Australia is poised to purchase lethal remotely-piloted Reaper drones from the United States for use in future conflicts.

Key points: American company General Atomics in battle with Israeli Aerospace Industries for contract to supply drones

American company General Atomics in battle with Israeli Aerospace Industries for contract to supply drones IAI accuses the Defence Department of giving the Americans favourable treatment

IAI accuses the Defence Department of giving the Americans favourable treatment Defence says the decision has not yet been made and the evaluation process is ongoing

American company General Atomics is widely tipped to soon win a multi-million-dollar contract for Australia's first armed unmanned aerial vehicles.

Now its sole competitor — Israeli Aerospace Industries (IAI) — is going public to accuse the Defence Department of lacking transparency in the evaluation process.

Project AIR 7003 is pitting the General Atomics MQ-9 Reaper product against the Heron TP system manufactured by IAI.

Shaul Shahar from IAI said the American rivals appeared to have enjoyed favourable treatment from the contract competition.

"With all the risk analysis, all competitive analysis they need to do here, they haven't done it because no-one has approached us, " he said.

"No-one has offered to put our data of the system on the table. So … no evaluation can be complete.

"The preference for a US product, in the absence of an open competitive tender, creates an environment in which there is little transparency of how the Australian Department of Defence is managing the project, and how it has arrived at its decision."

Defence says no decision made yet

The Heron was used for three years in Afghanistan, Mr Shahar says. ( Reuters: Amit Dave )

Senior Defence figures told the ABC the Israeli technology was reliable, but interoperability with the United States and other allies who already use the MQ-9 Reaper was crucial.

Mr Shahar rejected the argument.

"We have more than 100 pilots, Australian pilots, that have been trained on our Heron-1 system," he said.

"I want to remind you that one of the successful programs of UAV here in Australia was with our Heron-1 system.

"They used it for three years in Afghanistan successfully."

Doctor Malcolm Davis from the Australian Strategic Policy Institute is closely watching the multi-million-dollar international contest to supply the country's first armed drones, and suspected the Reaper would win out.

"I'm sure the Israeli system is very good, but there's an awful lot to be said for close interoperability with our key allies.

"The Americans are using Reapers, the British are using Reapers.

"I think that it would be probably the most likely choice to go down the path of Reaper.

"[But] I'm certainly not attempting to pre-judge the outcome of the contest."

Defence Minister Marise Payne told AM: "Defence is considering a range of options for the future Australian Defence Force armed remotely piloted aircraft system."

In a statement, she insisted "no decision on which system will be acquired has been made".

"As the evaluation process is ongoing, it is not appropriate to comment," she said.