Nearly $1 billion added to Raytheon’s contract to build a new, larger SM-3 interceptor cooperatively with Japan’s Mitsubishi Heavy Industries is expected to carry the program through to its initial flight test in preparation for deployment in 2018.

The funding will support a one-year restructuring of the program. Earlier, officials planned to begin intercept tests in fiscal 2014; that milestone has now slipped into calendar year 2016, according to government auditors. Despite technical challenges, government officials still say the new interceptor will be ready for deployment in 2018 along with new Aegis ship software and other sensors designed for deployment in Europe to help protect against an Iranian intermediate-range ballistic missile attack.

Late last year, U.S. government auditors found that two components — the divert-and-attitude-control system and its propellant (managed by Aerojet) — failed their subsystem reviews. And indications were that the third-stage rocket motor and nose cone, both developed under management by Mitsubishi, have encountered problems. A major critical design review on the propulsion stack is now slated for April 2013, says Wes Kremer, vice president of air and missile defense for Raytheon.

The U.S. Missile Defense Agency last month approved a $925 million modification to Raytheon’s existing SM-3 IIA contract, bringing the total value for the U.S. portion of the development to $1.51 billion.

The program is scoped to produce a 21-in. interceptor capable of higher velocity at burnout, and thus longer-range engagements than the SM-3 1A/B models, which are 14-in. in diameter.

The new interceptor also will have a larger kill vehicle optimized for improved target detection and maneuverability in the endgame.

Though the interceptor is designed to allow for Japan to protect against a North Korean attack with fewer deployed ships, the White House in 2009 selected it as a linchpin for Phase III of the European Phased Adaptive Approach, which is geared toward protecting much of Europe and, eventually, the East Coast of the U.S. from Iranian missiles.