MELBOURNE, Australia – France's DCNS has won the Australian Future Submarine contract, Prime Minister Malcolm Turnbull announced Tuesday.

The choice of the Shortfin Barracuda design surprised many observers, as DCNS has been in a hard-fought competition with Germany's Thyssen-Krupp Marine Systems and the Government of Japan to build 12 submarines for the Royal Australian Navy for Australian $50 billion (US $38.5 billion). Word leaked out over the past few days that the Japanese had been ruled out.

The Shortfin Barracuda Block 1A is a slightly smaller, conventionally-powered derivative of the French Navy's nuclear-powered Barracuda attack submarine. Detail design work is set to begin later this year.

Prime Minister Malcolm Turnbull announced today that the Shortfin Barracuda proposal from DCNS is being awarded is the winner of Australia's $50 billion (US$38.54 billion) Future Submarine (Sea 1000) program.

"DCNS has been selected as our preferred international partner for the design of 12 Future Submarines, subject to further discussions on commercial matters," the prime minister said in an official statement.

The announcement followed a comprehensive Competitive Evaluation Process involving DCNS, Thyssen-Krupp Marine Systems KMS of Germany and the Government of Japan, which offered the Soryu-class submarine design. The winning design is the Shortfin Barracuda Block 1A, a conventionally-powered derivative of the French Navy's nuclear-powered Barracuda attack submarine and design work is set to begin later this year.

Turnbull said that the decision was driven by DCNS' ability to best meet Australia's requirements for a long-range, conventionally-powered submarine to replace the Royal Australian Navy's six Collins Class boats.

"These included superior sensor performance and stealth characteristics, as well as range and endurance similar to the Collins Submarine," he said. "The Government's considerations also included cost, schedule, program execution, through life support and Australian Industry involvement."

Each contender was required to submit three strategies for construction, including full completion in their home shipyards, a 'hybrid' build, where initial boats are built in the home yard and the remainder in Australia, and a complete build in an Australian shipyard.

Turnbull, in a statement, noted the submarine program "will directly sustain around 1,100 Australian jobs and a further 1,700 Australian jobs through the supply chain."

The Future Submarine project," he added, "is the largest and most complex defence acquisition Australia has ever undertaken."

All 12 submarines will be built at the ASC shipyard in Adelaide, Australia. DCNS has originally proposed building the first one or two boats in France.

However a spokesman for Defence Minister Marise Payne confirmed today that all 12 submarines will be constructed in ASC's Adelaide shipyard.

The submarine program is the largest part of a greater effort to revitalize Australia's Navy. Under the Naval Shipbuilding Plan, Australia will also pour $35 billion into a Future Frigate Program and $3 billion into an Offshore Patrol Vessel program.

The Japanese government has asked for an explanation of why their offer was not accepted, and the Australian government has said it will do so.