The order calls for Army Tactical Missile System (ATACMS) Unitary Product Improvement missiles that will be produced in Texas and undergo their first flight in early 2008.
The updated missiles are designed for improved accuracy and can provide air-burst, point or delayed detonations.
"The accuracy and lethality of the ATACMS missile and its vertical impact will further reduce collateral damage, as well as decrease the number of munitions needed for any given target," said Lockheed Vice President Rick Edwards.
The ATACMS is a primary medium-range tactical missile system used by Army units in the field. It was used in Desert Storm and the more-recent Operation Iraqi Freedom.
While the mobile system was designed for use against major targets such as enemy troop formations and installations, the United States has recently been aggressively developing more accurate ordnance of all types to enable the engagement of insurgents in crowded urban areas with a minimum of collateral damage.
The improved ATACMS are also designed to require less of a logistical footprint than current versions.