The Nixie, formally known as the AN/SLQ-25A, is towed behind ships and emits a sound that lures away torpedoes that home in on sounds and ship wakes.
The contract coincidentally was awarded to Argonst, Inc., in Smithfield, Penn., on the same day the Washington Times reported that a Chinese Song-class submarine equipped to carry homing torpedoes was sited shadowing the aircraft carrier USS Kitty Hawk in the East China Sea last month.
While it was not announced where the new Nixie was destined, U.S. cruisers and destroyers like the Hawk's escorts are generally equipped with the system.
In the event of a threat, Nixie would be towed behind the ship by cable. Its sensors pick up the torpedo seeker ping and amplify it so that the oncoming torpedo picks it up instead of the ship engine.
The system also includes fiber-optic capabilities that provide threat alerts to the ship's crew.
Nixie has been around since the 1960s and was upgraded to the current 25A model; an SLQ-25B is under development.
Monday's contract calls for delivery at the end of 2008 and includes the AN/SLQ-25A itself plus upgrade kits.
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