The Australian Submarine Corporation can take part in the tender process to build Australia’s new submarines, provided it works with an international partner.
France, Germany and Japan will be invited to formally enter the contest to build Australia’s new submarines in a process which does not rule out construction in Adelaide.
But culled from the shortlist is Sweden - which designed Australia’s Collins class submarines - because it has been almost two decades since the last Swedish sub rolled off a production line.
Prime minister Tony Abbott said designing and building subs was about the most complex sophisticated process imaginable - akin to building the space shuttle - and just a few countries could do it.
The US and UK now only build nuclear submarines, while Australia usually does not buy such equipment from Russia or China.
“There’s Germany and France that are involved in a wider range of submarines and Japan which builds the best large conventional submarine in the world,” he told reporters in Adelaide.
Under the process announced on Friday, France, Germany and Japan will be asked to supply designs able to meet Australia’s requirements, options for construction in Australia, overseas or both, rough costings, and their positions on issues such as intellectual property.
The desired submarine will feature long range and endurance comparable to Collins but superior sensor performance and stealth.
It would be equipped with the US combat system and the US Mark-48 heavyweight torpedo, as now used on the Collins.
Abbott said this was a clear and defensible process to come up with some good options from which a choice could be made by year’s end.
He said under any possible scenario, there would be more submarine work in Adelaide.
The navy’s six Collins subs would remain in service for another two decades and they would continue to be maintained by shipbuilder ASC.