France, Germany, Japan in Running for Australian Submarine Deal

Australia today said France, Germany and Japan were potential partners to design and build its next generation of submarines, in what will be its biggest ever defence procurement programme.

As Canberra seeks to replace its ageing Collins Class fleet, Defence Minister Kevin Andrews said all three countries had proven military design and build capabilities and were currently producing submarines.

"France, Germany and Japan have emerged as potential international partners," he said, adding that any future system's ability to work in sync with US military technology a "fundamental consideration."

The current diesel and electric-powered Collins Class submarines are set to be retired from about 2026 onwards, with the project to replace them worth about Aus$50 billion (US$39 billion).

The Australian military confirmed last month that it was in talks with Japan and others but this is the first time it has narrowed down the countries it would invite to bid on the project.

Prime Minister Tony Abbott told reporters building a submarine was "a very complex business," explaining why a joint venture with an international partner was preferred.

"It's not all that different from building a space probe, it really is that difficult and that sophisticated," he said.

Abbott said besides Germany, France and Japan, there was also Russia and China "but for various reasons we don't normally choose to partner with Russia or China for defence equipment".

The government said it would seek proposals from the trio of countries with options for designing and building the submarines overseas, in Australia or a combination of both.

There are concerns the domestic ship-building industry will be fatally hurt by Canberra choosing off-the-shelf submarines from Japan or another international supplier.

But Andrews said he expected significant work to be undertaken in Australia during the build phase, with at least 500 new high-skill jobs to be created, including in combat system integration, design assurance and land-based testing.

The competitive evaluation process is expected to take 10 months, after which one international partner will be chosen.

Besides matching the range and endurance of the Collins Class, the new generation of subs are expected to offer superior sensor performance and stealth capabilities.

The government's preferred combat system and main armament is the heavyweight torpedo jointly developed between the United States and Australia.