"These reforms will lead to greater certainty in the naval ship repair sector allowing for increased investment and better performance.
"This is good for jobs, good for the taxpayer and good for the Navy," Combet said.
"This is a win-win for Defence and industry.
"Defence enjoys savings in their sustainment budget and industry gains certainty that allows them to develop their workforce and infrastructure.
"Under these reforms, the Defence Materiel Organisation will reform the Navy's Major Fleet Unit Repair and Maintenance program as outlined in the Smart Sustainment initiative.
"The principal element of the reform program is the establishment of long-term performance-based contracts for repair and maintenance activities in lieu of the current arrangement that is based on awarding a contract under a panel arrangement for each and every maintenance activity.
"These reforms will lead to the batching of our requirements.
"This will affect the maintenance and repair of the Major Fleet Units - the eight ANZAC class frigates, the four Adelaide class frigates, the two Amphibious Landing Ships and the Heavy Landing Ship.
"It is also intended that these new maintenance concepts will be extended to new ship classes such as the Air Warfare Destroyers and the Landing Helicopter Dock Ships when they are introduced," Combet said.
"On average the Australian Government spends $150 million per annum on major surface ship repair and maintenance.
"We would expect to see significant savings from this reform."
Major ship repairers BAE Systems and Thales Australia have welcomed the move that aims to provide more certainty for workforce planning and investment in dockyard infrastructure.
Details on how the contracts will come together are being examined by DMO now with further detail to be released later in the year.
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