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Published: Tue, February 12, 2019

Worldwide | By Isabel Fisher

Australia signs massive submarine deal with French firm

Australia signs massive submarine deal with French firm

Australian Prime Minister Scott Morrison and Defence Minister Christopher Pyne met with French Defense Minister Florence Parly in Canberra on Monday to sign the Strategic Partnership Agreement (SPA) to guide the project, nearly three years after Naval Group, formerly known as DCNS, was selected to build the submarines.

Australia decided in 2016 that the French Naval Group (formerly known as DCNS) would be responsible for the construction of its new submarine fleet after a tender, but it did not sign the contract until recently, after months of negotiations.

A signing of the Future Submarine Program Strategic Partnering Agreement (SPA) by the Commonwealth of Australia (CoA) and Naval Group will create quicker advances in the industry and more jobs.

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.

It is both Australia's largest ever defence procurement project and Naval Group's largest ever foreign sales deal.

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"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.

With all 12 submarines to be built in Australia, the program is estimated to generate roughly 2,800 jobs per year.

"The formalisation of this agreement represents the contractual basis for the program". Construction of the first submarine is expected to begin in 2022 with the first boat delivered to the Royal Australian Navy by the early 2030s.

- Conducted numerous engagement activities in France and Australia to connect potential European and Australian suppliers.

The conclusion of the SPA was preceded by a two-year wrangle over contract details. 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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