The contract, initially awarded to Qantas in 1999, includes renewal options.
It covers a range of maintenance, engineering and logistic support activities performed by Qantas Defence Services for the Air Lift System Program Office (ALSPO) based at RAAF Base Richmond.
The $136 million contract was good news for industry and local employment, securing jobs for about 200 maintenance workers, minister for defence materiel and science Greg Combet said.
"Qantas Defence Services has maintained Australia's 12-strong C-130H Hercules fleet since 1999, demonstrating that local companies can deliver quality work and value for money," Combet said.
"This contract covers a range of maintenance, engineering and logistics support activities, including T56 engine support for both the C-130H Hercules and AP-3C Orion aircraft, and will directly support 200 jobs based at RAAF Base Richmond."
Head of Qantas Defence Services, Glen Steed, said the extension continued the strong long-term relationship between the two organisations, which had worked successfully together to reduce the cost of ownership of the C130H for the Government.