BAE Systems Australia is to modernize the country's military communications systes under a Department of Defense contract worth $460.7 million.

The contract, part of the government's LAND 2072 Phase 2B project, involves the design, development and delivery of a digital network to support the deployment of operational headquarters and provide them access to strategic networks.

The system will encompass digital wideband voice, data and video services over wireless and wired infrastructure.

"It will give commanders an increased level of situational awareness, command and control, and information sharing capability; improving the capacity, flexibility and responsiveness of the ADF during operations," the office of Defense Minister Kevin Andrews said.

Harris Communications Australia and GH Varley will act as subcontractors for establishing the new system, which is expected to achieve initial operational capability in 2017 and full operational capability in 2020, the Ministry of Defense said.