Lockheed Martin [LMT] yesterday said it has been awarded a $16.9 million contract to begin modernization of the final portion of the Army’s Apache helicopter Modernized Target Acquisition Designation Sight (M-TADS) system.

Under the three-year firm, fixed-price contract, Lockheed Martin will modernize the Laser Transceiver Unit in the Apache’s legacy Day Sensor Assembly (DSA) and associated electronics.

The objective is to modernize the entire DSA system to enhance performance and prevent obsolescence, as well as to increase the Modernized Target Acquisition Designation Sight/Pilot Night Vision Sensors’ (M-TADS/PNVS) ability to fully accommodate future weapons. The contract also includes two contract options to support integration and qualification, which can be exercised in 2009 and 2010.

“This modernization effort will provide superior technological and precision engagement advantages to our Warfighters,” Jack McClafferty, director of the Arrowheadr program at Lockheed Martin Missiles and Fire Control, said in a statement. “It will also ensure the U.S. Army’s Apache helicopter remains the world’s finest attack helicopter well into the future.”

The complete Day Sensor modernization program will be composed of two phases, with a separate contract for development and production in each phase.

Phase 1 will complete modernization of the Laser Rangefinder/Designator and associated electronics, while Phase 2 will include modernization of the remaining DSA elements.

The work will be done in Orlando and Ocala, Fla., with an estimated completion date of 2011.

The lower M-TADS turret contains the targeting system, which has both day and night sensor assemblies. The targeting forward-looking infrared sensor has three fields-of-view, a multi-target tracker, multiple-code laser spot tracking and internal boresight. A charge-coupled device camera improves day TV viewing.

Fielded since 2005, the M-TADS/PNVS, also known as Arrowhead, provides Apache pilots advanced pilotage and targeting capability when conducting day, night and adverse-weather missions.