Australia signs contract to build 12 submarines

Australian Defence Minister Christopher Pyne Australian Prime Minister Scott Morrision and French Defence Minister Florence Parly shake hands after signing the Attack class submarine Strategic Partnering Agreement in Canberra Australia February 1

The production of the 12 Attack-class submarines by French shipbuilder Naval Group will cost Australia A$50 billion ($35.5 billion). "With their inherent stealth, long-range endurance, and formidable striking power, the Attack-class are a key part of our Navy's future", he added.

"This agreement with Australia will see Naval Group transfer the "know-how" and "know-why" to Australia to become an sovereign submarine nation".

Australia rejected offers from Japan's Mitsubishi Heavy Industries and Kawasaki Heavy Industries, as well as Germany's ThyssenKrupp AG, and accepted the French bid.

Negotiations on the SPA began in early 2017 and were meant to have been completed during that year, but was delayed by issues including the length of warranty periods and the implications of a possible merger between Naval Group and Italy's Fincantieri.

"Work on the submarines has taken place under the Design and Mobilisation Contract and this will continue uninterrupted under this agreement", PM Scott Morrison said in a statement. "The formalization of the [SPA] represents the contractual basis for the program".

It's estimated the program will generate an annual average of around 2,800 jobs, helping end the "valley of death" in naval shipbuilding jobs we inherited from the Labor Party.

The transfer of technology commenced with the relocation of the first group of Australian engineers to France to learn how to carry out the detailed design of the Future Submarines.

According to sources familiar with the knowledge of the matter, the officials of the Defense and the Naval Group had been negotiating on the deal in question for several years, with the intent to manufacture 12 submarines.

- Conducted numerous engagement activities in France and Australia to connect potential European and Australian suppliers. Negotiations for the SPA kicked off in 2017 and were expected to be concluded by September 2018. However, various disagreements over intellectual property and warranty periods for defects, as well as possible production delays, caused the SPA signing date to be repeatedly pushed back.

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