A parliamentary committee has been told a key milestone on the Future Submarine program has been pushed back, and the eventual cost of building the new fleet could reach $90 billion.
Meanwhile, Australia's next batch of Joint Strike Fighter aircraft could also be delayed after US defence company Lockheed Martin foreshadowed a production slowdown for three months due to the coronavirus impact.
"In response to COVID-19 F-35 supplier delays, Lockheed Martin is taking proactive measures to mitigate impacts and position the program for the fastest possible recovery," a company spokesperson told the ABC.
"The corporation is tapering its production rate over a three-month period, temporarily adjusting the work schedules for the F-35 production workforce in Fort Worth, Texas, and continuing to accelerate payments to small and vulnerable suppliers".
Australia is due to accept another 15 F-35s in 2021, as part of a $17 billion deal to eventually acquire 72 Joint Strike Fighters.
"A small number of Australian aircraft could potentially be delayed in the region of one to two months," the Defence Department told the ABC.
The department insisted that Australia's "full operational capability planned for 2023 is not expected to be impacted", despite the production delays in the United States.
Defence officials appearing before a parliamentary committee also warned the COVID-19 pandemic could further delay Australia's troubled $90 billion future submarine program.
A Preliminary Design Review originally due to be completed March 2020 is now expected to be finished in January 2021, despite a Systems Requirements Review also being months overdue.
The Defence Department's general manager of submarines, Greg Sammut, told the hearing that despite the impact of the coronavirus, he is relatively confident already missed deadlines can still be recovered.
"If I was to take into account the impact of COVID-19 and how that might play, and not to appear naive about the depth of that impact, we maintain a medium level of confidence that we can recover schedule by January 2021," Mr Sammut said.
The expected cost of building 12 new French-designed submarines has also blown out by a further $10 billion on top of the already expanded $80 billion price tag.
Defence and naval heads overseeing the project pointed to foreign exchange rates and inflation for the now estimated $89.7 billion cost to taxpayers.
Tony Dalton, the Defence Department's deputy secretary in charge of national shipbuilding, told the inquiry the future submarine project was exposed to the euro, US dollar and British pound.
"It could go higher or it could go lower depending on foreign exchange rate variations … I don't have a crystal ball," he said.
Following the hearings, Centre Alliance senator Rex Patrick expressed scepticism that Defence would be able to catch up on delays.
"At every step they have been late but promised to make up time," Mr Patrick told the ABC.
(ABC)