OSI Awarded C$1.3 Million Contract with the U.S. Office of Naval Research

VANCOUVER, British Columbia--March 21, 2006--Offshore Systems International Ltd. (TSX:OSI)(OTCBB:OFSYF) (OSI) has been awarded a contract valued at approximately C$1.3 million (US$1.1 million) including all options with the United States Office of Naval Research (ONR). Under the terms of the contract, the company will build a software solution designed to emulate human decision-making and problem-solving skills.

"We are extremely proud to have been selected by ONR," said Ken Kirkpatrick, president and chief executive officer of OSI. "This contract provides us with an opportunity to diversify our current product offering by building technical expertise in areas of growing military importance, including high-level data fusion and automated intelligence analysis."

The system to be developed, called Situation And Threat Updates for Real Net-centric teams (SATURN), is based on a model of how humans perform analytic and perceptual problems. The development will address a number of high-level interpretation or information fusion problems that currently require human analysts to correctly interpret situations in the environment to make accurate predictions.

About OSI

Offshore Systems International Ltd. (OSI) is the world's leading developer and supplier of military navigation systems. Focused on the commercial, defense, and homeland security markets, OSI delivers advanced systems and software to address the growing need for enhanced situational awareness in command, control, and intelligence applications. By providing essential tactical and geospatial information, the company's systems and software help decision-makers know the precise location of mission operations across all military forces while integrating information with allies. OSI systems are in use by military, government, and commercial customers around the world. The company is publicly traded on the Toronto Stock Exchange (OSI) and the Over the Counter Bulletin Board (OFSYF). For additional information please visit www.osil.com.

Forward-Looking Statements:

This news release contains items that constitute forward-looking statements within the meaning of securities laws including Section 27a of the Securities Act of 1933, as amended, and Section 21e of the Securities Exchange Act of 1934, as amended. These statements are made under the 'safe harbour' provisions of the Private Securities Litigation Reform Act of 1995 and, as such, involve known and unknown risks and uncertainties and other factors that may cause the actual results to be materially different from the results implied herein. Offshore Systems International can give no assurances that its representations will be achieved or that it will update them at any time in the future.

Offshore Systems International Ltd. (TSX:OSI) (OTC Bulletin Board:OFSYF)