Australia said Tuesday it accepted a Japanese company's bid for a lucrative and hotly contested contract to build Australian warships, expected to be worth 10 billion Australian dollars ($6.5 billion).

The Mitsubishi Heavy Industries Group announced Tuesday that the Australian government has chosen it to build a new fleet of warships for the nation's navy.

The frigate contract is the biggest Australian defence purchase since the government agreed to build nuclear-powered submarines with the United States and Britain in 2023. MHI's Mogami frigate was selected over German company Thyssen­Krupp Marine Systems' MEKO A-200 in a meeting of the government's national security committee on Monday.