Kratos Defense & Security Solutions Inc. received a big contract for jet-powered target drones, used in military war games. The U.S. Navy announced the $37.1 million contract modification on June 27.

Under the deal, Kratos’ aerospace subsidiary in Sacramento will build 45 BQM-177A subsonic aerial targets at low-rate initial production for $34.6 million.

Under a separate, $2.5 million portion of the deal, Kratos (Nasdaq: KTOS) will supply 315 mission equipment installation kits, 30 radar altimeters, technical manuals, training materials and equipment as well as logistics support services.

Work will continue through April 2019.

The Naval Air Systems Command of Patuxent River, Md. awarded the deal.

San Diego-based Kratos said it expects separate contracts — covering peculiar support equipment, initial systems spares, external payload systems and flight consumables — to follow shortly.

It added that a second low-rate initial production order in fiscal 2018 should be 25 percent higher than its first low-rate initial production order.

The BQM-177A target imitates anti-ship cruise missiles and is expected to replace the Navy’s existing BQM-74E Chukar targets. The new model offers a longer range, lower cruise altitudes and greater maneuverability. Kratos used a BQM-167A Skeeter target, which it sells to the U.S. Air Force, as a starting point for the Navy model. It modified the design by changing the fuselage, mounting the wings higher and integrating a turbo jet into the body.

“Transitioning to production is a significant milestone for our team,” said Steve Fendley, president of Kratos’ Unmanned Systems Division, in a prepared statement, “and with this achievement it delivers a much needed capability to the Navy in supporting our country’s national security requirements.”