Sweden barred from Australia sub program

Swedish submarine builder SAAB has been excluded from the short list for Australia's new submarines because it wasn't designing and building submarines at present, Defence says.

Defence Materiel Organisation submarines manager David Gould said Defence clearly spelled out the need for a builder of demonstrable and present experience in designing and building submarines.

He said SAAB, owner of Kockums, designer of Australia's Collins submarines, was a fine engineering company, but had not gone through the full process from early stages of design through to production of a new submarines since the 1990s.

The government has announced a short list of builders from France, Germany and Japan for consideration for Australia's new submarines. A decision will be made by year's end.

SAAB, although regarded as a potential contender, wasn't included.

Mr Gould said in December 2013 that Defence commissioned SAAB to advise on the feasibility of an evolved version of the Collins submarines.

"That is quite different from actually going through the process of doing a new design," he told a Senate estimates committee hearing.

It was concluded the work required was comparable to that required for a whole new design.

Japan has been tipped as favourite but Defence secretary Dennis Richardson said no decision had been made and no deal had been done.

He said the Japan built submarines about the desired size but they didn't feature the range Australia required.

"Each of the three countries have particular challenges. What the three countries share is decades of experience of a continuous build of conventional powered submarines," he said.

Japan has never exported a submarine, while France and Germany have extensive experience at working with other countries.

"We have up to this point talked more with the Japanese than with the French and Germans because we have needed to," Mr Richardson said.