Nicknamed "The Punisher," the semi-automatic, shoulder-fired XM-25 has a laser rangefinder and can launch rounds that explode at a set distance, meaning it can defeat barriers protecting enemy fighters.
The 12-pound, 29-inch gun can fire 25mm airbursting rounds up to 500 meters (546 yards) for a precision target and 700 meters (765 yards) when firing on an area. ATK may also develop door-breaching and armor-piercing rounds for the XM-25.
Under the 30-month contract with the Army's Program Executive Office (PEO) Soldier, the XM-25 will be further designed and tested to ensure the final weapon meets all requirements.
The site said the Army wants to acquire 36 more XM-25s. The first batch may be deployed in a year, the site said, although mass production won't happen until 2013 at the earliest. The site previously said the Army would buy more than 12,500 XM-25s beginning in 2012.
ATK, a rocket, aircraft, and weapons maker, is based in Minneapolis, Minn.