Argon ST Awarded AN/SLQ-25A Torpedo Defense Contract by the Navy.

FAIRFAX, Va. -- Argon ST, Inc. (NASDAQ:STST), announced today that it has been awarded a multi-year contract for the continued development and production of the AN/SLQ-25A Torpedo Countermeasures System for the U.S. Navy. The contract was awarded by the U.S. Naval Sea Systems Command (NAVSEA 415) for the continued development and support of the AN/SLQ-25A system which is widely deployed on Navy surface ships. Work under the contract will primarily be accomplished at Argon ST's Smithfield, Pennsylvania facility with support from the corporate headquarters in Fairfax, Virginia. The contract calls for a base year with four additional option years. The first increment of tasking on the base year has a value of $17.65M. It is anticipated that additional tasks and funding will be added to this contract during both the base and option years.

In announcing the award, Mr. Kerry Rowe, Chief Operating Officer of Argon ST, stressed the importance of the contact for the Navy and the company's operations in Pennsylvania. "This new contract will lead to the creation of the next generation baseline system for the AN/SLQ-25/25A line of systems which upon successful sea testing during the base year will be designated as the AN/SLQ-25C. There are presently more than 170 systems in the U.S. Navy inventory and 220 systems delivered to allied navies worldwide. We expect many of these systems to be replaced or retrofitted in the coming years with the upgraded system which includes an Open Architecture software system, a lightweight modular winch and other enhanced operating efficiencies designed to provide better ship protection from torpedo attack."

This contract initially had been planned by Argon ST for FY06 Q3 implementation but operational delays in sea testing and contract implementation unexpectedly pushed the award into FY07. Production plans for the AN/SLQ-25C system are scheduled to begin in FY08.

Argon ST designs, develops, and produces systems and sensors for the Command and Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) markets including SIGINT (signals intelligence), ESM (Electronic Support Measures), EW (Electronic Warfare), imaging, and acoustic systems serving domestic and worldwide markets.

Forward-Looking Statements

Statements in this press release which are not historical facts are forward-looking statements under the provision of the Private Securities Litigation Reform Act of 1955. Forward-looking statements are not guarantees of future performance and are based upon numerous assumptions about future conditions that could prove not to be accurate. Forward-looking statements are subject to numerous risks and uncertainties, and our actual results could differ materially as a result of such risks and other factors. In addition to those risks specifically mentioned in the reports filed by the Company with the Securities and Exchange Commission (including the Company's Form 10-K for the fiscal year ended September 30, 2005), such risks and uncertainties include, but are not limited to: the availability of U.S. and international government funding for the Company's products and services; changes in the U.S. federal government procurement laws, regulations, policies and budgets (including changes to respond to budgetary constraints and cost-cutting initiatives); the number and type of contracts and task orders awarded to the Company; the exercise by the U.S. government of options to extend the Company's contracts; the Company's ability to retain contracts during any rebidding process; the timing of Congressional funding on the Company's contracts; any government delay or termination of the Company's contracts and programs; difficulties in developing and producing operationally advanced technology systems; the timing and customer acceptance of contract deliverables; the Company's ability to attract and retain qualified personnel, including technical personnel and personnel with required security clearances; charges from any future impairment reviews; the future impact of any acquisitions or divestitures the Company may make; the competitive environment for defense and intelligence information technology products and services; general economic, business and political conditions domestically and internationally; and other factors affecting the Company's business that are beyond its control. All of the forward-looking statements should be considered in light of these factors. Investors should not put undue reliance on any forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect new information, future events or otherwise, except as provided by law.