The UK Royal Navy will upgrade more than 30 ships and submarines with Lockheed Martin's compass systems.
Lockheed Martin will develop the new compass systems as part of a six-year, £17m contract from the UK Ministry of Defence.
Under the navigation compass programme (NCP) contract, Lockheed's new, high-accuracy solid state sensor-based technology will replace the current systems fitted on the Royal Navy's Type 23 Frigates, Hunt and Sandown class mine counter-measure vessels, Trafalgar and Vanguard class submarines, and a number of Royal Fleet Auxiliary vessels.
UK Defence Minister Philip Dunne said: "The new compass system will modernise navigation systems on-board our ships and submarines, which are critical for safely plotting courses at sea.
"This contract will therefore provide state-of-the-art technology for the Royal Navy while delivering the best value for money for the UK taxpayer, and is yet another example of how we are investing our £178bn equipment fund and growing defence budget in providing the best possible kit for our armed forces."
The new compasses will be produced in Havant, under a collaboration between Lockheed Martin and iXBlue.
Using iXBlue MARINS M7 Inertial Navigation the compasses will be able to operate in remote locations where there is sporadic or no GPS signal available.
The new compass will be fitted into first surface ships early next year, with plans to begin fitting the system to submarines later that year.
Ideal for use in the most demanding situations that the navy operates, the new system will operate alongside the Royal Navy's warship electronic chart display and information system, also produced by Lockheed Martin.