Austal Limited is pleased to announce the official signing of the Strategic Shipbuilding Agreement (SSA) between the Commonwealth of Australia (“the Commonwealth”) and Austal Defence Shipbuilding Australia (“Austal Defence Australia”), a newly created, wholly owned subsidiary of Austal Limited.
Austal press release
This landmark agreement, signed on behalf of the Commonwealth by RADM Michael Houghton, Head Patrol Boats and Specialist Ships, Naval Shipbuilding and Sustainment Group and Paddy Gregg, Austal Limited CEO, formally appoints Austal Defence Australia as the Commonwealth’s strategic shipbuilder for Tier 2 surface combatants at Henderson, Western Australia.
The SSA establishes the framework under which Austal Defence Australia will design, construct, integrate, and deliver key naval programs, beginning with the LAND8710 Landing Craft Medium (LCM) and Landing Craft Heavy (LCH) projects for the Australian Army. Subject to final contractual negotiations, these programs are expected to deliver:
- 18 x LCMs over 8 years (contract finalisation expected Q1 FY2026), and
- 8 x LCHs (contract finalisation expected by end of calendar year 2025)
Austal Limited Chief Executive Officer Paddy Gregg said:
“The signing of the SSA marks a defining moment in Austal’s history, establishing Austal Defence Australia as the Commonwealth’s shipbuilder of choice for Tier 2 surface vessels. This partnership not only reinforces Australia’s sovereign naval shipbuilding capability but also strengthens the Henderson precinct’s role in delivering continuous naval shipbuilding and strategic readiness.”
Under the SSA, Austal Defence Australia will act as prime contractor and take responsibility for all aspects of program delivery—including design, construction, procurement, testing, and acceptance—while driving progressive cost reductions and efficiencies.
Key features of the signed SSA include:
- A 15-year maximum term, supporting a continuous naval shipbuilding capability in WA
- Use of a Target Cost Incentive model with performance-based gainshare/painshare mechanisms
- Development of a sovereign and resilient local supply chain
- Establishment of intellectual property rights, governance, and oversight via a ‘Sovereign Share’ held by the Commonwealth
- Ongoing alignment with broader Defence programs including Collins Class sustainment and fleet support
Austal Defence Australia will employ a dedicated workforce focused on delivering the Commonwealth’s Tier 2 naval programs, while Austal’s other group companies continue commercial and defence shipbuilding operations across Australia, Asia, and the United States.
This agreement confirms Austal’s long-standing commitment to supporting Australia’s strategic defence capability and industrial sovereignty, with enhanced opportunities for Australian industry, workforce, and innovation over the coming decades.
Austal will provide further updates to the market as contractual milestones are achieved under the SSA.
