Yes. They do. I've fiddled and tested, and squad members will report contacts at longer ranges if they are equipped with binoculars, and even longer ranges if you tell them to watch a particular direction. This is assuming they have a clear field of view. A sniper rifle seems to give detection at the longest range (in daylight). I have no numbers to back this up, but this is the way it seemed to be working in the game.
I think it depends more on skill than equipment, though.