Pave Penny was developed in the mid-1970s based on the earlier AN/AVQ-11 Pave Sword laser tracker used on a few USAF F-4 Phantom II during the Vietnam War, miniaturized using solid-state electronics.
The compact (31 in / 78 cm) pod, which weighs only 32 lb (14.5 kg) is a simple laser spot tracker that searches for reflected laser light from other laser designators (used by friendly air or ground forces) and displays that target information on the aircraft heads-up display (HUD). Unlike the LRMTS (laser ranger and marked target seeker) systems common to European aircraft, or the more sophisticated ASQ-228 ATFLIR, TIALD, and LANTIRN designators, Pave Penny does not contain a laser. Pave Penny can recognize specific laser designation signals based on pre-determined four-digit codes encoded into the laser pulse, allowing it to seek out particular targets and ignore others (to avoid, for example, several aircraft hitting the same target). It has no range-finding capability. Pave Penny's nominal range is 20 miles (32 km), although effective range is considerably shorter.
The Pave Penny pod was used by USAFA-7D Corsair II aircraft, fuselage-mounted beneath the engine intake, and the A-10 Thunderbolt II, mounted on an external pylon designed specifically for the pod (see photo top right). It was previously used by some F-16 aircraft, although most now use LANTIRN instead. Some pods were also supplied to Singapore, where they are used on that nation's upgraded A-4SU Super Skyhawks.