In fact, back around 15 years ago, we were at the mercy of offset agreements that did little to assist a small or medium business. Australia’s attempt at offsets was far from successful, it resulted in a procurement process that was more inefficient than it should have been, with little or no benefit for SMEs. But this is not a history lesson, there has been more than enough written on the trauma of offset arrangements for many nations around the world.
In essence, the goal of the AIC program is to develop our industrial base capability by maximising Australian industry participation in major capital projects. The big picture is to create enduring Australian supply chains that can deliver over the life of projects. Obviously there is a strong connection between the AIC program and sovereign industrial capability, with both policies focused on ensuring Australian defence SMEs are contributing to the necessary capabilities required within Australian borders to maintain and support our defence forces.
It should be noted that we have had AIC plans in Australia for many years, and it would be fair to say that they haven’t worked as well as expected. Previous AIC polices were not particularly well targeted and provided little clarity around the industry capabilities they were created to develop. In more recent times, AIC plans are a little more clearly defined and definitely moving closer to alignment with the required in-country capabilities that are necessary to support sovereign industrial capability. We still have a ways to go to ensure that defence suppliers are held accountable for their obligations, but there is an optimistic feeling that we are getting closer.
AIC plans set out the policies and opportunities that contracted Defence suppliers will provide for Australian industry involvement in major Defence capability projects and sustainment activities. While not all details of AIC plans are published, it is sufficient for SME purposes to know that specific Defence suppliers have a requirement to involve Australian industry. That means, there is an obligation to develop Australian industry capability and to utilise Australian defence SMEs.
As an SME, we can use these obligations to our advantage; the simple fact is that we know these defence suppliers need to support Australian companies to develop capability, and ultimately place orders for products or services. AIC plans provide an opportunity to SMEs that we might not otherwise be able to access. But remember, it is not a “free pass” to new revenue streams, we must still offer a value proposition that is acceptable to the buyer – a product or service that is needed, competitive pricing, quality and on time delivery.
To access these opportunities you need to do your research and you absolutely need to establish and continue to develop relationships. To begin, find out what a particular supplier to Defence does, know what you do for them, which division you want to work with, and which products or services you can sell to them. The key is to establish relationships to ensure ongoing communications and dialogue and make it easier for them to see where you can fit into the supply chain.
The message is (and it’s a simple one), a knowledge of AIC plans and the requirement by defence suppliers to meet their Australian industry inputs provides an SME with critical information about available opportunities and where to focus their business resources and attention.