• Bloomberg


Australia is inviting Japan, Germany and France to head construction of a $39 billion submarine fleet in the largest defense procurement program in the nation’s history.

“All three countries have proven submarine design and build capabilities and are currently producing submarines,” Defense Minister Kevin Andrews said in a statement Friday.

The government’s so-called competitive evaluation process will take about 10 months before a winning bidder is selected, he said.

The announcement by Prime Minister Tony Abbott’s government came after media speculation intensified that Australia would bypass a bidding process and select Japan to build the fleet.

Australia needs to replace its six Collins-class diesel-electric submarines by 2026 to adequately patrol the Pacific Ocean and Indian Ocean.

After winning power in September 2013, Abbott scrapped the previous Labor Party government’s plan to locally build 12 submarines.

“The competitive evaluation process will help the government balance important considerations including capability, cost, schedule and risk,” Andrews said in the statement. “Interoperability with our alliance partner, the United States, will also be a fundamental consideration.”

Japan’s Defense Ministry has proposed the joint production of hulls for the submarines, the Mainichi Shimbun reported last month.

Choosing Japan, which has never exported submarines before, would be a bet that its technology would be suitable. It may also spark concern among both Australian voters, who want the project kept onshore, and Australia’s biggest trading partner, China, as regional military and territorial tensions between the Asian powerhouses increase.

Andrews’ predecessor, David Johnston, said the government has received “unsolicited proposals” to build the submarines from Japan, Germany, Sweden and France. Alongside Australia, countries such as Vietnam and India are expanding their submarine fleets as China seeks greater military clout in the Pacific.

The government said it expects “significant work” to be undertaken in Australia during the construction phase that will create at least 500 highly skilled jobs, Andrews said.

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