Austal Defence Shipbuilding Australia has signed a strategic agreement with the Australian government to produce the nation’s Tier 2 surface combatants.
The agreement establishes a 15-year framework and designates Austal as the prime contractor. The company will oversee the design, construction and testing of the vessels.
Key features of the agreement include a target-cost incentive model with performance-based gainshare and painshare mechanisms. A “sovereign share” arrangement will also grant the Australian government oversight of intellectual property rights, governance and ship production.
As prime contractor, the Austal subsidiary will lead efforts to deliver 18 Landing Craft Medium and eight Landing Craft Heavy vessels under the Australian Army’s LAND 8710 program.
The Tier 2 naval program, recommended by an independent Surface Fleet Review in 2024, aims to produce up to 11 general-purpose frigates capable of undersea warfare, air and land strikes and escorting critical trade routes.
“This partnership not only reinforces Australia’s sovereign naval shipbuilding capability but also strengthens the Henderson precinct’s role in delivering continuous naval shipbuilding and strategic readiness,” Austal CEO Paddy Gregg said.
The deal follows a recent Department of Defence announcement that Mitsubishi Heavy Industries’ upgraded Mogami-class design will be the basis for the Royal Australian Navy’s future general-purpose frigates. Defense officials said a commercial contract could be finalized as early as 2026.
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