CANBERRA, Australia

Australia announced Tuesday that French company DCNS has beat out bidders from Japan and Germany to build the next generation of submarines in Australia’s largest-ever defense contract.

DCNS, Germany’s ThysennKrupp Marine Systems and Japan’s Mitsubishi Heavy Industries were in the running to build 12 conventional submarines that the Australian navy expects will cost at least $43 billion.

Prime Minister Malcolm Turnbull said the Frenchdesigned submarines would be built in the Australian manufacturing hub of Adelaide.

“The French offer represented the capabilities best able to meet Australia’s unique needs,” Turnbull told reporters in Adelaide.

French President Francois Hollande said in a statement that the deal was a “decisive step forward” in the strategic partnership between France and Australia. French Defense Minister Jean-Yves Le Drian told Europe 1 radio that it was a “major victory for the French naval industry.”

The Mitsubishi bid was the early favorite, and the contract had promised to become Japan’s first fully fledged military technology transfer since World War II.

Japanese Defense Minister Gen Nakatani said the outcome was “very regrettable.” He told reporters that he would seek an explanation from Australia to find out why the Japanese submarine was not selected “so we can reflect the findings to future operations.”

Mitsubishi said in a statement, “It is deeply regrettable that Japan’s capabilities were not sufficiently conveyed, which has led to the result announced today.”

Japan’s chances appeared to diminish when Australian government lawmakers dumped Tony Abbott as prime minister in September and as the seasoned European exporters made their pitches.

Abbott saw the Japanese bid as having a strategic value by building on ties with Japan and the United States.

But others warned that Japan’s long-term cooperation in the submarine contract might hinge on Australia forming an alliance that could bring Australia into conflict with China, Australia’s most important trade partner.

The United States did not publicly endorse any option, saying it was Australia’s decision.

Turnbull said both the Australian and the Japanese governments “are thoroughly committed to the special strategic partnership between Australia and Japan which gets stronger all the time.”

“It gets stronger day by day, and we’re committed to that and we are committed to our strong trilateral strategic engagement between Australia, Japan and the United States,” Turnbull said.

France offered a diesel-electric version of the Barracudaclass nuclear submarine under construction for the French navy. Japan proposed a longer version of its Soryuclass diesel-powered propulsion system with advanced stealth capabilities.

Germany offered a larger variation of its Type 214 submarine made for Australian specifications called a Type 216.

The French bid offered the same pump jet propulsion that gave its nuclear submarines their advanced stealth capacity. Other diesel-electric submarines are too small to be fitted with the same stern-heavy technology.

Australia’s Shortfin Barracuda Block1A will be 318 feet long and weigh 5,000 U.S. tons — 8 feet shorter and 220 U.S. tons lighter than its French nuclear cousin.

The German bid had highlighted their decades of experience in building submarines for several navies and had publicly offered to build the entire fleet in Adelaide for AU$20 billion — less than half the navy’s expected cost. It promoted as its edge over competitors its partnership with German engineering firm Siemens which would have provided the submarines’ software and promised to create a digital shipbuilding center in Adelaide.

Australia already has one of the world’s largest conventional submarines, the Australia-built Collins class, and the navy insisted that its replacement at least match its range of 12,000 nautical miles. At 3,400 U.S. tons and 253 feet long, the Collins will be dwarfed by the next-generation Shortfin Barracuda.