The AN/SLQ-25C system, nicknamed the Nixie, is an electro-acoustic towed decoy system that lures in-bound torpedoes away from ships by mimicking a vessel's propulsion system.
Argon ST said it will produce eight additional systems under the option as part of the Navy's Surface Ship Torpedo Defense program.
The option exercised is worth $8 million.
Argon ST has been supporting the Nixie program for the Naval Sea Systems Command since 2002. The new order is the first option exercised under its current contract. Production of the new systems will begin next month at company facilities in Smithfield, Pa.
Argon ST is the sole contractor for the design, development and manufacturing of the AN/SQL-25C system.
"Nixie's open architecture allows us to continue to innovate advances in engineering and technology that improve the system's capability and reliability and reduce its cost," said Kim Patterson, Boeing AN/SLQ-25C program manager.