Australian Prime Minister Malcolm Turnbull defended the decision to build a A$50 billion ($40 billion) submarine fleet in partnership with France in Australia, rather than opt for a faster build that would have seen initial work offshore.
Turnbull defended that doing the build entirely in Australia would cost more than DCNS to begin construction in France, "but it's not the huge figure people have speculated about."
"It is critically important that with a sovereign defence capability we have the skills in Australia to build it, to maintain it and sustain it," he told Australian Broadcasting Corp radio.
"It is important that it is built in Australia, it's a matter of national security," he added.
The share of the DCNS’s overall contract to build 12 submarines will amount to about 8 billion euros ($9.02 billion), according to sources with knowledge of the deal.
DCNS chief Herve Guillou said the deal would create about 4,000 jobs in France, in shipyards and industrial sites in Lorient, Brest, Nantes and Cherbourg will benefit the most.
Prime Minister Turnbull said Australia planned to sign a full contract with France's DCNS Group by the end of the year.
French company DCNS has beaten two other bidders who are Japanese government-backed consortiums led by Mitsubishi Heavy Industries and German group ThyssenKrupp Marine Systems.
Japanese, backed by US, were the early favourite to win the bid. US was backing Japan not just for the quality of the submarines but also for the development of deeper strategic, cooperation between Canberra, Washington and Tokyo at a time of China's rise.
The victory for state-owned naval contractor DCNS Group underscored France's strengths in developing a compelling military-industrial bid, and is a blow for Japanese Prime Minister Shinzo Abe's push to develop defence export capabilities as part of a more muscular security agenda.
Australia is increasing its spending on defence, to protect its strategic and trade interests in the Asia-Pacific as the United States and its allies grapple with China's rising power.