WASHINGTON, July 6 -- A Shahed drone costs Iran a few thousand dollars to build. Shooting one down with a Patriot missile costs the United States several million. That math, exposed repeatedly during this year's air war with Iran, is what the Army just paid AeroVironment Inc. (NASDAQ: AVAV) $500 million to fix.

The Army Contracting Command at Detroit Arsenal awarded the three-year, firm-fixed-price contract this week, covering counter-drone systems built around AeroVironment's existing Switchblade loitering munitions and its LOCUST directed-energy laser, which the company says can down a small drone for as little as $3 a shot. Specific locations and dollar amounts will be set through individual task orders as they come in, meaning the $5...