Australia's future submarines program has hit a nine-month delay, an audit of the $50 billion program has found.
Two key contract milestones have been extended.
"As a result, [The Department of] Defence cannot demonstrate that its expenditure of $396 million on design of the future submarine has been fully effective," the Australian National Audit Office said in a report on Tuesday.
The design and construction of the submarines is the largest defence procurement in Australia's history.
The Department of Defence is in the process of acquiring 12 new submarines to replace six Collins Class vessels.
The audit office found its decision not to acquire "off the shelf" military submarines has increased the risk of the acquisition.
The submarines are being designed and constructed by France's Naval Group at the Osborne Shipyard in South Australia.
Lockheed Martin is the combat system integrator.
The auditor-general found the success of the program is dependent on the department establishing an effective long-term partnership with Naval Group.
"This key relationship is at a relatively early stage and the parties' active management of both specific issues and the partnership is essential for effective risk management and program success," he said.
The new submarines are expected to enter service by the mid-2030s.
