
The Australian Government has approved a Strategic Shipbuilding Agreement (SSA) with Austal Limited, formally appointing the company’s new subsidiary, Austal Defence Shipbuilding Australia, as the Commonwealth’s strategic shipbuilder for Tier 2 surface combatants based at Henderson, Western Australia.
In a media release, the company said the announcement establishes a framework for Austal Defence Australia to oversee the design, construction, and delivery of key naval platforms, beginning with the Australian Army’s Landing Craft Medium and Landing Craft Heavy programs.
According to Austal, formal execution of the SSA and associated documentation is imminent following the government’s approval. The company initially announced the Heads of Agreement to establish the SSA in November 2023.
Under the agreement, Austal Defence Australia will serve as the prime contractor for the Landing Craft Medium program, expected to involve the construction of 18 vessels, and the Landing Craft Heavy program, anticipated to comprise eight Damen-designed LST100 vessels.
Austal said final contractual arrangements are still being discussed, with further details to be released upon conclusion.
“The government’s approval of the SSA is a defining moment for Austal,” said Austal CEO Paddy Gregg. “It will establish Austal Defence Australia as the Commonwealth of Australia’s strategic shipbuilder for Tier 2 vessels in Western Australia and reflects both Austal’s excellent defence shipbuilding record and the capabilities that Austal possesses to help the Australian Government to achieve its defence objectives.”
Gregg said the agreement aims to support sovereign defence procurement and build resilience within the naval shipbuilding supply chain, adding, “Utilising our decades of experience, Austal can contribute significant expertise to Australia’s sovereign shipbuilding base to reduce costs and improve the performance of vessels for the Australian men and women who work tirelessly to protect our shores.”
The SSA will cover a 15-year initial period and includes the development of a local supply chain in the Henderson precinct to support continuous shipbuilding in line with national strategic objectives.
Programs under the SSA will generally follow a Target Cost Incentive model, with reimbursement of allowable costs and a performance-linked profit margin.
Austal Defence Australia will manage all aspects of design, integration, construction, and delivery of vessels under the agreement.
The subsidiary will employ its own workforce, drawing from existing Austal entities and new recruits, and will retain ownership of intellectual property it develops, with necessary licences granted to ensure strategic objectives are met.
Austal expects contracts for the Landing Craft Medium program to be finalised in the first quarter of FY2026, with an estimated total value between A$1 billion and A$1.3 billion. The final vessel is scheduled for delivery in 2032. Contracts for the Landing Craft Heavy vessels are anticipated to follow by the end of 2025.
Austal confirmed that the SSA execution, along with the related Shareholders Deed and transaction documents, will be announced once completed.
The content of this article is based on information supplied by Austal Limited. For more information, please refer to the official company announcement and communications from Austal. Please consult a licensed and/or registered professional in this area before making any decisions based on the content of this article.