The U.S. Air Force wanted a greater variety of laser-guided bombs, especially a lighter and more maneuverable one to be able to hit moving targets on the Ho Chi Minh trail.

GBU-12 bombs entered service in 1976[3] and are produced (along with the balance of the Paveway series) by defense contractors Lockheed Martin and Raytheon.

Lockheed Martin was awarded a contract to compete with Raytheon when there was a break in production caused by transferring manufacturing out of Texas.

According to Raytheon's fact sheet for the Paveway II, 99 deliveries of guided munitions will yield a circular error probable (CEP) of only 3.6 feet (1.1 m), versus a CEP of 310 feet (94 m) for 99 unguided bombs dropped under similar conditions.

This means the bomb's fins deflect fully, rather than proportionally when it is attempting to guide to the laser spot.