Updated 22 June 0635
The two companies vying for the program - Rheinmetall Defence Australia and Hanwha Defense Australia - have been told to resubmit their bids for 300 vehicles instead of the original 450.
According to the AFR, the two companies were also told to prepare budgets to allow the government to consider increasing the order in increments of 50 vehicles, and must resubmit their bids by the end of July for a decision in September.
In addition, the decision to reduce the program down to 300 vehicles was made by the previous government but only communicated to the two bidders in the week after the federal election, leaving the entire industry supply chain rushing to adjust quotes before the July deadline.
Land 400 Phase 3 is the most expensive acquisition program in Army's history and its scope has been under pressure given the Budget's allocation of $9.9 billion to the Australian Signals Directorate for the REDSPICE program, as ADM reported in March.
The budget for Phase 3 was initially set at $10-15 billion in 2015 but then ballooned to $18-27 billion.
In response to ADM's questions, a Defence spokesperson said: "The recent decision to acquire upgraded Abrams tanks and Combat Engineering Vehicles through Land 907 Phase 2 and Land 8160 Phase 1, demonstrates a commitment to delivering a relevant and credible combined armed fighting system. Land 400 Phase 3 is an essential component of that system and seeks up to 450 Infantry Fighting Vehicles."
"This project is pre-Government decision and subject to a live tender process therefore it would not be appropriate for Defence to make further comment. Once a decision has occurred, notification will be made via Government announcement