Some of the world's largest defence companies have expressed disappointment at Australia's decision to award a lucrative multi-billion-dollar missile contract without a full competitive evaluation process.

Defence Industry Minister Christopher Pyne has confirmed Raytheon Australia will be commissioned to develop its National Advanced Surface to Air Missile System (NASAMS) for the Australian Defence Force — a capability first flagged in last year's Defence White Paper.

The $2 billion advanced missile protection system will be deployed to protect Australian soldiers fighting overseas as part of the Turnbull Government's rapid boost to defence spending.

Christopher Pyne acknowledged the move towards a limited tender process may increase. ( ABC News: Adam Kennedy )

However, several industry sources have told ABC News they are concerned the announcement for the LAND 19 project may signal a trend towards awarding defence contracts without the standard government request for tender (RFT) process.

"Defence companies would be concerned if we continue to see a lack of transparency in the awarding of contracts," one senior company official said.

Mr Pyne has acknowledged the move towards a limited tender process may increase with future defence projects.

"This is the first time we've used the limited request for tender (LTM) under the Smart Buyer process for such a large acquisition, and we have over many announcements in the last few years been very open to a wide tender," Mr Pyne told reporters in Adelaide.

"With this one, we very clearly decided that we wanted this product to protect our troops and that's why we have released in this particular way."

Companies 'spent hundreds of thousands on bids'

One defence industry official said several companies had spent hundreds of thousands of dollars responding to Government requests for information on their bids, but then discovered the final decision was made without a competitive evaluation.

Mr Pyne said he stood by the process that was used to award the contract to Raytheon Australia.

"They'll be disappointed and they will get up the next morning and get back in the race for the next particular contract that comes up," he said.

"And if they choose not to, that's business, that's their decision."

The ABC has been told that Raytheon was identified as the only supplier which could meet Defence's requirements against future threats, boasting an in-service system with a proven integration into US command systems that was able to use the same guided missile type used by the Air Force's combat platforms.

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