Hunter engineering company Varley Group has missed out on a five-year contract to build truck bodies for the Australian Defence Force (ADF).
The Newcastle Herald reports that winning the work would have been worth tens of millions of dollars to Varley and created 75 jobs.
The decision has angered Varley managing director Jeff Phillips who claimed that he believed his company had won the contract.
Phillips said Varley had worked with Rheinmetall, the German head contractor for the job, for over a year, “But something has changed since the contract was announced and it looks like we've been cut out."
Rheinmetall is required to use 35 per cent Australian content in the $1.6 billion job.
According to a Rheinmetall spokeswoman Hannelore Duczek, that requirement will be met and an Australian company will be awarded the contact.
"We are still in the final stages of the selection process and under the preferred bidder arrangements another Australian company is number one and Varley is number two, and is still in the game."
Opposition defence spokesman Senator David Johnston, Paterson MP Bob Baldwin, and state Newcastle MP Tim Owen share Varley’s belief that the company has been badly treated by Rheinmetall.
Owen said that he had been told "across the table" by Rheinmetall about two months ago that Varley had won the contract.
Rheinmetall MAN Military Vehicles GmbH of Germany, a joint venture company of Rheinmetall AG and MAN Truck & Bus AG, won the contract to supply the ADF with advanced logistical vehicles in July.
The overall contract for around 2500 protected and non-protected logistical vehicles is worth about $ 1.6 billion.