Electro Optic Systems Holdings Limited (ASX:EOS): US Army Clarifies Common Remotely Operated Weapon Station Acquisition Strategy

Canberra, Mar 11, 2011 AEST (ABN Newswire) - With its partner Northrop Grumman Corporation (NYSE:NOC), Electro Optic Systems Holdings Limited (ASX:EOS) (PINK:EOPSF) is a potential bidder for the US Army's CROWS (Common Remotely Operated Weapon Station) program.

On 1 March 2011 the US Army published an update to its FedBizOpps notice regarding CROWS dated 16 February 2011, in the form of responses to all written questions arising from the original notice.

The Army requirements for its CROWS program include three general SOW (Statement of Work) areas:

1. Manufacturing of up to 18,000 CROWS;

2. Recapitalization (upgrade) of previously delivered XM153 CROWS; and

3. Engineering and logistics services, and spares parts for CROWS.

The FedBizOpps notice and the subsequent update together clarify key elements of the CROWS procurement:

A. CROWS Configuration

Army owns rights to all technical data for production of those parts of previously delivered XM153 CROWS that Army wishes to be propagated into future CROWS, and this technical data will be applied in three different ways by Army:

- Software. All CROWS, current and future, must operate the Army's CROWS software which will be provided to qualified bidders. No vendor software will be used.

- Physical elements from XM151 CROWS. Army will provide technical drawings and other material necessary for a new manufacturer to accurately re-produce sufficient parts of XM153 CROWS to ensure that new parts and sub-systems developed for future CROWS will be generally backwards compatible with [i.e. fit] older CROWS built up to 2012.

- New technology. Army intends to withhold some technical data for XM151 CROWS, allowing alternative designs and technology to be proposed for specific parts. However any new part or sub-system will be required to perform a similar function when used in the older XM151 CROWS.

EOS believes the Army approach aims to capture the best-available new technology while ensuring that current and future CROWS can operate from a substantially common pool of spare parts, training and support systems.

EOS and Northrop Grumman Corporation each have production technology and facilities suitable for efficiently re-producing Army-selected XM151 parts, and each have weapon system technology adaptable to improve the XM151 CROWS configuration.

B. Number of Awards

The Army update states that: "The Government's intent is to award multiple (two or more) Indefinite Delivery / Indefinite Quantity (ID/IQ) contracts, however the Government reserves the right to make one award."

Further: "...each IDIQ contract award will contain all three SOW areas. These three SOW areas will be identified in one encompassing SOW."

It is clear that Army intends to award at least two CROWS contracts spanning all CROWS requirements [SOW areas], and if CROWS follows precedent for major capital programs then those two suppliers will compete thereafter for work share on the basis of price, performance, technology, quality and responsiveness.

EOS considers that it has appropriate technology, production skills and support capabilities to contribute, through its teaming with Northrop Grumman Corporation, to any Army strategy aimed at this objective.

EOS and Northrop Grumman Corporation will jointly compete vigorously for one of the [two or more] awards that Army intend to make for CROWS.

C. CROWS Schedule

The Army update states that it expects:

- Draft tenders and industry consultation to be completed by 30 September 2011.

- The deadline for tender submission will be between 1 October 2011 and 30 September 2012.

- Contracts will be awarded between 1 October 2011 and 30 September 2013.

EOS and Northrop Grumman Corporation are positioned to respond to any of these potential deadlines.

Contact

Ben Greene Chief Executive Officer Electro Optic Systems Holdings Limited Ph: +61-414-365-658 http://www.eos-aus.com