Electro Optic Systems Holdings (EOS) is moving to expand production capacity of its new R-400S-MK2 remote weapon system as it fulfils a major contract and achieves preferred tenderer status for two others.
In June, EOS announced it had executed a $170 million contract to supply approximately 600 weapons systems to Orbital ATK. The order is deliverable in monthly shipments from November 2017 through early 2020 and the annual shipment values are up to $75 million.
The product configuration for the contract is EOS’ new R-400S-Mk2 weapon system which has been in low volume production for more than 12 months for another customer, with more than 70 units completed and shipped, according to EOS. With over 12 months of low volume production, EOS has completed and refined the production documentation and full-rate production can now commence.
“The production line is now switching to the Orbital ATK order, and EOS has already completed all units required for this order in 2017 – these are now ready for shipment, EOS CEO Dr Ben Greene said.
He added the product configuration is subject to export control by the US government, which has formally granted EOS all export licenses required for this program up to 31 December 2017.
During 2017 the R-400S-Mk2 product was tendered for two other international customers with significant weapons’ systems requirements, both of which exceed the current Orbital ATK contract in scale and term.
“Both customers have chosen EOS as the preferred bidder for contract negotiation and we've negotiated and performed contracts for both customers before,” Greene said.
EOS is confident of completing sufficient contracts during 2017 to exceed $500 million in cumulative orders for its new R-400S-Mk2 weapon system, according to Greene.
“Either of these new programs would raise the total production capacity required for the product to more than $120 million per year.”
EOS recently entered into firm commercial agreements for a larger facility in Australia, with fitout and equipping towards a capacity of $150 million per annum per shift already underway. The new plant will be operational from the first quarter of 2018; EOS plans to maintain its current production facilities until mid-2018 after which the new plant will assume all production load.
“Planning is already under way for the next stage of capacity expansion, which may include the use of partner facilities where demand exceeds EOS’ own expanded capacity,” Greene said.
In parallel with the infrastructure expansion, EOS has been working with its suppliers to increase capacity, improve quality and reduce risk from just-in-time supply chain management.