LMT Lockheed Martin Corp

CANBERRA, Australia—Lockheed Martin Corp. has won a multibillion-dollar contract to install combat systems in Australia's next fleet of submarines, Australia's government said Friday, beating out U.S. rival Raytheon Co.

Lockheed would work with French naval shipbuilder DCNS to supply and install weapons and sensors for the new submarines, expected to cost around 50 billion Australian dollars (US$38.46 billion) to build and operate, Australian Defense Industry Minister Christopher Pyne said.

"By partnering with an Australian-based company with strong links to the United States we will ensure that we get the best Australian and U.S. technology, while ensuring that our sensitive technology is protected." Mr. Pyne said.

The Australian government said it couldn't offer a precise estimate of the contract value. Estimates by strategic think tanks and local media have varied between A$2 billion and A$4 billion.

Australia in April selected DCNS to supply 12 submarines, based on a conventionally powered version of its new Barracuda nuclear-attack vessel designed for France's navy.

But the leak of details about smaller DCNS-designed Scorpene-class vessels being built for India prompted Australian Prime Minister Malcolm Turnbull this month to seek assurances from President Franç ois Hollande that France can guarantee security for Australia's subs and their U.S. control systems.

Submarines are at the center of a small-scale arms race in Asia as nations in the region try to hedge against uncertainty triggered by China's growing military capabilities and territorial assertiveness. The region will be home to half the world's submarines and advanced combat aircraft within the next two decades, military analysts say.

Australia's new 4,500-ton "Shortfin Barracuda" submarines—the largest diesel-electric powered submarines ever built—will use American combat systems similar to those on U.S. Navy nuclear submarines and be fitted with stealth technologies including pump-jet propulsion, previously used only on vessels operated by the U.K., the U.S. and France.

Lockheed, the world's largest defense contractor by sales, will integrate sensors, sonar, radar, navigation, imagery systems and weapons into the new vessels, construction of which will begin in the next decade.

Write to Rob Taylor at rob.taylor@wsj.com

(END) Dow Jones Newswires

September 29, 2016 10:35 ET (14:35 GMT)

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