Austal subsidiary signs strategic shipbuilding agreement
Austal Secures Major Shipbuilding Agreement with Australia
Austal Defence Shipbuilding Australia has officially signed a Strategic Shipbuilding Agreement (SSA) with the Australian government, positioning itself as the primary shipbuilder for Tier 2 surface combatants in Henderson, Western Australia. This landmark agreement aims to enhance Australia’s naval capabilities while ensuring cost efficiency and improved operational performance. The initial projects under this agreement will focus on the construction of Landing Craft Medium (LCM) and Landing Craft Heavy (LCH) for the Australian Army, with contracts expected to be finalized by early 2026.
Key Features of the Strategic Shipbuilding Agreement
The SSA outlines a maximum duration of 15 years, ensuring a consistent shipbuilding presence in Western Australia. As the main contractor, Austal Defence Australia will oversee the entire process, including design, construction, procurement, testing, and acceptance of the vessels. This comprehensive approach is designed to deliver cost reductions and enhance efficiency throughout the shipbuilding lifecycle.
Among the notable features of the agreement is the implementation of a Target Cost Incentive model, which includes “gainshare/painshare mechanisms” based on performance metrics. This innovative structure aims to foster a resilient local supply chain while managing intellectual property rights through a ‘Sovereign Share’ held by the Commonwealth. Furthermore, the SSA aligns with broader defense initiatives, including the sustainment of the Collins Class submarines and fleet support operations.
Austal’s CEO, Paddy Gregg, emphasized the significance of this agreement, stating that it marks a pivotal moment for the company and reinforces Australia’s sovereign naval shipbuilding capabilities. He noted that this partnership will not only enhance the Henderson precinct’s role in naval shipbuilding but also contribute to the nation’s strategic readiness.
As Austal Defence Australia embarks on this new venture, the company plans to maintain its commitment to commercial and defense shipbuilding activities across Australia, Asia, and the United States. Stakeholders can expect regular updates as Austal progresses through the contractual milestones outlined in the SSA.
