CAIRNS has won the battle to lock down decades of lucrative Australian Navy contracts as businesses duke it out for their multimillion-dollar share of the action.

Tenders close in less than a month for a lead operator to oversee the city's transformation to a Department of Defence regional maintenance centre when a fleet of shiny new offshore patrol vessels starts hitting the water.

The initial contract is to service two of the new Arafura-class ships - although at least four will be homeported in Cairns and there is the potential for more of the 12-strong fleet to head north.

The work pipeline has driven top-dollar sales with Austal buying BSE Maritime Solutions for $27.5m late last year and Varley Group taking over Norship, and now the focus is on dividing the spoils of war.

Former Australian Army chief Lieutenant General (retired) John Grey said the full scope of opportunity was only now starting to emerge.

"The federal government and the Royal Australian Navy have recognised the strategic importance of Cairns in its geographic location," he said. Austal is by far the biggest maritime company operating in Cairns - a multinational prime contractor already building six new Cape Class patrol boats in Western Australia.

It is the frontrunner to win the regional maintenance provider contract although several firms are in the running.

None will be able to complete all of the work required alone, so subcontracting out to competing firms will be key.

Lt Gen (ret) Grey said Tropical Reef Shipyard had excellent lifting capacity and access to the port's deepest water but was confined in terms of real estate.

"They're stuck in there by the trawler boats that kick around and the boat ramp," he said.

Norship's advantage is its manufacturing capability.

"It's got a really good little facility where they can not only repair, but actually create the parts to go into a ship as necessary," Lt Gen (ret) Grey said.

"That is a key element."

As a trio of shipyards, Austal, Tropical Reef and Norship have what it takes to get the job done.

"Then we've got a whole raft of subcontractors that will work with them throughout Cairns," Lt Gen (ret) Grey said.

The economic impact will extend far beyond just the maritime precinct with the new ships requiring crew and associated staff and services, not to mention big opportunities for Cairns information technology businesses to provide software support.

Defence has already flagged the need to find accommodation for 180 extra employees.

Lt Gen (ret) Grey believed the navy should look to man each of its new ships with two alternating crews based in Cairns with their families.

"With the improved maintenance these days, you ought to be able to keep the vessels at sea for a much longer period," Lt Gen (ret) Grey said.

"You can get much longer sea work out of it, which is really good."

The horizon looks bright for Cairns, and Leichhardt MP Warren Entsch said it was just the beginning.

"There's no reason we can't provide stop-off services, particularly for the Pacific fleet for the US," he said.

"They already do a bit of that at Tropical Reef Shipyard but we could certainly increase our capacity there.

"When Manus (Island) goes ahead with the American and Australian base there, we're a natural fit for all of that sustainment and maintenance work for vessels that are based there," Mr Enstch said.

Originally published as Inside billion-dollar navy boom coming to Cairns