Kratos Defense & Security Solutions Inc (NASDAQ:KTOS) shares are trading higher Monday after the company was awarded a five-year government contract worth up to $1.45 billion.

What Happened: Kratos said it was awarded a five-year OTA contract for the Multi-Service Advanced Capability Hypersonic Test Bed 2.0 under Task Area 1. If all options are exercised over a five-year period, the contract has a total value of $1.45 billion.

MACH-TB 2.0 aims to provide an affordable bridge between hypersonic ground tests and system level flight tests, reducing overall hypersonic development risks and time.

The Office of the Under Secretary of Defense for Research and Engineering Test Resource Management Center established MACH-TB to support the Under Secretary of Defense's National Hypersonic Initiative 2.0 by creating an affordable flight test bed to increase hypersonic flight test capacity.

"Kratos is honored to receive the largest contract award in our company's history, a testament of the value Kratos' employees and team bring both to our Company and United States National Security," said Eric DeMarco, president and CEO of Kratos Defense.

"This programmatic milestone underscores our unwavering commitment to making upfront investments for rapidly developing, and being first to market with affordable, mission-critical solutions that meet the evolving needs of the warfighter."

Kratos said the contract includes integrated subscale, full-scale and air launch services to increase hypersonic flight test cadence. The company will lead a team of subcontractors that will provide systems engineering, assembly, integration, test mission planning and execution and launch services.

Kratos noted that it will work with several companies including Leidos, Rocket Lab, Koda Technologies, Corvid Technologies, Northwind, JRC, Stratolaunch, CFD Research and PAR Systems.

KTOS Price Action: Kratos shares were up 5.68% at $29.04 at the time of publication Monday, according to Benzinga Pro.