The Australian Government has cancelled a A$40m defence project awarded to Thales Australia to build six LCM2000 watercraft for use with landing platform ships HMAS Kanimbla and Manoora, in 2001.
The decision follows Defence Minister Stephen Smith calling for internal rigour of projects to prevent future costly cancellations and delays.
The weight and dimensions of the craft being designed were deemed unsuitable for launch from the landing platform ships, or for any other defence force use, Smith said.
The country has listed 18 projects "of concern" since 2008 with seven scrapped due to remediation and cancellation, including the A$1bn Seasprite helicopter project.
The navy's A$8bn plan to build new air warfare destroyers also faced setbacks last year, according to the Wall Street Journal.
Plans to review the MRH-90 helicopter project, which is running up to 18 months behind schedule, are also underway, Smith said.
Australia's biggest upgrade of its military capability since the Second World War could lead to further delays as defence companies struggle to meet the growing demand, experts warn.