As horizontal drilling and completion technology has improved through evolution, the length of the horizontal sections has grown longer and the need for more accurate directional placement become more critical. The reliance on examining formation conditions and borehole directional data some 50 to 80 feet above the bit becomes less acceptable as turning radii decrease and target sands become thinner. The project objective is to develop a measurements-while-drilling module that can reliably provide real-time reports of drilling conditions at the bit. The module is to support multiple types of sensors and to sample and encode their outputs in digital form under microprocessor control. The assembled message will then be electronically transmitted along the drill string back to a standard mud-pulse or EM-MWD tool for data integration and relay to the surface. The development effort will consist of reconfiguring the AccuNav{reg_sign} EM-MWD Directional System manufactured by Guided boring Systems, Inc. of Houston, Texas for near-bit operation followed by the inclusion of additional sensor types (e.g., natural gamma ray, formation resistivity, etc.) in Phase 2. The near-bit MWD prototype fabrication was completed and the system assembled and calibrated. The unit was then subjected to vibration and shock testing for a period in excess of 200 hours. In addition, the unit was completely disassembled and inspected at the conclusion of the reliability tests to assess damage or wear. No fall off in performance or damage to the electronics or battery pack were found. The performance of the telemetry link was also assessed. The tests demonstrated the ability to transmit and receive error-free data over a transmitter-to-receiver separation distance of 100 feet for both liquid-filled and dry boreholes.