the moat

RTX's five munitions framework agreements with the Department of War are not yet contracts and are not counted in its backlog.

Some of the demand investors count is not yet contracted. RTX is working to convert five framework agreements with the Department of War into definitive contracts, which management said carry "significant demand over the next 10 years"1. They are not in the $289 billion backlog.

RTX defence backlog ($bn)78Dec 202393Dec 2024107Dec 2025119Jun 2026RTX Forms 10-K FY2024-FY2025, 10-Q Q2 2026; frameworks excluded
Rising, before the frameworks are counted.

A framework agreement sets terms for future buying; it does not commit a budget. The money comes through appropriations, lot by lot, and the government keeps the right to buy less. The base budget request for 2027 is $1.1 trillion, roughly 25% more than the year before2, but a request is not an appropriation.

The risk is that expectations run ahead of contracts. Raytheon's shares of that budget have to be won and then funded each year.

Defence bookings already include firm orders that are not yet funded. RTX's definition of defence bookings includes "firm orders for which funding has not been appropriated"3, so even part of the counted backlog depends on future appropriations. The frameworks add a further layer of intention on top.

Count the conversions. When the five agreements become contracts, the backlog will show it; if a year passes and the defence backlog, $119 billion in June 20264, has not stepped up by the amounts implied, the frameworks were options rather than orders.

References
  1. ReportedRTX is working to convert five framework agreements with the Department of War into definitive contracts, which management said carry "significant demand over the next 10 years".
    RTX second-quarter 2026 earnings call transcript (The Motley Fool) - Raytheon bookings and book-to-bill, GTF aircraft-on-ground and MRO output, munitions output, framework agreements, the defence budget request, GTF Advantage, Collins margin plans and segment outlook - defence: Raytheon bookings, book-to-bill and backlog, munitions output, framework agreements and the budget request. — Q2 2026 · publ. 24 July 2026 · source ↗
  2. ReportedThe base budget request for 2027 is $1.1 trillion, roughly 25% more than the year before, but a request is not an appropriation.
    RTX second-quarter 2026 earnings call transcript (The Motley Fool) - Raytheon bookings and book-to-bill, GTF aircraft-on-ground and MRO output, munitions output, framework agreements, the defence budget request, GTF Advantage, Collins margin plans and segment outlook - defence: Raytheon bookings, book-to-bill and backlog, munitions output, framework agreements and the budget request. — Q2 2026 · publ. 24 July 2026 · source ↗
  3. ReportedRTX's definition of defence bookings includes "firm orders for which funding has not been appropriated", so even part of the counted backlog depends on future appropriations.
    RTX Form 10-K for fiscal 2025 - customers and backlog: sales to the U.S. government (38%, 40%, 46% of net sales in 2025-2023), Airbus (about 14%, 14%, 17% before discounts and incentives; 29%, 31%, 48% of Pratt & Whitney sales), Boeing and Airbus at 16% of Collins sales, international sales of 47%, and total, commercial and defence backlog with remaining performance obligations. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  4. ReportedWhen the five agreements become contracts, the backlog will show it; if a year passes and the defence backlog, $119 billion in June 2026, has not stepped up by the amounts implied, the frameworks were options rather than orders.
    RTX Form 10-Q for the quarter ended 30 June 2026 - backlog of $289 billion ($170 billion commercial, $119 billion defence), remaining performance obligations, the $0.4 billion powder-metal accrual, the Blue Canyon Technologies sale, Patriot awards and the remaining repurchase authority. — Q2 2026 · publ. 23 July 2026 · source ↗
Sources
Generated September 28, 2026