Austal Limited announced the signing of a Strategic Shipbuilding Agreement between the Commonwealth of Australia and Austal Defence Shipbuilding Australia, a wholly owned subsidiary of Austal Limited.
The agreement appoints Austal Defence Australia as the Commonwealth’s strategic shipbuilder for Tier 2 surface combatants at Henderson, Western Australia.
The SSA sets a framework under which Austal Defence Australia will design, construct, integrate and deliver programs beginning with the LAND8710 Landing Craft Medium (LCM) and Landing Craft Heavy (LCH) projects for the Australian Army.
Subject to final contractual negotiations, the programs are expected to deliver 18 x LCMs over 8 years (contract finalisation expected Q1 FY2026) and 8 x LCHs (contract finalisation expected by end of calendar year 2025).
Under the SSA, Austal Defence Australia will act as prime contractor responsible for design, construction, procurement, testing and acceptance, with an emphasis on progressive cost reductions and efficiencies.
Key features include a 15-year maximum term to support continuous shipbuilding in Western Australia; a Target Cost Incentive model with performance-based gainshare/painshare mechanisms; development of a sovereign and resilient local supply chain; intellectual property rights, governance and oversight via a ‘Sovereign Share’ held by the Commonwealth; and ongoing alignment with broader Defence programs including Collins Class sustainment and fleet support.
Austal Defence Australia will employ a dedicated workforce to deliver Tier 2 programs, while other Austal group companies continue commercial and defence shipbuilding operations across Australia, Asia and the United States. The company said it will provide further market updates as contractual milestones are achieved.
Austal Limited is a public company listed on the Australian Securities Exchange. The group structure includes companies operating in Australia, Asia and the United States.
Austal Defence Shipbuilding Australia is a corporate subsidiary of Austal Limited established to conduct defence shipbuilding activities in Australia.
Commonwealth of Australia is the federal government of Australia, acting here as the contracting authority for defence shipbuilding.