CANBERRA, Nov. 25 (Xinhua) -- A German company has been awarded the 2.6-billion-U.S.-dollar contract to design and build Australia's 12 new Offshore Patrol Vessels (OPVs).
Luerssen will begin construction on the first two ships at the government-owned ASC Shipbuilding facility in Adelaide at the end of 2018.
The remaining 10 ships will be built at the Austal shipyard south of Perth in Western Australia (WA).
Under the contract, announced by Australian Defence Industry Minister Christopher Pyne, Austal will be forced to sever ties with Fassmer, a European shipbuilder considered one of Luerssen's biggest rivals.
Jay Weatherill, premier of South Australia, praised the federal government for making the right decision.
"There are 400 families (in South Australia) that were going into Christmas wondering whether they had security," Weatherill told reporters in Adelaide on Friday night.
"Now we will see a pipeline of work that can bridge the gap between the end of the Air Warfare Destroyer project and the beginning of the Future Frigates project," he said.
"This is exactly what we've been asking for and it's a great decision," he added.
The new fleet of ships will be used by the Australian Navy to conduct intelligence and surveillance missions as well as providing disaster relief and humanitarian assistance.
Austal said that while it was happy to be involved in the construction it was disappointed that bid partner Fassmer would miss out.
"Obviously they're disappointed that they're not involved but they like us bid (on) a lot of programs around the world, and you win some and you lose some," said David Singleton, chief executive officer (CEO) of Austal.