Emiraje Systems, a fledgling local defence company, was awarded the largest single deal by the UAE Armed Forces at the Abu Dhabi International Defence Exhibition (Idex) last week.
The move was part of a shift by the UAE at this year's exhibition towards awarding contracts to national companies and local talent.
Emiraje Systems was formed two years ago as a joint venture between Cassidian, the defence and security subsidiary of the European company EADS, and C4 Advanced Solutions, part of Emirates Advanced Investment.
The Armed Forces headquarters will pay Emiraje Dh2 billion (US$544.5 million) to implement an advanced network system called C4ISR, which stands for command, control, communications, computers, intelligence, surveillance and reconnaissance.
Abdul Aziz al Khaili, the chairman and managing director of Emiraje, said the technology was the most "cutting edge" in the world and the new systems were a "triple shift" from the defence priorities of old, such as aircraft and tanks.
The contract will see Emiraje build a new Emirates command and control system (ECCS) that will co-ordinate all of the UAE Armed Forces' assets.
The ECCS will include a project management division, an operational and tactical analysis suite, and strategic software development centres.
Emiraje is expected to use suppliers and subcontractors from all over the world. "This is a system of systems and an important project for the UAE," Mr al Khaili said. "Many other companies and people will be involved."
Cassidian said its stake in Emiraje was part of the European company's growth strategy to become a global player with operations on every continent.
"I'm happy to have found a place we can grow locally, not only through exports, as this is the way of the future," said Herve Guillou, the president and chief executive of Cassidian.
"We can get a return on investment and a good reference because this C4ISR technology is unprecedented."
The duration of the deal with the UAE Armed Forces was not disclosed, but Mr al Khaili said the process of integrating the ECCS would "not take long", and that it was the first step in a wider vision for the UAE.
Major Gen Obaid al Ketbi, a spokesman for the UAE Armed Forces, dismissed claims the deal was too large to award to such an inexperienced company.
"Emiraje is one of the local companies that I think have excellent partnerships with other firms," Major Gen al Ketbi said. "The system [being implemented] is an international system with strong links with global companies."
The UAE Armed Forces had decided to use the local company because of its international connections, he added. Emiraje Systems also has two experienced backers.
Mr al Khaili said the transfer of technology would boost training in the UAE. "It gives the UAE people the faculty to learn how these big complex systems work," he said.
"One of the main objectives of this joint venture is the transfer of technology and we need to enhance the local capabilities here through this partnership."