BAE Systems Hawaii, which develops defense-related software and products, opened last month a $2.5 million innovation center downtown in an effort to expand its commercial business.

The 3,000-square-foot regional innovation center on the 12th floor of the First Hawaiian Center on Bishop Street will be used to demonstrate new software and products and will link with BAE facilities in San Diego and Reston, Va., as well as a soon-to-be-open center in Nashua, N.H. Annual operating costs are estimated at $1 million.

“;Software is something you can't describe on paper, it has to be seen,”; said Alan Hayashi, Hawaii manager of public relations and communications.

The facility also will be used to show classified materials for special defense military operations and modeling and simulation capabilities, he said. Smaller defense companies that do both commercial and Department of Defense work may qualify to use the facility at no charge to demonstrate their own products and software, according to Hayashi.

BAE, which creates military identification and surveillance systems and offers ship repair services, operates a half dozen offices in Hawaii and employs 1,000 people statewide.

Its products include communication systems used on commercial airplanes, hybrid buses and bullet-proof vests used by police, military and private security companies.

“;Distance is no longer a limiting factor in our ability to apply creative thinking to the needs of our customers,”; said Ty Aldinger, BAE Systems site executive in Honolulu. “;The Innovation Center Pacific is part of a growing network of facilities that are linking our best minds across the company.”;

With about 100,000 employees worldwide, BAE Systems had sales of more than $31.4 billion in 2007.