Cyclone&39's Mark V 100-horsepower engine.

Raytheon Integrated Defense Systems has signed a deal with Cyclone Power Technologies to partner on developing a version of the all-fuel Mark V "clean-tech" engine.

The Cyclone Mark V is a Rankine Cycle heat-regenerative external-combustion engine that the company says can run on "virtually any fuel" including algae fuel and waste oil while emitting few pollutants.

The engine has a thermal efficiency of over 30 percent and produces fewer emissions than a modern gas or diesel internal-combustion engines, according to Cyclone. Mechanical energy is derived through the heating and cooling of water in a closed-loop, piston-based engine system, the company says.

Cyclone Power Technologies first gained attention when its founder, Harry Schoell, was named Popular Science's "Inventor of the Year" in 2008 for the Cyclone Engine, an earlier version of the Mark V engine. He also won an award from the Society of Automotive Engineers.

The initial deal with Raytheon is for an engine that Cyclone is referring to as the MantaRay, and is a modified version of its Mark V engine. The deal is estimated at $400,000, and is just one of several projects in which the companies plan to collaborate, according to Cyclone.

Sketch of the Cyclone Mark V engine.

"After months of rigorous engine testing, we're pleased to say that Cyclone and Raytheon are now entering the next phase of our working relationship. We are designing and building engines such as the MantaRay for Raytheon and their customers, and starting to generate revenue from these operations. We're very pleased to be working alongside such a well established and respected company and look forward to building our relations going forward," Schoell said in a statement.

This is not the first high-profile deal for Cyclone. In January 2010, Cyclone signed over waste-oil-related rights to the Mark V as part of a deal with Phoenix Power Group, which planned to use the engine in its Phoenix 5 Series Generator.

The MantaRay engines will be built at Cyclone's Florida facility.