$15 billion Army contract fight could see jobs leave state

THE battle to win the Army's largest ever vehicle contract is set to get destructive with the two rivals signing on to risk mitigation testing over the next two years.

The Defence Department recently short-listed German company Rheinmetall and South Korea-based Hanwha for the $15 billion Land 400 Phase 3 contract to build the next generation of infantry fighting vehicles.

The companies have agreed to conditions for testing their vehicles in a range of conditions, including blast testing.

Rheinmetall unveiled the first of the Boxer vehicles it is building for the Army under a $5 billion contract at Brisbane’s Enoggera Barracks last month.

Defence Minister Linda Reynolds said the contract signings moved the Army closer to upgrading its mounted close combat capability

"This program is a significant investment in Army's capability - it will make our personnel safer, more effective on operations, and will complement our investment in Boxer Combat Reconnaissance Vehicles under Land 400 phase 2," she said.

Rheinmetall, which plans to base its construction in Queensland, won the $5 billion Land 400 phase 2 contract to build 225 state-of-the-art armoured vehicles and set up a construction centre near Ipswich.

The Land 400 Phase 3 Program will replace the M113 Armoured Personnel Carriers.

Defence Industry Minister Melissa Price said Australian industry and workers would be critical to the project.

"Defence will work with the short-listed tenderers to ensure small and medium enterprises across Australia have the opportunity to showcase their capabilities," she said.