Australia 'captured' by submarine contract

Australia's decision to hand Naval Group an $80 billion submarine contract without a backup plan left the nation "captured" by the French company.

Ron Finlay from the Naval Shipbuilding Advisory Board said the government had compromised its negotiating power by "down-selecting" to the French option in 2016.

Under questioning by Labor's Penny Wong at a Senate estimates hearing on Wednesday, Mr Finlay said naming the French defence giant without any alternatives had put Australia at a disadvantage.

"In my experience, many decades of negotiating major contracts, if you do not have an alternative of either going to bidder 'b' or cancelling the project, yes you are captured in a negotiation with few options," he said.

"And, that does increase the number of issues that can become a block to concluding the negotiations."

The government announced the selection of Naval Group - then known as DCNS - for the future submarines project in April 2016.