Transfield's greatest contractual success was the largest ever private contract in Australia's history up to the turn of the century: the winning of the five billion dollar tender in 1989 for the construction of eight frigates for the Royal Australian Navy and two for the Royal New Zealand Navy.  

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In December 1987, the Commonwealth sold the shipyard to the winning consortium, Australian Marine Engineering Consolidated (AMECON), which consisted of partners Eglo Engineering (Services) Ltd, Australian Shipping Industries Ltd (ASI) and International Combustion of Australia Ltd (ICAL) for $100 million and to finish two older style Perry class frigates, already partly under construction.

Transfield then decided to make takeover bids on the ASX for all three partners in AMECON. Transfield at that point controlled only about 20 per cent of Eglo's shares. After a long-running and bitterly contested battle, by August 1988 Transfield was successful in controlling AMECON. The only competition now for the ANZAC frigate project was the Newcastle consortium.

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On 10 November 1989 Transfield, having beaten its rival consortium, Australian Warship Systems (AWS) in Newcastle, received from the Commonwealth the order for the ten ANZAC frigates. The project, its cost now revised at $5.8 billion, employed 10,300 people in Australia and another 1,300 in New Zealand.

Transfield completed on time and in budget the first frigate for the Royal Australian Navy, HMAS ANZAC, launched on 16 September 1994, and the first frigate for the Royal New Zealand Navy, HMNZS Te Kaha, launched in Melbourne on 22 July 1995, while the two FFG-7 frigates, HMAS Melbourne and HMAS Newcastle were commissioned in February 1992 in December 1993 respectively.

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Following the parting of the ways by the two families in July 1996, the remaining eight frigates would be completed by Tenix, the company set up by the Salteris, who took over the defence contracts when Transfield's assets were equally distributed between them.

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Beside the frigates, from 1989 until 1996, Transfield was involved in several other defence contracts. In 1990 it repaired and refitted the submarines HMAS Oxley and HMAS Swan, delivered to Tonga the first of three patrol boats and consigned to the Royal Australian Navy four hydrographic survey vessels. In 1993, it applied protective coatings to the midsection of six Collins Class submarines. By this year, Transfield had delivered or had on order thirty high-speed patrol boats for the Pacific Island States, Hong Kong and Kuwait. In 1995, Transfield proposed to the Australian Army a new turret for its armoured fighting vehicles, as well as folding, floating bridges and demountable bridges designed for rapid assembly, capable of supporting loads up to 70 tonnes.  

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Upon relinquishing to Tenix the balance of the ANZAC contract in 1996, Transfield pursued its defence interests elsewhere. In October 1999, in association with the Thales Group from France, Transfield purchased ADI, the Commonwealth Government defence contractor and Australia's only supplier of military ordnance.

In private ownership for the first time in its history ADI had in Thales, on the one hand, an international technology partner and in Transfield on the other, a proven local engineering contractor, with specific expertise in the defence industry.    

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ADI at the time was completing the contract for six Italian designed Minehunters- widely regarded as the most sophisticated vessels of their type.

ADI thus represented itself as a leading private defence player, winning a number of complex major projects, including the design and installation of command headquarters on HMAS Manoora and, in 2002 the upgrade of command, control and guided missile launch systems on the Perry Class frigates worth over $1bn.

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