The federal government must heed lessons from the problem-plagued Collins class submarines before work starts on a new French-designed fleet.
That's the key message from the Submarine Institute in its submission to a Senate inquiry looking at the future of Australia's naval shipbuilding industry.
French shipbuilder DCNS won the contract to design 12 new submarines which will be constructed in Adelaide.
The first steel is expected to be cut by 2022, and the first sub will enter service in the early 2030s.
As the design phase gets underway, the institute said key questions around contract arrangements were yet to be answered.
In 1987, Australia ordered six Collins submarines from a design by Swedish firm Kockums AB.
Kockums had a corporate stake in the prime contractor - the Australian Submarine Corporation board.
"While the Kockums members of the Australian Submarine Corporation board operated at arm's length from the design office, a potential conflict of interest existed," the institute wrote in its submission.
There were also problematic issues surrounding Commonwealth access to intellectual property.
"The benefits (if any) of including the submarine designer as a shareholder in the prime contractor need to be balanced with the risks that if the designer is, in fact, the prime contractor the designer is in effect marking its own homework," the institute said.
The institute argued a single entity should be the prime contractor, and it should be an Australian company.
It recommended DCNS and Lockheed Martin, which is supplying the combat systems, should be subcontractors to the prime contractor.
The institute said the government's shipbuilding agency, ASC, is well qualified to step up to the role of prime contractor, but it stopped short of offering a full endorsement.
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