GDLSA has proposed a five-year deal for the sustainment of armoured fighting vehicles with greater efficiencies for the Australian Army.
The value of the contract is likely to be in excess of $100 million over the five-year period.
"What GDLSA has proposed is a performance-based deal with greater incentives for improved efficiencies and performance.
"Under this proposal GDLSA could be rewarded for good performance with an extension to the life of the contract," Combet said.
The Australian Army has a fleet of more than 300 Abrams Tanks, M88A2 Hercules and Australian Light Armoured Vehicles.
The DMO will commence negotiations with GDLSA shortly, with a view to having a contract in place by October 2010.