Rheinmetall's offering of the Boxer CRV was chosen over BAE Systems Australia's AMV-35 vehicle, which would have been built in Fishermans Bend, Victoria.
The lucrative contract, worth $5.2 billion, will see up to 225 CRVs built in Brisbane to replace the ageing Australian Light Armoured Vehicle fleet.
Victoria's Minister for Industry and Employment Ben Carroll has said the awarding of the contract is a slap in the face to the state's workers transitioning from the automotive industry, as well as the already-established industry manufacturing the Australian Army's Bushmaster and Hawkei vehicles.
"We are the home of manufacturing in Australia and have the skills, knowledge and expertise to deliver the best and safest military vehicles for our defence force – but Malcolm Turnbull has betrayed Victoria yet again," Minister Carroll said.
Victoria’s defence sector is estimated to be worth $8 billion to the local economy every year, and is made up of about 20,000 workers and more than 400 businesses.
Minister Carroll said the government's decision came down to securing marginal federal seats in Queensland, rather than deciding the best vehicle, laying blame on the National Security Committee for not having a single Victorian politician.
"This is a disgraceful decision that’s based on the political interests of Andrew Broad, Malcolm Turnbull and the Coalition’s desperation to cling to marginal seats in Queensland – not the national security interest of our country," the minister said.
Defence Industry Minister Christopher Pyne shot down suggestions of political point-scoring on Twitter, labelling Premier Daniel Andrews' government statements as "offensive".
"Daniel Andrews’ statements are offensive and insult the professional men and women of the ADF and @DeptDefence who advised the Government that @RheinmetallAG was the clear choice based on capability, lethality and protection," Minister Pyne tweeted.
"Sadly it seems Daniel Andrews would have us put the safety of our men and women of the ADF second to his own parochial interests."
At the announcement of the decision, Minister Pyne confirmed that of the $5.2 billion for the project, $1.8 billion of the acquisition is in Queensland and $635 million of it will be in Victoria. The government has tipped up to 1,450 jobs will be created, with at least 330 in Queensland, 170 in Victoria and 140 in NSWduring acquisition.
The CRVs will undertake a range of missions, from regional stability and peacekeeping through to high-threat operations.