France has won the $50 billion contract to help build Australia's next fleet of submarines, with Prime Minister Malcolm Turnbull indicating all 12 submarines will be built in Adelaide.
Mr Turnbull announced that Defence experts' advice was "unequivocal" in favour of the French proposal.
French firm DCNS has won the hard-fought contest over Germany and Japan to help design and build the fleet to replace the Collins Class fleet.
"The recommendation of ... the experts who oversaw it was unequivocal. The French offer represented the capabilities best able to meet Australia's unique needs. This is a momentous national endeavour."
Mr Turnbull said that "the bulk of the work will be done here" in Adelaide though there would be a supply chain that stretched across the country and some components such as the US-made combat system will be sourced overseas.
He also said that Australian steel would be used to build the boats.
France's bid was seen as technically very strong. DCNS makes a wide range of cutting-edge submarines, ranging from small attack boats to massive strategic nuclear missile submarines.
Their Barracuda design will be a variant of an existing French nuclear-powered boat. It will be converted to a diesel-electric powered design.
The French were competing against designs by Japan and Germany. While former prime minister Tony Abbott favoured Japan, there were concerns that the country lacked experience in exporting such complex military hardware.
Rather Japan's bid rested partly on strategic arguments, in that it would bring two of the major democracies in Asia closer together at a time of rising instability caused by the emergence of China as a major power.
Broadcaster NHK quoted Japanese government sources as saying they had been contacted by the Australian government to confirm Japan had not been selected to build the submarines.
EARLIER
France is tipped to win Australia's biggest ever defence contract with Prime Minister Malcolm Turnbull expected on Tuesday morning to announce the winning bid to help build the $50 billion new submarine fleet.
Reports are emerging that the hard-fought contest between France, Germany and Japan to help design and build the fleet to replace the Collins Class has been won by the French.
Sources confirmed the news on Tuesday morning.
The Australian reported that Mr Turnbull had already called French President Francois Hollande to tell him the news.
The announcement may mean that the first and possibly the second submarine will be built in France, with Australian workers relocating to the country to develop their expertise.
This so-called "hybrid" model has been openly favoured by France as the most efficient approach, rather than building entirely in Australia or France.
The country's majority government-owned shipbuilder DCNS has said that it will create the same number of direct jobs – about 2900 – as would be the case if it were built entirely in Australia.
But this approach could nonetheless leave the government vulnerable to political attacks given the Coalition promised before the last election to build all 12 boats in Adelaide.
France's bid was seen as technically very strong. DCNS makes a wide range of cutting-edge submarines, ranging from small attack boats to massive strategic nuclear missile submarines.
Their Barracuda design will be a variant of an existing French nuclear-powered boat. It will be converted to a diesel-electric powered design.
The French were competing against designs by Japan and Germany. While former prime minister Tony Abbott favoured Japan, there were concerns that the country lacked experience in exporting such complex military hardware.
Rather Japan's bid rested partly on strategic arguments, in that it would bring two of the major democracies in Asia closer together at a time of rising instability caused by the emergence of China as a major power.
Broadcaster NHK quoted Japanese government sources as saying they had been contacted by the Australian government to confirm Japan had not been selected to build the submarines.
