The cost of upgrading the weapons systems for NZ Navy frigates will match their initial purchase price 20 years ago.
HMNZS Te Mana and HMNZS Te Kaha have already received upgrades to their diesel engines and air conditioning systems, and will now be sent to Canada for the a $440 million upgrade.
Lockheed Martin Canada won the contract for the self-defence upgrade, which is in the detail design phase.
The first of the frigates will be sent to Victoria, in British Colombia, in mid 2017 with the second expected to be completed by late 2019.
Ministry of Defence deputy secretary of acquisitions Des Ashton said the ships would not remain fully operational without the upgrade.
"There would be situations where the way in which they were deployed... would be done in a different way than what we will be able to do with this upgraded kit."
The upgrade includes missile defence, communications and radar detection, torpedo decoys and an overall combat management system.
Mr Ashton likened the current systems to a 20-year-old home computer.
"There's plainly a lot of advance and software that has moved a long way in 20 years, the same applied here."
Victoria University Centre for Strategic Studies professor Dr Peter Greener said the upgrades indicated a commitment to maintaining a blue water navy involved in global water protection.
It would allow the frigates to maintain their involvement in operations such as anti-piracy patrols off the Somalian coast, and targeting terrorism and drug smuggling in the Gulf of Oman.
"This is about regaining the capabilities for self defence that the vessels had when they were new 20 years ago.
"Currently their weapons systems are essentially obsolete."
Labour Party defence spokesperson Phil Goff said despite the improvements, the ships would need replacing in the next 10 to 15 years, and that was likely to cost about $1.4 billion per frigate.
However, the new armament systems would probably be able to be reused on the new frigates.
Peace Movement Aotearoa coordinator Edwina Hughes said the upgrade was a "sad indication of government spending priorities at a time when child poverty for example is a shocking 29 percent".
She was also concerned that the upgrades were only to allow the navy to work with the other ships belonging to nuclear weapon states, or countries which were carrying out airstrikes.
The Movement believes New Zealand's interests in maritime protection could be served by a coastguard, rather than a full navy.