Chinese-owned telecommunications giant Huawei has won a $136 million contract with the West Australian government after consultations with security agencies.
The McGowan government is under fire for dismissing security concerns over the deal to build and maintain a 4G communications system for Perth's rail network.
Prime Minister Malcolm Turnbull said the state government checked with Canberra before signing the contract.
"They certainly consulted with the Department of Home Affairs ... but the decision to award the contract is obviously one for the WA government," he told reporters in Tasmania on Monday.
"But we don't go into the security dimensions in any more detail than that."
WA Opposition Leader Mike Nahan said there were "serious strategic issues" around awarding the contract to Huawei as the system, while initially stand-alone, would in a year or so be integrated with emergency services.
"They're just pursuing the lowest cost contract for the short-term," he said.
Dr Nahan also said it should have been awarded to a local company.
But WA Premier Mark McGowan said no Australian companies had put in a bid.
"This has been an open tender process and the winning tenderer provided the best service," Mr McGowan told reporters in Broome, adding it was "populist and political" the opposition had been critical.
News of the deal follows the local arm of Huawei saying Australian customer data will never be handed over to Chinese spy agencies.
Huawei Australia chairman John Lord, a former rear admiral, told the National Press Club last month that while Chinese law requires companies to hand over information, it won't happen in Australia.
He said the company obeys the law in the 170 countries in which it operates.
Huawei announced it had won the contract, a joint venture with Sydney-based UGL Ltd, on its website on Friday.
The deal is "for an initial period of five years from completion with options for a further five plus five years," it said.
Huawei has been providing similar communications technology services to Sydney Trains and Ambulance NSW safely and securely for nearly a decade, Mr Lord said in the statement.
The company says WA steel and labour will be used for outdoor cabinets and towers, with more than 50 local staff and subcontractors employed during the 40-month design-and-build period.
