Australia opens tender for next-generation ground combat vehicle

By Matt Siegel

SYDNEY, Feb 19 (Reuters) - Australia will hold an open tender for a multi-billion dollar project to replace the army's current light armoured vehicles with a next-generation ground combat system, Defence Minister Kevin Andrews said on Thursday.

The proposed LAND 400 project to replace a fleet of light fighting vehicles could be worth as much as A$10 billion, media has reported. The government called it a "multi-billion dollar" project in a statement.

Britain's BAE Systems (LSE: BA.L - news) , which earlier this month won a contract to do heavy maintenance in Australia on Lockheed Martin Corp's F-35 stealth fighters, has been mentioned as a possible contender for the contract.

U.S. defence giant General Dynamics Corp has also been mentioned in Australian media, as well as France's Thales and German technology group Rheinmetall AG (LSE: 0NI1.L - news) .

The contracts will be seen as a boon for Australia's struggling manufacturing industry, which has been battered in recent years by thousands of job losses and the departure of its automotive industry.

At the same time, Industry Minister Ian MacFarlane issued an opaque warning not to view the tender as simply a jobs package and warned that Australian firms that did bid would be held to the highest standards.

"The government's broader policy settings ... are focused on building on our strengths and maximising opportunities for investment and job creation," MacFarlane said in a statement.

"Australian industry must continue to demonstrate that it can be competitive, and can be a vital, long-term contributor to supply chains and support strategies."

The current fleet of light fighting vehicles would reach its end of life around 2021, the Defence Ministry said.

The project will likely include a suite of next-generation vehicles including an infantry fighting vehicle, a manoeuvre support vehicle, and an integrated training system.

The announcement is likely to be welcomed by state governments and organised labour in Australia, which have been at loggerheads with the conservative federal government over the procurement process to build a next-generation submarine.

Sources have said Australia is strongly considering buying a version of the 4,000-tonne Soryu-class submarine built by Japan's Mitsubishi Heavy Industries (Other OTC: MHVYF - news) and Kawasaki Heavy Industries to replace its ageing Collins-class fleet.

But Prime Minister Tony Abbott's government earlier this month pledged something closer to a tender process for the project, worth as much as A$40 billion ($31.33 billion), which could see more of the manufacturing work done in Australia. ($1 = A$1.3) (Reporting by Matt Siegel; Editing by Nick Macfie)