Under a $10.4 million contract, Minneapolis-based ATK will develop a new Excalibur artillery projectile system for Army operations at Picatinny Arsenal in New Jersey.

The phase one deal is for ATK to develop a longer-range version of the Excalibur Ia precision-guided 155mm artillery projectile at a lower cost. The next-generation Excalibur is also part of an effort to transition the Army to an all-precision artillery inventory.

Officials say when the Excalibur Ib is ready for production, the contract could be worth more than $350 million.

"ATK is committed to providing affordable precision solutions to our soldiers in the field," Jack Cronin, ATK mission systems group president, said in a statement.

"When you combine the savings of our Excalibur Ib with ATK's Precision Guidance Kit solutions for 155mm and 105mm artillery rounds, we believe that ATK can enable the U.S. Army to move to an all-precision inventory of artillery ammunition."