Relations between the Australian Federal Government and the French company designing future submarines have hit a new low, with the Australian Defence Minister declaring she will hold the group to account on its local industry commitments.

France-based Naval Group questioned the capability of local suppliers and suggested Australian businesses may not get half of the value of contracts under the $80 billion program.

Naval Group Australia chief executive John Davis told The Australian newspaper that the company “didn't know the Australian market before we joined the program”.

“Now we have a much deeper insight, and we recognise there is a lot more work to be done than we anticipated,” he said.

Australian Defence Minister Linda Reynolds expressed her disappointment in return and said she would discuss the Government's expectation of strong Australian industry involvement when she met her French counterpart in Europe.

“I am disappointed by the comments attributed to Naval Group Australia on the Future Submarine Program as they do not reflect the strong collaboration between Naval Group and Australian industry on this program of national significance,” Senator Reynolds said in a statement.

“Our Government will hold Naval Group to account for the commitments they signed on for to work with Australia's world-leading defence and shipbuilding industry.”

Under earlier questioning in Parliament, Defence Industry Minister Melissa Price said there was no specific percentage requirement of Australian industry content in the contract with the French company.

“The actual proportion of Australian content on the submarines will be determined as the design of the submarine is completed,” Ms Price told Parliament.

In 2016, Naval Group (then known as DCNS) beat rival bids from Germany and Japan to build 12 new submarines for the Royal Australian Navy over the next three decades.

Last year the ABC revealed Australia would be forced to make multi-million-dollar compensation payments to France if the submarine program was terminated.

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