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Rounding out DIDS: Accelerating procurement, driving innovation and building export, workforce opportunities

Defence Industry Minister Pat Conroy MP and CEA Technologies CEO Mark Foster on a tour of the CEA Integration Lab before the release of the Defence Industry Development Strategy at CEA Technologies in Canberra (Source: Defence)

Any significant change to Australia’s defence industry policy would be incomplete without reforming our long-maligned procurement practices, balanced by expanding export and employment opportunities for generations of Australians to come, but how does DIDS deliver this?

Any significant change to Australia’s defence industry policy would be incomplete without reforming our long-maligned procurement practices, balanced by expanding export and employment opportunities for generations of Australians to come, but how does DIDS deliver this?

It is now well acknowledged (not sure why it took so long, if I am honest) that Australia’s own domestic demand for Defence capabilities is not sufficient enough to sustain a globally competitive workforce, with innovation often leading to undesired outcomes for our own procurement.

Recognising this, successive governments have sought to position and transform Australia’s defence industrial base and supporting workforce into a globally competitive contributor to the national economy and the expansion of our industrial capability.

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Seeking to avoid the failures of the past, the government’s Defence Industry Development Strategy (DIDS), launched by Defence Industry Minister Pat Conroy, is the latest incarnation of Australia’s push to develop a vibrant, at least somewhat self-reliant defence industrial base, workforce and supporting ecosystem to better defend the nation in the era of great power competition.

In the first part of this short analysis series, we took a closer look at the Defence Industry Development Strategy’s emphasis on defining Australia’s sovereign defence industrial base, new sovereign defence industrial priorities (SDIPs), and establishing the policy and regulatory frameworks necessary to prioritise speed and capability outcomes.

But this is just part of the framework established and outlined in the DIDS, with equally important focus on procurement reform, defence innovation, and developing the export and defence industry workforce opportunities to capitalise on the opportunities presented by the defence industrial base.

Much needed procurement reform

The Defence Strategic Review, released in 2023, wasn’t exactly shy in coming forward with its criticism of Australia’s defence procurement infrastructure which has long been maligned for poor decisions, poor capability outcomes, and cost and delivery timeline blowouts.

Indeed, the DSR stated, “Timely and strategically relevant capability acquisition is critical in the coming period. Defence’s current approach to capability acquisition is not suitable given our strategic circumstances, and there is a clear need for a more efficient acquisition process. The increasing volume and complexity of capability projects is overwhelming Defence’s capability system, its limited workforce and its resource base.”

Accordingly, DIDS established the need for radical Defence procurement changes, saying, “Defence procurement must change to meet the strategic circumstances outlined in the DSR and to ensure Australia reaps the full benefits of the opportunities presented by the construction of Australia’s nuclear-powered submarines (SSN-AUKUS). We will simplify Defence’s approach to contracting, increase its risk appetite, and shorten the time it takes to receive project and contract approvals, to deliver capability at speed while maintaining appropriate levels of governance.”

What this effectively does is reinforce comments made by the Defence Industry Minister at the launch of the DSR where he highlighted that the government would seek to prioritise sole source procurement decisions and the acquisition of “minimally viable capability” where the capability decision could be widely considered a “known known” saving industry costly time and effort tendering for projects.

Australian industry isn’t to be left out in the cold in this process, with DIDS stating, “This [sole source and limited tendering] will particularly be the case for procurement of off-the-shelf assets, materiel or advanced capabilities through foreign military sales or other cooperative programs, or in support of SDIPs. Where this approach results in design and manufacture overseas, Defence will prioritise, including through investment in SDIPs, conducting sustainment activities utilising Australian industry.”

The DIDS report detailed Defence’s new approach, saying, “Defence will overhaul its approach to contracting with industry, by removing redundant or unnecessarily burdensome requirements during engagement, solicitation and selection processes, such as repeated requests for documents. Defence will be more effective and efficient in its engagement and contract management with suppliers, to deliver timely, sustained and assured capability to the ADF.”

Importantly, and much to the benefit of industry, consultation and collaboration (that dreaded C-word) will be essential to promoting and implementing Defence procurement reform.

This will feed into extensive reform to the current Defence procurement infrastructure and policy framework, bringing Defence procurement in line with the Commonwealth Procurement Rules (CPRs) and simplifying and streamlining the Australian Standard for Defence Contracting (ASDEFCON) based on extensive industry feedback.

The government’s procurement changes will be focused on reducing paperwork “required by Defence at early stages of the solicitation processes and enable Defence and industry to enter into contracts sooner, leading to cost and time efficiencies” which will focus on three priority areas, mainly:

  • Revision and simplification of the ASDEFCON suite of contracts.
  • Development of additional, more flexible contracting mechanisms.
  • Additional guidance, training and assistance to Defence procurement staff, to ensure the contracting frameworks are implemented in accordance with the principles of tailoring, agility, flexibility and risk appetite.

This push will result in Defence “transforming” the ASDEFCON suite “to make it easier, faster and more cost effective for industry to work with Defence”. This will also lead to the development of “new contracting models” that is designed to “deliver an initial level of capability to the ADF more quickly than current contracting requirements allow”.

Building on this, these procurement reforms will be “built around relational contract frameworks that support collaboration between Defence and industry and reflect best-for-enterprise behaviours”, a welcome news for many in defence industry, but let’s wait to see how effectively it is implemented before popping the champagne.

Defence aims to deliver this by leveraging “contemporary engineering models, techniques and tools, such as digital engineering and mission engineering and best practice” and “contracting templates focused on intended commercial outcomes that include disciplined governance, strategic planning and mission-focused continuous improvement”.

‘Strategic partnerships’ and ‘procurement pathways’ leading to better industry, workforce outcomes

Defence has long prided itself on building “strategic partnerships” and “collaborative partnerships” with industry. Industry, on the other hand, would often beg to differ.

Accordingly, DIDS is designed to rectify this divergence of experiences to deliver “Strategic partnerships provide long-term opportunities, spanning up to decades, to work with Defence on progressive capability development and innovation.”

As part of delivering this, DIDS will leverage “relational contracting frameworks” designed to promote “enterprise behaviours” and a more collaborative approach to sharing risk and reward through mechanisms including:

  • Strategic alignment and strong governance.
  • Measurable performance and efficiency objectives that are refined through the life of the relationship to best meet Defence needs and deliver ongoing value for money.
  • Returns for industry that reflect risk and reward and disincentives for poor behaviours and performance.

This is designed to deliver greater certainty for industry and “assurance for long-term investment, including the small to medium ecosystem that supports each prime”. What this fails to explain though is if we will see policy making that will avoid the maligned “valleys of death” that have traditionally characterised Defence planning and procurement policy for much of the last four decades, at least.

All of this is designed to deliver a range of outcomes for Defence, the Australian warfighter, and the defence industrial base and supporting workforce, including:

  • Enhance Defence capability outcomes and preparedness.
  • Support in-country integration, adaptation and evolution of Defence capability, including pulling through Australian innovation into Defence capability.
  • Ensure sovereign, resilient, profitable and secure supply chains.
  • Nurture SMEs to grow an enduring and resilient industrial base, including supporting access to capital market funding sources.
  • Manage and oversee the security, cyber worthiness and resilience of SMEs.
  • Invest in Australian innovation, pulling it through to Defence capability and leveraging this into export opportunities.

All of this is ultimately designed to “make Defence a better customer”, something many in industry would say loudly in closed circles, but not necessarily in the open for fear of repercussions on their business outcomes.

Defence aims to deliver these outcomes by expanding and enhancing its professionalisation, drawing on best practice from across the Australian government, building collaborative and relational structures through industry secondment programs and establishing and delivering on commercial best practice.

This approach will be supported by a “tripartite Defence industry council” chaired by the Defence Industry Minister, bringing together representatives from the Australian government, defence industry and the union movement to “focus on ensuring a collaborative, whole-of-nation approach to developing the sovereign defence industrial base required to meet Defence needs”.

This all aims to enhance the size, competitiveness, and capacity of Australia’s defence industrial workforce, put simply, the men and women who deliver the platforms, technologies, and consumables that keep Australia’s men and women in the fight.

Workforce challenges aside, both Defence and defence industry recognise that they have their work cut out for them, whether delivering future naval capabilities or the range of other programs ranging from armoured vehicles to the multi-billion-dollar, multi-decade guided weapons manufacturing initiative.

In order to build the defence industry workforce, Defence and the government have identified the need to enhance and expand a range of Commonwealth and state/territory initiatives like the South Australia Defence Industry Workforce and Skills Taskforce, Schools Pathways Program, and the Defence Industry Internship Program.

The DIDS report stated, “To meet challenges, the government will target investment to identify and support the development of a skilled defence industry workforce. To simplify direct industry grants arrangements, the Skilling Australia’s Defence Industry Program has been streamlined into the new consolidated Defence Industry Development Grant Program.”

Going further, the government review stated, “Collaboration between the Commonwealth and state governments, in consultation with defence industry, unions and education providers is needed to build Australia’s defence industry workforce in priority areas.”

Staying at the lethal, cutting edge

Technology has long played an oversized role in delivering “overmatch” on the battlefield at both tactical and strategic levels, whether it is in the realm of advanced munitions, low observability or night vision technologies. In this era, technology will only continue to become more important.

In order to achieve this, DIDS has specified the need to “pull innovation through to capability”, long a criticism of Defence innovation organs and schemes, giving rise to the Australian Strategic Capabilities Accelerator (ASCA) and leveraging the technical expertise from Defence Science and Technology Group, alongside “delivery groups including Capability Acquisition and Sustainment Group (CASG), NSSG and GWEO Group, as well as the services”.

Accordingly, Defence is embracing a streamlined approach to innovation activities, this includes, “shifting from delivering capability in large increments through major procurement activities, towards delivering ‘minimum viable capability’. These minimum viable capabilities, through incremental upgrades, can then be improved and advanced through innovation to maintain strategic military advantage”.

Building on this, Defence will also embrace innovation challenges with an emphasis on rapidly accelerating the capability through the Technology Readiness Level (TRL), with these innovation challenges focusing on “how quickly can that technology be pulled through to TRL 8/9 and be placed into the hands of the warfighter”.

This is supported by Defence increasing its focus on a number of key areas to help foster a culture of innovation in the defence industrial base, namely:

  • Prioritising areas of innovation.
  • Identifying and articulating priorities to industry.
  • Introducing disruption.
  • Rapidly transitioning an innovative or disruptive technology into service.
  • Engaging with risk.

This approach will be supported by enhanced mechanisms for integrating Defence’s own innovation ecosystem and that of defence industry, with the broader national innovation and science and technology ecosystem to leverage the economies of scale and dual use and cross-pollination applications of technologies that may provide Australian warfighters with a critical tactical or strategic advantage.

Defence will work with other government agencies to support Australian industry to protect their IP, including understanding defence-related export conditions.

Final thoughts

Australians are going to be asked to accept a number of uncomfortable realities in coming years. First and foremost, we will have to accept that while the world is increasingly becoming “multipolar”, the Indo-Pacific, in particular, is rapidly becoming the most hotly contested region in the world.

This has been underpinned by the emerging economic, political, and strategic might of powers like China, India, Pakistan, Thailand, Vietnam, and the established and re-emerging capability of both South Korea and Japan, in particular, are serving to create a hotbed of competition on our doorstep.

At the forefront of preserving Australian sovereignty in this era is a robust, resilient and competitive industrial base and economy, no longer dependent on a limited number of income streams, rather value add and export-oriented “homeland economics”, leveraging Australia’s natural and human competitive advantages can set us apart and secure our interests.

Second, both the Australian public and our policymakers will have to accept that without a period of considered effort, investment and reform, or as I like to colloquially refer to it, our rocky montage moment, current and future generations of Australians will be increasingly impoverished, living in a nation pushed around by the region’s now rising powers.

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch at This email address is being protected from spambots. You need JavaScript enabled to view it. or at This email address is being protected from spambots. You need JavaScript enabled to view it.

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