I don't ordinarily get excited about mere R&D contracts -- especially when they're priced for pocket change -- but I'm making an exception in this case.

Thursday opened with news that Motley Fool Rule Breakers selection iRobot (NASDAQ:IRBT) has been awarded yet another groundbreaking contract from the U.S. military. While selling glorified vacuum cleaners at Best Buy (NYSE:BBY) and Target (NYSE:TGT) is nice, it's this kind of military contract that really gets an investor excited. Fools, this one's a bona fide Terminator.

U.S. TARDEC awarded iRobot $3.75 million to build two "Warrior 700" robots. (The acronym-phobic may refer to it as the Army Tank Automotive Research, Development and Engineering Center.) As previously promised, the Warrior joins a long line of military robots drafted out of iRobot's factories:

  • Multiple PackBot versions suitable for military support duties, including the so-called "xBot" bomb-disposal PackBot.
  • A "model 510" PackBot that can be equipped with TASER (NASDAQ:TASR) stun guns.
  • R-Gator, which is essentially a robotic porter, jointly developed with Deere (NYSE:DE).
  • The Negotiator, a 'bot inherited from Robotic FX and aimed primarily at the law enforcement market.
  • The Small Unmanned Ground Vehicle (SUGV) developed with Boeing (NYSE:BA).

The Warrior, however, is arguably the most robust robot ever fielded by iRobot. Weighing in at 250 pounds, the Warrior has the potential to operate as an actual "soldier replacement." It's strong enough to lift 150 pounds, yet small enough to enter buildings, and stable enough to carry weapons and do lethal things with them inside those buildings. In fact, high-tech gunsmith Metal Storm recently outfitted a Warrior with one of its Firestorm "40mm electronic weapon systems," demonstrating the robot's capability as a "shooter."

With its potential to replace not just logistics soldiers, but actual foot soldiers, iRobot CEO Colin Angle has promised that Warrior will become "one of the drivers" of iRobot's success in 2010. So far, so good. Yesterday's contract makes good on Angle's prediction of low-rate initial production (LRIP) beginning this year. The next step should be expanded production in the second half of 2009, accelerating in 2010.

Why this is exciting
According to Angle, the average U.S. infantryman costs taxpayers $4 million over his lifetime. If a Warrior can truly replace an infantryman (debatable today, but arguable as improvements are made to the prototype), then already iRobot has introduced cost savings to the equation. If iRobot can build two Warriors for less than $4 million at LRIP rates, just imagine how far the price may fall once iRobot begins churning these babies out on the assembly line.

iRobot is a Motley Fool Rule Breakers stock selection. Best Buy is a Motley Fool Stock Advisor and Inside Value pick. The Motley fool owns shares in Best Buy. Get full access to any of the Fool's investing newsletters, free for 30 days. 

Fool contributor Rich Smith owns shares of iRobot and Boeing. The Motley Fool has a disclosure policy.