The Australian Government has now approved the terms of the SSA, with formal contracts expected to be executed shortly. This milestone follows the initial Heads of Agreement announced on 23 November 2023.
Under the agreement, Austal Defence Australia will act as the prime contractor for two major shipbuilding programs: Landing Craft Medium and Landing Craft – Heavy. The initial scope includes 18 medium and 8 heavy vessels for the Australian Army.
Discussions are ongoing to finalise contractual terms for each pilot program, with detailed announcements to be made separately. These programs are part of the Commonwealth’s broader objective to strengthen Australia’s sovereign naval shipbuilding capability.
Austal CEO Paddy Gregg described the agreement as “a defining moment for Austal”, stating it reflects the company’s “excellent defence shipbuilding record and the capabilities that Austal possesses to help the Australian Government to achieve its defence objectives.” He emphasised Austal’s commitment to supporting Australia’s defence procurement goals in a “complex strategic environment”.
The SSA introduces a structured framework with common terms under which Austal Defence Australia will manage and deliver shipbuilding programs using a Target Cost Incentive model. This model includes cost reimbursement and a profit margin, subject to performance-based adjustments.
The agreement aims to build a resilient supply chain within the Henderson precinct and deliver long-term naval shipbuilding capabilities aligned with strategic defence goals. Other objectives include improving schedule and budget adherence and boosting local supply chain participation.
Austal expects to generate significant revenue over the proposed eight-year Landing Craft Medium contract term. Revenue for the larger Landing Craft – Heavy program remains to be confirmed, pending contract finalisation.
Mr Gregg added: “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 Landing Craft Medium program, comprising 18 vessels valued between A$1 billion and A$1.3 billion, is expected to be finalised in Q1 FY2026, with completion scheduled for 2032. The Landing Craft – Heavy program is anticipated to follow, with contracts likely concluded by the end of 2025.
