Insensitive Munitions Explosives intend to be more resistant to fire, mechanical shocks and other igniters than TNT, according to the report.
The fixed-price contract will run through the end of September 2017.
According to the company, an Army team at Picatinny Arsenal earlier this year approved the IMX-101 explosives as a replacement for TNT.
Both the Army and Marine Corps have approved that type of explosives as a replacement for TNT in the M795 155-millimeter artillery munition, BAE says.