XTEK Limited (ASX:XTE) has signed an exclusive support services agreement with the Australian Defence Force (ADF) to provide additional repair and maintenance services for AeroVironment WASP Small Unmanned Aerial Systems(SUAS).
This comes after the tech company secured a long-term contract with the ADF worth more than $10 million, the fourth contract notice issued by AusTender to date with the previous three worth a combined total of more than $600,000.
Underpinned by future deliveres under the original contract, as well as growing orders from the ADF for additional SUAS and spare parts, XTEK is well positioned to capture additional support revenue.
Potential to capitalise as incumbent supplier
XTEK managing director Philippe Odouard said it was a significant contract win for the business to support the ADF’s growing SUAS fleet.
The company has delivered 59 WASP AE SUAS to date, with another 20 systems scheduled to be delivered in 2020.
Further sales are possible as the ADF finds innovative applications to employ SUAS in the field and XTEK capitalises on its present position of incumbent supplier.
“Guaranteed support work over medium and long term”
Odouard added: “This follows the recent installation of the repair and maintenance facility and represents guaranteed support work over the medium and long term.
“We are a full-service SUAS supplier, with the ability to provide training, spares, repairs and ongoing maintenance services.
“This is aligned with the Federal Government’s objective to increase domestic content and intellectual property within defence procurement and we look forward to working with the ADF.”
Multiple options to extend
The long-term support contract is for three years with multiple options to extend the contract through to 2026, with an anticipated revenue of up to $5 million a year.
Overall it is expected that the ongoing contract could be worth up to $35 million in revenue over seven years.
XTEK’s key support services consist of spare parts, training, maintenance and repairs, including installation of spare parts, electronics and composite materials of the product itself.
Most of the contract will be completed in Australia except for the OEM parts coming from AeroVironment in the US.