The family-owned engineering firm will create six new jobs in Port Macquarie and support 18 ongoing workers as $6.17 million is added into the local economy.

Managing Director Link Bale said the company has begun a Commonwealth vehicle evaluation, nine months of finalising the configuration and validating the design for production on September 30.

"This means a lot for our staff and the growth of the staff. There will be $6.17 million spent within Australia and most within the region," he said.

"We're put a lot of weight in the recruitment process and we favour veterans wherever we can because they have so much experience we can learn from to produce the next generation of rough terrain vehicles.

"We first started making kits fitted to light tactical vehicles 15 years ago by partnering with companies overseas, now we've moved towards manufacturing our own vehicles.

"They will be manufactured and designed here, which is leaps and bounds from where we were 15 years ago."

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Mr Bale said the contract tender was originally submitted two years ago and has been a work in progress to meet the vehicle requirements.

"This award was a long time coming and we are determined to supply light tactical vehicles with adaptable payload carriage," he said.

"These will be a real utility vehicle with no limitations. They could be used anywhere in the world and be inserted in environments no other vehicle can be put into."

The vehicles will be able to be carried within helicopters, carried outside helicopters or parachuted from aircraft, according to Mr Bale.

"They are a forward operations workhorse utility with the ability to carry 81mm, 61mm or 84mm mortar. Javelin (anti-tank missile), personal weapons and manned weapons to attack or defend.

"They will be delivered in batches starting from mid-2022 until the end of 2023."

Member for Cowper Pat Conaghan said the contract was another example of regional Australia leading the charge for innovation and technology.

"I'm not at all surprised that a project of this calibre has come out of the Cowper electorate on the Mid North Coast," Mr Conaghan said.

"We're an innovative bunch, and to see that ingenuity rewarded like this is fantastic news for our region.

"Huge congratulations to Bale Defence for the recognition of excellence by securing this exciting contract, and I look forward to seeing the project come to fruition."

Minister for Defence Industry Melissa Price said the contract is a beneficial defence industry partnerships for both the ADF and local business.

"The rough terrain vehicle provides an important tactical, light, all-terrain land capability used by the ADF on operations and exercises both in Australia and overseas," Minister Price said.

"Bale Defence provided the first generation of rough terrain vehicles to the ADF.

"This contract ensures Australia can continue to manufacture, modernise and enhance this critical capability locally, to meet our Defence Force's evolving requirements."

"Our Defence industry partnerships will only continue to grow and strengthen with our Government's $270 billion investment in Defence capability over the next decade."

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