- Austal Limited has signed a Strategic Shipbuilding Agreement (SSA) with the Commonwealth of Australia, officially appointing Austal Defence Shipbuilding Australia as the strategic shipbuilder for Tier 2 surface combatants.
- The agreement provides a framework for delivery of the LAND8710 Landing Craft Medium (LCM) and Landing Craft Heavy (LCH) programs, with 18 LCMs and 8 LCHs planned over the next decade.
- The SSA establishes a 15-year shipbuilding framework that strengthens Australia’s sovereign naval capability, fosters a resilient supply chain, and enhances the Henderson shipbuilding precinct’s role in continuous naval construction.
Austal Limited (ASX: ASB) has announced the signing of a landmark Strategic Shipbuilding Agreement (SSA) with the Commonwealth of Australia, appointing Austal Defence Shipbuilding Australia—a newly created, wholly owned subsidiary—as the nation’s strategic shipbuilder for Tier 2 surface combatants at Henderson, Western Australia. The agreement was signed by RADM Michael Houghton, Head Patrol Boats and Specialist Ships, Naval Shipbuilding and Sustainment Group, and Austal CEO Paddy Gregg.
Program Deliverables and Timelines
The SSA provides the framework for Austal Defence Australia to deliver the Commonwealth’s Tier 2 naval programs, beginning with the LAND8710 Landing Craft Medium (LCM) and Landing Craft Heavy (LCH) projects for the Australian Army. Subject to final negotiations, the projects are expected to deliver 18 LCMs over eight years (contract finalisation Q1 FY2026) and 8 LCHs by the end of 2025.
Framework and Strategic Importance
Under the SSA, Austal Defence Australia will act as prime contractor, managing the design, construction, procurement, testing, and delivery of the programs while pursuing progressive cost efficiencies. Key features include:
- A 15-year maximum term supporting continuous naval shipbuilding capability in Western Australia.
- A Target Cost Incentive model with gainshare/painshare mechanisms linked to performance.
- Commitment to building a sovereign and resilient local supply chain.
- Governance and intellectual property arrangements overseen through a ‘Sovereign Share’ held by the Commonwealth.
- Integration with broader defence initiatives, including Collins Class sustainment and fleet support.
Industry and Sovereignty Impact
Paddy Gregg, CEO of Austal Limited, described the SSA as a defining milestone for the company and a pivotal step for Australia’s naval shipbuilding capability. The agreement reinforces sovereign industrial capacity while expanding opportunities for Australian suppliers, workforce development, and innovation. The Henderson shipbuilding precinct will be further strengthened as a national hub for continuous naval construction and strategic readiness.
Next Steps
Austal Defence Australia will establish a dedicated workforce to deliver the SSA programs, while Austal’s broader operations continue across Australia, Asia, and the United States. The company confirmed that further updates will be provided as contractual milestones are achieved.
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Source: Austal
