France wins A$50bn Australia submarine contract Published duration 26 April 2016

image copyright DCNS Australia

France has won a A$50bn (€34bn; £27bn) contract to build 12 submarines for the Australian Navy, beating bids from Japan and Germany.

The deal, announced by Prime Minister Malcolm Turnbull, is Australia's largest-ever defence contract.

The Shortfin Barracuda submarines will be built in Adelaide using Australian steel, creating 2,800 jobs, he said.

Japan, which had been a frontrunner in the contest, said the decision was "deeply regrettable".

Defence Minister Gen Nakatani said Japan would "ask Australia to explain why they didn't pick our design".

Mr Turnbull said the decision, the result of a 15-month bidding process, was "securing the future of Australia's navy over decades to come".

"Australian workers will be building Australian submarines with Australian steel."

Why does Australia want new submarines?

image copyright Getty Images image caption The new submarines will replace Australia's aging fleet of Collins Class vessels

The government says the existing Collins Class submarine fleet is ageing and in need of replacement.

A strong submarine capability is seen as vital for an island nation like Australia to conduct surveillance operations, counter growing military strength from countries like China and to support Australian allies.

What submarines will DCNS be building?

image copyright DCNS Australia

The Shortfin Barracuda is a 4,500-tonne conventionally powered submarine. It is closely related to the nuclear-powered Barracuda which weighs 4,700 tonnes.

DCNS has said the full details are confidential, but the vessel is know to be more than 90m long and to feature an advanced pump-jet propulsion system that is supposed to be quieter than propeller propulsion systems.

Mr Turnbull said the French bid "represented the capabilities best able to meet Australia's unique needs".

What were the other bids

The Japanese bid, with a consortium led by Mitsubishi Heavy Industries Ltd, proposed a version of its 4,000-tonne Soryu-class submarine, lengthened by between 6-8m.

Mitsubishi said it was "deeply regrettable that Japan's capabilities were not sufficiently conveyed".

The German bid, from company TKMS, offered a 4,000-tonne version of an existing 2,000-tonne Type 214 class submarine.

Relationship with Japan

The French bid received unanimous support from the various experts in the government's competitive evaluation process, Defence Minister Marise Payne said.

Japan was an early frontrunner to win the contract, thanks to former Australian Prime Minister Tony Abbott's close relationship with his Japanese counterpart, Shinzo Abe.

But its bid is said to have foundered because of Japan's inexperience in building military equipment for export.

The Japanese constitution was reinterpreted in 2014 to allow the export of military hardware. The lucrative submarine deal would have been its first such deal and a major victory for Mr Abe.

The Japanese government was also reportedly keen to further deepen its military ties to Australia as a counter to China's rise. Shared military technology would increase interoperability between the Japanese and Australian fleets.

The decision to reject the bid is seen as having ramifications for Australia-Japanese relations.

Mr Turnbull said he had spoken to Mr Abe and they were both "thoroughly committed to the special strategic partnership between Australia and Japan which gets stronger all the time".

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