Ship ahoy ... the Soryu class submarine.Source: Supplied

In one of the biggest and most contentious defence equipment decisions in decades, the Abbott Government will select the Japanese-built Soryu Class submarine to replace locally built Collins Class boats as the navy’s key strike weapon beyond 2030.

A decision to spend more than $20 billion on up to 10 of the Japanese vessels will be announced before the end of the year.

That is six months ahead of the release date for the Abbott Government’s first Defence White Paper.

The decision is being fast-tracked due to growing concerns about the massive cost of maintaining the Collins boats beyond their use-by-date of 2026. Some estimates put that cost at more than $2 billion.

“The Government cannot afford a submarine capability gap and every day past 2026/27 when Collins class is due to begin decommissioning, adds days of risk,’’ a senior defence source said.

The 4200-tonne Soryu Class boat carries a crew of 65 and is powered by an air-independent propulsion system that allows it to remain submerged for much longer periods that other conventionally powered submarines.

Range has been a major factor against the design — the Soryu has a range of about 11,000 km at 12 km/hr compared with 22,000 km at 19 km/hr for the Collins Class - but it is understood that one option under consideration is to provide submarine basing facilities in Northern Australia (Darwin) to cut the transit distances to the boats’ patrol areas by thousands of kms.

The purchase price for the Japanese built boats would be about half the price of an Australian option.

Big ticket item ... one of Japan's Soryu class submarines docked in a Japanese port. Picture: Kikuchi MasayukiSource: Supplied

German builder TKMS told a conference earlier this year that it could build 12 submarines for $20 billion.

Both German and French submarines remain in the running, but senior sources told News Corp Australia that the Japanese option was clear favourite.

The decision will anger government owned South Australian shipbuilder ASC and the SA Government and it finally breaks the government’s election promise to “build 12 submarines in Adelaide”.

“It is ludicrous to think we can design a submarine — nobody believes that,” one insider said.

Given that the Collins fleet will not reach its availability benchmark (the amount of time a vessel is available for service) until 2016 (20 years after entering service) the government does not want to risk a submarine capability gap.

Out with the old ... a Collins Class Submarine, HMAS Farncomb, arrives in Hobart.Source: News Limited

ASC will remain the centre of submarine sustainability and will play a key role in the future frigate project with work estimated at $1 billion a year flowing to South Australia by 2023.

However the yard’s woeful performance on the Air Warfare Destroyer (AWD) project ($600 million over budget and three years late) has left the government with little option but to look elsewhere for a new submarine.

“With a record like that is anyone seriously thinking we should proceed and build a fleet of future submarines in the same shipyard?” a government source said.

News Corp can also reveal that when the Commonwealth signed up to the AWD contract, it was informed by Treasury that it would incur a premium of $1 billion.

According to government auditors the premium for local production is about 30 per cent or $15 billion for a locally built submarine. That is the entire cost of the Joint Strike Fighter project.