SDIP26 – mind the gaps: How to close them and not paper over them

My Sovereign Defence Industrial Priorities: A first-principles framework paper set out an approach to identifying and managing Australia’s Sovereign Defence Industrial Priorities (SDIP). It treats “priority” as working in two dimensions.

The first is identification: deciding which industrial capabilities are essential to Australia’s readiness and preparedness. The framework organises these into three tiers – enabling capabilities, force-wide support and individual platforms/systems – with transparent tests for what makes each sovereign.

The second is management: what to do about a capability once identified. It begins with a health check – whether the capability can, as things stand, meet its requirement. Being a priority does not imply intervention; it may be perfectly healthy. Identification establishes a standing duty to monitor and intervention runs along a spectrum, from no action through skills development, contract levers and targeted investment to co-investment, acquisition or direct operation.

The check applies whether or not industry does most of the work: many capabilities are delivered largely within Defence yet still depend on an essential industry component, and the question is whether that component exists, is healthy and can scale as required. Defence already categorises the readiness of its own side through minimum level of capability (MLOC)/operational level of capability (OLOC); the industry side needs the equivalent.

Priority, then, is where Defence concentrates finite resources to secure the readiness the vice chief of the Defence Force (VCDF) is accountable for – naming the sovereign-essential set, then monitoring it and intervening only where a capability falls short.

What has improved

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Measured against that framework, DIDS26 makes four genuine advances in how the priorities are set out:

A stable priority set – the same seven carry across 2024 and 2026, allowing the set to be scrutinised over time rather than reshuffled each cycle.

• Life cycle stages designated individually – each capability is decomposed across a 10-stage life cycle and designated stage by stage, so a capability can be Grow in manufacturing but only Guide in maintenance – making the manufacture-versus-sustainment distinction visible for the first time.
• A published classification scheme – Grow, Guide, Monitor, No Action, Achieved – applied to populated tables.
• Paired accountability – the VCDF for requirements, the National Armaments Director (NAD) as industry steward for delivery, with a commitment to monitor (Action 3.1).

These are significant gains. But they improve transparency more than the underlying logic of identification and management – gains in how the priorities are presented, not yet in whether they are the right priorities or what is done with them once designated.

What has not improved

Both dimensions remain underdeveloped in substance.

Identification is more visible but no better justified. The seven carry no published selection test – inherited from 2024, where they were not justified either, and the 2026 “refinement” is likewise unexplained.

Without a published methodology, neither government nor industry can know whether equally important capabilities have been omitted. The set is plainly not exhaustive: most consequentially, the framework’s Tier 1 enabling capabilities – fuel, energetics, munitions feedstocks – are not designated at all. This is not merely a framework preference.

NDS26, the strategy DIDS26 implements, calls sovereign fuel “a critical component of National Defence” and commits up to $6.8 billion to it – yet the priorities instrument leaves fuel out entirely.

Force-wide support capabilities fare little better: test and evaluation, definitionally the assurance of the whole integrated force, appears only as scattered per-platform line-items with no force-wide designation. Identified at the wrong level, such capabilities cannot be managed at the right one.

Management is narrower than readiness requires. Action 3.1 monitors industrial health – the condition of the supporting industry – not sufficiency: whether a capability can deliver at the scale, speed and duration a contingency demands. Field-level sustainment, a universal obligation on the framework’s account, is treated selectively and only within the seven.

The funding gate – nothing is listed Grow or Guide unless already funded – means a necessary-but-unfunded capability never appears, leaving the shortfall unowned. Two of the seven still lack published plans, so roughly a third of the set cannot yet be assessed; Annex C of the long review records the verdict capability by capability – one SDIP aligns closely with the framework, four only partially, two remain deferred, and Tier 1 is absent altogether.

The reverse problem appears with manufacture: several priorities assert a sovereign build requirement – continuous naval shipbuilding, sovereign manufacture of the main land vehicles – justified in sustainment terms that never establish why the platform must be built here rather than bought from an ally and sustained here.

Beneath both sits the central point: DIDS26 provides no means of discovering either kind of gap. An unjustified or incomplete selection is never tested; a health-only monitor never asks the sufficiency question. The designations rest on a benefit-and-difficulty quadrant – and difficulty is the wrong axis, so a capability that is important but easy to establish scores low and is pushed towards no action even where preparedness depends on it.

The central problem is not that gaps exist. It is that DIDS26 provides no published mechanism for finding or dealing with them.

What can be done to address the gaps

These steps are the short-term stream – what can be done now, while the NAD, a new and expansive role, takes the measure of responsibilities reaching well beyond the seven. Most of the remedy does not wait, because the responsibilities already sit with the NAD, who as industry steward is accountable for the health of the whole sovereign defence industrial base.

The SDIP list bounds where the published designations apply, not the stewardship. The following assist discharging existing duties rather than adding new ones:

• Scope the monitor to the framework’s priority set – wider than the seven (including the enabling layer, force-wide support and the universal sustainment floor), narrower than the whole industrial base.
• Monitor on sufficiency, not just health – assess each capability against an industrial readiness standard, the industry-side equivalent of MLOC/OLOC: can it deliver at the required scale, speed and duration, with the result driving a graduated response?
• Bring fuel and energy into the same readiness picture – not by taking over fuel responsibility, but by coordinating its reporting so a foundational enabler is visible alongside the seven.
• Complete the two deferred plans so all seven are detailed.
• Own the funding gap – identify and report unfunded-but-necessary capabilities rather than letting them vanish behind the Guide/Grow funding gate.

None of this changes the seven priorities; it runs a parallel stream covering the NAD’s full stewardship.

Conclusion

Measured against Defence’s own policy – NDS26’s requirements and DIDS26’s own commitments – the sovereign industrial capability gaps are real: in what has been chosen, watched, and shown to be ready. The most serious are the ones the current SDIP arrangements give no means of seeing until a contingency exposes them.

Section 4 showed how, short-term, the NAD’s responsibilities can be discharged while the SDIP arrangements continue – two streams in parallel, a stopgap to fill the gaps identified in Section 3.

The longer-term point is more fundamental. Creating a National Armaments Director as steward of the entire sovereign defence industrial base is the right move – that breadth is precisely what sovereign industrial policy has lacked.

The difficulty is that Defence has defined a responsibility broader than the SDIP provided to meet it: a scheme scoped to a selected few cannot by itself discharge stewardship of the whole. What the role now requires is a prioritisation instrument matched to its breadth – one identifying the full sovereign-essential set and managing it continuously against requirement – with the authority to prioritise resources across the base to match the accountability.

The framework of the companion paper, built on the two dimensions and a three-tier account of sovereign-essential capabilities, is offered as one candidate: a scheme matched to the NAD’s breadth of responsibility rather than to a selected few.

A full version of this paper is available here.

John Harvey is a former Air Marshal in the Royal Australian Air Force and has a PhD in computer science from UNSW Canberra. His postings have included Chief Capability Development Group, F-35 project manager, director Military Strategy and director Air Power Studies Centre.