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Defence industry representatives have commended the Defence procurement overhaul recently announced by the Australian government, amid concerns about a continuing perceived lack of investment.
Acting Prime Minister and Defence Minister Richard Marles and Defence Industry Minister Pat Conroy recently announced the sweeping overhaul, including plans for a new agency designed to tighten project delivery, strengthen accountability and ensure Australia gets maximum value from its record defence investment.
The changes will reportedly see the creation of a stand-alone Defence Delivery Agency consolidating three of Defence’s capability-delivery groups: the Capability Acquisition and Sustainment Group, the Guided Weapons and Explosive Ordnance Group, and the Naval Shipbuilding and Sustainment Group.
Supporting this, a newly appointed National Armaments director will head the agency, advising government on acquisition strategies and overseeing the delivery of major capability and sustainment projects once approved by cabinet. By merging them under one structure with its own budget authority, the government aims to cut internal duplication, accelerate delivery schedules and strengthen the national defence industrial base.
Defence manufacturer NIOA, which recently signed a new support contract for through-life support of select Australian Defence Force in-service weapons and LAND 300 Lethality Program systems out to 2032, confirmed its enthusiasm to continue working with the announced changes.
“We welcome the Australian government’s announcement today to reform the procurement arm of Defence,” according to the company.
“Australia’s 2024 National Defence Strategy and Integrated Investment Program call for prioritising speed to capability.
“We commend the Deputy Prime Minister and Minister for Defence Richard Marles and the Minister for Defence Industry Pat Conroy on their decision and look forward to working in partnership with government to deliver on its priorities.”
Concerns have already been raised about a potential extra layer of bureaucracy resulting from the changes.
“There are risks of unintended consequences associated with the Defence Delivery Agency announced today. One is that it could increase the bureaucracy, if it simply involves placement of a national armaments director over the top of the existing acquisition groups. There are unlikely to be significant efficiencies across the new organisation and could even be inefficiencies if its independence from Defence requires duplication in support,” RAND Australia director Dr Andrew Dowse said.
“A bigger concern is the implication of this reorganisation on ‘speed to capability’. Greater independence from capability managers could lead to a reduced priority for schedule imperatives. Moreover, the time frame of 2027 does not reflect a sense of urgency.”
In tandem with the procurement overhaul, Defence will centralise its capability development functions, tightening how new proposals are assessed, prioritised and integrated across the ADF. The government said this will ensure investment decisions are aligned with an increasingly focused, integrated force design.
The reforms are expected to deliver stronger project and budget discipline, sharper cost estimation and improved oversight across the full life cycle of defence capability.
Maritime security specialist and defence analyst Jennifer Parker, a former Navy officer and expert associate at the National Security College - Australian National University, said the overhaul is a step in the right direction but does not likely represent a once-in-a-generation change.
“It is a significant structural change for the Department of Defence. Is it the most historic in the last 50 years or some of those terms? No, I don’t think that’s true,” she said, speaking to ABC Radio earlier this week.
“It is important in terms of improving our acquisition and sustainment process for the capabilities that we bring into Defence. So, I think it is a good decision.
“In fact, it actually builds on 20 years of review. So, there was a significant review in 2003 of Defence’s acquisition called the Kinnard review, and another one in 2008 called the Mortimer review. Each of these reviews actually recommended that an autonomous delivery agency was developed outside of Defence that reported to the minister. Now, governments around 2003 and 2008 didn’t support that, and it didn’t happen, but this is something that a lot of analysis said we should be doing for a couple of decades.
“Effectively, this group is aimed at streamlining acquisition and sustainment … It means that it can focus on becoming a delivery agency which supports Defence as a customer, which means it can operate much more like a commercial entity with flexibility in terms of contract management, flexibility in terms of budget management, and with the right skill sets of qualified project directors and cost assessors within it.
“Also means that direct reporting to government means that government is going to be more quickly informed if there is an issue with the management of a project.
“Will this structural change address it (cost blowouts)? It won’t address it in the whole entirety. It certainly will make it more effective to manage acquisition and sustainment. But to address cost blowouts in general, you also need to look at the cultural aspects.
“What is the culture you’re generating within that group or agency? What are the skill sets? So in fact, the subsequent reviews for the last 20 years looking at capability, acquisition and sustainment have always said you need to have people with the professional backgrounds that have industry experience in this organisation. So, we still need to address culture qualifications and processes to really make us more effective.”
Work on designing and standing up the Defence Delivery Agency will begin immediately, with extensive consultation planned across industry and other stakeholders, recognising the critical role of Australian industry in delivering sovereign capability.
Shadow minister for defence industry and defence personnel Melissa Price described the new changes as an ineffective “shuffling of deck chairs”.
“The Coalition stands ready to work with the government on any reform that genuinely speeds up procurement and gets capability into the hands of our warfighters faster,” she said.
“While Labor is patting themselves on the back and calling this the ’biggest reform in 50 years’, Australian defence industry is reeling from a lack of investment. A quite remarkable position given the Albanese government’s acknowledgement of the deteriorating strategic environment.
“This is simply shuffling the deck chairs. The Guided Weapons and Explosive Ordnance (GWEO) Enterprise and Naval Shipbuilding and Sustainment Group (NSSG) were spun out of the Capability Acquisition and Sustainment Group (CASG) under this government. Both are simply being returned under one roof. There is no new money on the table and this is simply Labor attempting to distract Australians from their poor management of defence procurement.
“Instead of playing games, Labor should be investing in Australian industry and ensuring our men and women in uniform have the equipment they need to keep us all safe.”
