Electro Optic Systems secures $94 million Australian Defence Force contract

Electro Optic Systems ASX EOS Remote Weapon Commonwealth of Australia Bushmaster Hawkei vehicle
The supply of remote weapon systems is part of a $270 billion capability upgrade for the Australian Defence Force.

New South Wales technology company Electro Optic Systems Holdings (ASX: EOS) has signed a $94 million contract with the Commonwealth government for the acquisition of 251 remote weapon systems (RWS) and related materials for Australian Defence Force purposes.

The new-generation systems will enhance targeting and accuracy, and protect personnel in the field by allowing them to operate a weaponised system from a safe position onboard Bushmaster and Hawkei protected mobility vehicles.

The first 40 RWS units are scheduled for delivery before year end, with the remainder to be delivered in 2021.

The contract will draw on Australian-owned and developed intellectual property, with more than 80% of parts sourced through Electro Optic Systems’ Australian supply chain, which consists of 146 small-to-medium enterprises and over 1,100 employees.

Electro Optic Systems will reap approximately $28.5 million in cash flow from the contract during 2020, which will be used to assist in securing the supply chain.

The new weapons are part of a $270 billion capability upgrade for the Australian Defence Force, and forms part of the Standardisation of Protected Mobility Vehicles Fleet program under the 2020 Force Structure Plan.

In a separate media statement, Defence Minister Linda Reynolds said investments such as the acquisition of RWS will make the Australian Defence Force “more capable for the wide range of potential scenarios and threats Australia will face in the future”.

Space and defence focus

Electro Optic Systems operates primarily in the space and defence markets, with products incorporating advanced electro-optic applications based on core technologies in software, laser, electronics, optronics, gimbals, telescopes and beam directors, and precision mechanisms.

The company operates two research centres in Australia and has production facilities in Australia and the United States.

It also has a production support depot in Singapore and offices in Alabama and Arizona in the US, Abu Dhabi in the United Arab Emirates, and Germany.

In 2005, Electro Optic Systems formed a strategic alliance with Northrop Grumman for the further exploitation of common technologies in the space and military sectors.

In May, it completed the $10 million acquisition of US-based Audacy Corporation and launched new technical initiatives to expand its communications business.

Earlier this month, the company secured two contracts worth $4.25 million for the supply of R400 RWS units for integration onto remotely-operated combat vehicles owned by a European NATO country.

Both contracts will be delivered this calendar year.

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