An Australian and an international company are vying to design the main storage batteries for the navy's new fleet of submarines.
Australian company PMB Defence and Greek company Systems Sunlight S.A are both in the running for the work after signing deals with Naval Group Australia.
Through a competitive process, one company will win the battery design contract for the Attack Class submarines.
The federal government's $50 billion program involves the construction of 12 submarines which will all be built in Adelaide.
The government has pledged that the storage batteries will also be manufactured locally regardless of which company's design is selected.
Defence Minister Linda Reynolds said the batteries were one of the top five critical equipment items to the overall design of the subs.
"The main storage batteries are the main source of power when the submarine is submerged," Senator Reynolds said.
"A competitive process will ensure the final designer selected will deliver the very best battery technology to meet the key performance requirements."