A major drone manufacturer says there is a lack of transparency in Australia’s bid to buy new lethal flying machines.

American company General Atomics is expected to be the winner of a multi-million-dollar contract for Australia's first armed unmanned aerial vehicles.

But its sole competitor — Israeli Aerospace Industries (IAI) — has accused the Defence Department of lacking transparency in its evaluation process.

Project AIR 7003 has pit the General Atomics MQ-9 Reaper drone against IAI’s Heron TP system.

Shaul Shahar from IAI said the American firm has enjoyed favourable treatment in the process.

“With all the risk analysis, all competitive analysis they need to do here, they haven't done it because no-one has approached us,” he told the ABC.

“No-one has offered to put our data of the system on the table. So … no evaluation can be complete.

“The preference for a US product, in the absence of an open competitive tender, creates an environment in which there is little transparency of how the Australian Department of Defence is managing the project, and how it has arrived at its decision.”

Unnamed Defence figures have allegedly told reporters that the Israeli technology is reliable, but there are interoperability issues created by the fact that Australia’s allies already use the MQ-9 Reaper.

Mr Shahar rejected the claim.

“We have more than 100 pilots, Australian pilots, that have been trained on our Heron-1 system,” he said.

“I want to remind you that one of the successful programs of UAV here in Australia was with our Heron-1 system.

“They used it for three years in Afghanistan successfully.”

Dr Malcolm Davis from the Australian Strategic Policy Institute suspects the Reaper will win.

“I'm sure the Israeli system is very good, but there's an awful lot to be said for close interoperability with our key allies,” he said.

“The Americans are using Reapers, the British are using Reapers.

“I think that it would be probably the most likely choice to go down the path of Reaper.

“[But] I'm certainly not attempting to pre-judge the outcome of the contest.”

Defence Minister Marise Payne issued a statement saying: “Defence is considering a range of options for the future Australian Defence Force armed remotely piloted aircraft system”.

“No decision on which system will be acquired has been made,” she said.

“As the evaluation process is ongoing, it is not appropriate to comment.”