The competition for a 50 billion Australian dollar ($34.55 billion) contract to build Australia's next submarine fleet is narrowing to a race between Japan and France as a bid from Germany's Thyssen-Krupp Marine Systems (TKMS) has lost ground over technical concerns, multiple sources said.
Australia is expected to decide the winner of one of the world's most lucrative defense contracts within the next six months, ahead of a national election in which the deal and the jobs it will create is expected to be a key issue for the conservative government.
TKMS is proposing to scale up its 2,000-ton Type 214 class vessel, while Japan is offering a variant of its 4,000-ton Soryu submarine made by Mitsubishi Heavy Industries and Kawasaki Heavy Industries.