Defence contractor Naval Group has expressed "major disappointment" over the federal government's decision to scrap a $90 billion deal to build 12 conventional submarines with the French-based company.
Australia will now build nuclear-powered submarines as part of a landmark security pact with the United States and the United Kingdom.
Prime Minister Scott Morrison said the three "friends of freedom" would launch an 18-month investigation into building nuclear-powered submarines in Adelaide.
In a statement, Naval Group confirmed the federal government had decided not to continue with the next phase of the Attack Class program which was also based in Adelaide.
"This is a major disappointment for Naval Group, which was offering Australia a regionally superior conventional submarine with exceptional performances," the company said.
"Naval Group was also offering Australia a sovereign submarine capability making unrivalled commitments in terms of technology transfer, jobs and local content."
The company said its teams in both France and Australia, as well as its partners, had given their best and had delivered on all their commitments over the past five years.
It said analysis of the consequences of the Australian decision would be conducted with the commonwealth in the coming days.
Under the terms of the Naval Group deal, construction work on the first of the Attack Class submarines had been expected to start in the next few years with the first of the subs scheduled to enter service in the early 2030s.
Australian Associated Press