Austal’s new subsidiary, Austal Defence Shipbuilding Australia, has entered into a Strategic Shipbuilding Agreement (SSA) with the Australian government.
This significant pact designates Austal Defence Australia as the primary shipbuilder for Tier 2 surface combatants in Henderson, Western Australia.
As the main contractor, Austal Defence Australia will be responsible for the design, construction, procurement, testing, and acceptance while ensuring cost reductions and improved efficiency throughout the process.
The initial endeavours under this agreement are the LAND8710 Landing Craft Medium (LCM) and Landing Craft Heavy (LCH) programmes intended for the Australian Army.
The expected timeline for finalising contracts is the first quarter of FY2026 for 18 LCMs over eight years and by the end of 2025 for eight LCHs.
Austal chief executive officer Paddy Gregg said: “The signing of the SSA marks a defining moment in Austal’s history, establishing Austal Defence Australia as the Commonwealth’s shipbuilder of choice for Tier 2 surface vessels.
“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.”
The SSA includes some key features such as a maximum duration of 15 years to maintain a steady shipbuilding presence in Western Australia.
It incorporates a Target Cost Incentive model featuring “gainshare/painshare mechanisms” based on performance.
The agreement also aims to cultivate a “sovereign and resilient local supply chain” and establishes intellectual property rights management through a 'Sovereign Share' held by the Commonwealth.
Additionally, it aligns with broader defence initiatives such as Collins Class sustainment and fleet support.
Austal Defence Australia will oversee a specialised workforce dedicated to executing Tier 2 naval programs for the Commonwealth.
Meanwhile, other Austal group companies will persist in their commercial and defence shipbuilding activities in Australia, Asia, and the United States.
Austal said it will provide updates to stakeholders as further contractual milestones are reached under the SSA.
