General Dynamics Ordnance & Tactical Systems and American Ordnance LLC will compete for individual orders of the rounds under the $993.7 million contract, the Army said in a statement.
The aim is to produce between 12,000 and 20,000 additional rounds per month, it added.
The announcement comes after the Army awarded $522 million in orders for the same rounds to two other companies in a deal funded by the Pentagon's Ukraine Security Assistance Initiative.
Ukraine and Russia have fired huge amounts of artillery munitions at each other since the Russian invasion began almost a year ago.
In November, a US official said Russian forces were firing about 20,000 artillery rounds a day.
Ukraine's rate was between 4,000 and 7,000 rounds per day -- faster than allied Western manufacturers can produce to keep pace.
The rates have plunged since then, as the winter set in and both sides face shortages and conserve ammunition.
EU eyes joint purchases of ammunition for Ukraine
Brussels (AFP) Feb 17, 2023 -
EU member states are looking at ways to jointly buy arms and ammunition for Ukraine, diplomats said Friday, as Kyiv fires thousands of shells a day to fight off Russia's invasion.
Estonia has put forward a proposal for the 27-nation bloc to contribute 4 billion euros ($4.25 billion) more to a joint fund in order to buy 1 million 155-millimetre shells for Ukraine.
Prime Minister Kaja Kallas said the plan was similar to the EU-wide common purchasing scheme the bloc used for Covid-19 vaccines during the pandemic.
EU foreign ministers meeting in Brussels on Monday were expected to start a debate on the issue.
Ukraine's Foreign Minister Dmytro Kuleba will attend and is set to issue a call for more weapons for Kyiv on the eve of the one-year anniversary of the invasion, which started February 24, 2022.
Several European diplomats said the Estonian proposal had been broadly welcomed but that more work would take place in coming weeks to try to hammer out a concrete plan.
"It's going to launch a discussion, and maybe this discussion will land on something that is not at all what the Estonians are proposing," a diplomat said.
The EU's foreign affairs service is to come up with its own proposals and defence ministers will discuss the issue more next month.
EU nations have sent weaponry worth billions of euros to Ukraine and have had to dig deep into their stockpiles to keep arming Kyiv's forces.
Ukraine's Western backers are now struggling to solve overlapping challenges: how to keep ammunition flowing to Kyiv as it faces renewed Russian assaults, while bolstering the output of their own defence industries.
NATO chief Jens Stoltenberg warned this week that Ukraine's expenditure of munitions was "many times higher" than the rate of production in alliance members.
Estonia estimates that Ukrainian forces are firing up to 7,000 artillery shells a day in their grinding war of attrition with Russia.
But the European defence industry is estimated to currently be producing a maximum of 25,000 shells a month.
Both the EU and NATO are urgently looking to get their defence industries to ramp up output, with joint purchases and longer-term contracts mooted as ways to stimulate increased production.
Estonia's proposal said key players of the European defence industry stand ready to boost production by "more than sevenfold" as demand arises.
It added that "our short-term goal to help Ukraine in the battlefield feeds into our industry-related capability goal -- to boost the European defence production and replenish the stocks."
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