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Kratos Defense Secures $61.1 Million Navy Contract Modification for BQM-177A Targets

Last updated: February 25, 2026
Taurigo

1. Overview

In a significant boost for its operations, Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) announced a substantial contract modification valued at $61.1 million from the U.S. Navy on February 25, 2026. This award marks a pivotal moment for the company as it solidifies its role in providing advanced aerial target systems essential for military training and testing.

2. Contract Details

The contract modification pertains to the full-rate production of Lot Seven for 70 BQM-177A Subsonic Aerial Targets, alongside 70 Rocket-Assisted Takeoff (RATO) attachment kits and associated technical and administrative data. The BQM-177A system is designed to support realistic threat representation, which is critical for advanced weapons testing and fleet training operations.

Steve Fendley, President of Kratos Unmanned Systems Division, commented on the contract, stating, “Achieving full-rate production of the BQM-177A reflects the Navy’s continued confidence in Kratos’ ability to deliver reliable, high-performance aerial target systems at scale.” He emphasized that this award underscores the company's commitment to providing affordable unmanned systems that meet the Navy's training, testing, and evaluation requirements.

3. Contract Value and Future Prospects

The total contract value, including this latest modification, amounts to $238,798,157, demonstrating a strong ongoing relationship between Kratos and the Navy. Fendley highlighted that this modification will allow the company to maintain production readiness for future demand while continuing to invest in capital production improvements aimed at enhancing capacity and efficiency.

4. Production Locations

The work associated with this contract will be carried out across various locations within the continental United States, with the majority of tasks expected to be performed in:

  • Sacramento, California (50%)
  • Dallas, Texas (20%)
  • Fort Walton Beach, Florida (5%)
  • Blacksburg, Virginia (4%)
  • Santa Ana, California (2%)
  • Newton, Kansas (2%)
  • Concord, California (2%)
  • Milwaukie, Oregon (2%)
  • Chatsworth, California (2%)
  • Additional locations across the U.S. (11%)

The successful execution of this contract is anticipated to be completed by August 2028, further solidifying Kratos' position in the defense sector.

5. About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions is recognized as a leading provider of technology, products, systems, and software addressing defense, national security, and commercial markets. The company is known for its innovative approaches, focusing on rapid development and production to meet mission-critical needs efficiently and effectively. With a diverse portfolio that includes unmanned aerial systems, propulsion systems, and advanced vehicles, Kratos is well-positioned to capitalize on emerging opportunities in the defense industry.

6. Conclusion

The recent contract modification awarded to Kratos Defense & Security Solutions not only reflects the U.S. Navy's trust in the company's capabilities but also highlights its strategic importance in the defense sector. As Kratos continues to invest in production improvements and expand its operational capacity, the company is poised for sustained growth and success in the coming years.

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