DoD

November 27, 2013

Key land, sea-based electro-optical systems valued at $13.5 billion projected in next 10 years

An estimated $13.5 billion will be spent through 2022 on the research, development, and production of the representative programs covered in Forecast International’s newly updated analysis, “The Market for Land and Sea-Based Electro-Optical Systems.”

Of the major EO systems covered in the report, a total of 296,036 units will be produced over the next 10 years. During the first half of the forecast period, from 2013 through 2017, some 156,561 units will be produced; the 2018-2022 timeframe should see production of 139,475 units.

“Despite the drawdown of troops in Iraq and the reduction of forces in Afghanistan, high demand for EO systems will see only a slight decline over the next few years,” said Forecast International’s senior defense analyst Andrew Dardine. “Profound security challenges are a seemingly permanent feature of both nations.” Iraq in particular is now a major purchaser of U.S. technology and likely will be for some time. The Pentagon in August 2013 notified the U.S. Congress of a possible $2.7 billion arms deal to Iraq that would include air defense, surveillance systems, and other advanced technology.

Some of the leading EO technology in Forecast International’s analysis is critical to the performance of a wide variety of platforms. The next several years should see steady production of the Raytheon-produced VAS-5 Driver’s Vision Enhancer. This production will be spread among other services in the U.S. military, including the Navy, Marine Corps, Air Force, and Special Operations Command. Raytheon is also at work completing a $25.4 million contract for the Foreign Military Sale of the DVE to the Saudi Arabian National Guard. Work under the contract is expected to be completed by April 2014.

Night Vision devices will also continue to see high demand in the years ahead. Driven by ongoing demand by the U.S. Army for a wide range of advanced surveillance systems, the PSQ-20 Enhanced Night Vision Goggle will be produced in relatively steady numbers through the rest of the decade. The U.S. Army in May 2013 awarded prime contractor ITT Exelis a $48 million contract for the system. According to the fiscal yea 2014 U.S. defense budget, $1.1 billion will be spent on the procurement of night vision devices through 2018.

Over the next several years, as navies continue to shift their focus from defense from airborne attack alone (whether from missiles or jet fighters) to an emphasis on the surveillance and targeting of small sea-based threats, developers of sea-based EO systems will follow suit. L-3 KEO, for example, in August 2013 was awarded a $9.7 million cost-plus-fixed-fee basic ordering agreement for engineering and logistics services, refurbishment, overhaul, and upgrade in support of the Mk 46 Optical Sight System and the Mk 20 Electro-Optical Sensor components and subcomponents.




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