Tasmania will no longer deliver naval training for patrol boats after the federal government awarded the $36 million contract to Queensland.
The Australian Maritime College has delivered the program for 28 years but its tender for the training expired in December.
Federal acting Defence Minister Marise Payne announced on Tuesday that TAFE Queensland had won the new tender.
AMC principal Michael van Balen said the outcome was disappointing, but he understood why the decision was made.
"Hosting the training in the north of the country, closer to the Pacific Islands, and where the boats will be maintained makes sense," he said.
"We wish the new training providers well and would look forward to investigating opportunities to collaborate in the future."
Ms Payne said in a statement the Pacific Maritime Security Program training contract was designed to adapt and adjust, to meet the needs of our Pacific partners.
"A modern and innovative training approach offered by TAFE Queensland will have significant strategic benefits in the Pacific," Minister Payne said.
"TAFE Queensland has already established important relationships and arrangements with the Commonwealth and Pacific Island country governments, industries and communities.
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Tasmanian Defence Minister Jeremy Rockliff said the outcome was disappointing but as with all tenders success was not guaranteed.
"The AMC is exploring new opportunities in specialised fields such as autonomous vehicles and the design and delivery of digital training solutions targeted at online international maritime training markets," Mr Rockliff said.
"The Australian Government is investing heavily in the Defence and Maritime Innovation and Design Precinct at AMC which supports the Tasmanian Government's objective to develop world class defence and national security research, education and training capabilities."
The impact on jobs it not yet fully understood.