Tucson-based Raytheon Missile Systems has won a $22.1 million contract to jump-start production of the world's first satellite-guided artillery shell for the U.S. Army.

Raytheon will deliver initial production models of the Excalibur XM982, a 155 mm guided artillery projectile, to the Army by the end of this year, more than a year ahead of schedule, under the contract announced Tuesday.

Raytheon, the world's biggest missile maker and Southern Arizona's largest private employer, is developing Excalibur with Bofors Defence of Sweden, which also will field the weapon.

The first Excalibur rounds will be delivered along with advanced targeting systems to Army units that operate the Paladin self-propelled howitzer in Iraq, Raytheon said. Excalibur also is compatible with the Army and Marine M777 lightweight howitzer and 155 mm guns now under development.

The roughly 6-inch-diameter Excalibur uses a combination of Global Positioning System satellite guidance and inertial navigation to hit targets at ranges of up to 40 kilometers, or about 25 miles.

By comparison, a conventional artillery shell's range is about 20 kilometers, or about 12 miles; rocket-assisted shells can go up to 30 kilometers, or about 19 miles.

During testing last November, an Excalibur flew 20 kilometers and struck within 3.4 meters, or about 11 feet, of a target point. In a subsequent test, it landed within about 7 meters, or about 23 feet...