About 200 jobs will be created through a $700 million contract to fit combat systems to Australia's next fleet of submarines.
Defence Industry Minister Christopher Pyne signed the deal with Lockheed Martin Australia on Thursday saying the majority of jobs will be based in Adelaide.
"Today marks a further step forward in our partnership with Lockheed Martin Australia in delivering a fleet of regionally superior submarines to Australia," Mr Pyne said.
The 12 diesel-electric submarines will be built in Adelaide by French naval contractor, Naval Group and will be based on its existing Barracuda model with construction expected to begin in Adelaide in 2022.
Lockheed Martin Australia's chief executive Vince Di Pietro said the design on the future submarine was well underway.
"Today's announcement marks the next phase in the design and delivery of Australia's future submarine fleet" Mr Di Pietro said.
