Albanese government unveils biggest Defence delivery reforms to fix late, over-budget projects

The Albanese government has released its Rebuilding Defence Capability report, setting out a sweeping reset of how Defence develops, acquires and sustains capability projects as it moves to close what officials describe as a widening gap between strategic need and what’s actually being delivered to the Australian Defence Force.

The reforms come on the back of record spending, with the government confirming that additional investment flowing from the 2024 and 2026 National Defence Strategies now total $117 billion over the decade to 2035–36.

That scale of investment, the government argued, brings with it a corresponding obligation to ensure Defence has the structures and discipline to deliver the right projects on time, within scope and on budget, something it concedes has too often not been the case.

The Rebuilding Defence Capability report rests on three central changes:

• The creation of a new Defence Delivery Agency, a dedicated delivery organisation headed by a National Armaments director, which will consolidate the Capability Acquisition and Sustainment Group, the Guided Weapons and Explosive Ordnance Group, and the Naval Shipbuilding and Sustainment Group under one roof.
• Consolidation of capability development functions across land, air, maritime, space and cyber domains under the vice chief of the Defence Force, aimed at keeping force design integrated rather than siloed by service.
• A redesigned capability system intended to sharpen accountabilities and restore decision-making discipline, underpinned by stronger contestability and tighter cost estimation and assurance across the new Defence Delivery Agency, the Department of Defence and the Department of Finance.

Deputy Prime Minister Richard Marles said the changes were about building an organisation fit for the strategic environment Australia now faces: “These reforms are about building a more agile, disciplined and strategically focused Defence organisation, one that is capable of responding to the strategic challenges we face and safeguarding Australia’s security into the future.”

The Defence Delivery Group was formally established on 1 July 2026, tasked with giving government independent, evidence-based advice on project delivery; advice the government said has been conspicuously absent in the past. Nadine Williams has been appointed interim National Armaments director to steer that transition.

Minister for Defence Industry Pat Conroy said the report and the DIDS were designed to work hand in glove: “The Rebuilding Defence Capability report and the 2026 Defence Industry Development Strategy will deepen and strengthen our partnership with Australian industry. Together, these two documents lay out a new era for Defence – a sharper and more integrated enterprise, with defence industry as close partners in the mission to protect Australians and our way of life.”

The report maps out a 12-month implementation pathway that will see the Defence Delivery Group evolve into the fully-fledged Defence Delivery Agency on 1 July 2027, by which point it’s intended to have the resources, accountabilities and operational autonomy to function as an independent agency. The government has stressed the changeover will be staged and deliberate to protect continuity on projects already underway while the new system beds in.

Officials said the reforms will also reshape how Defence engages with industry, with the National Armaments director leading a shift towards more collaborative, transparent and performance-based partnerships. For defence businesses, that’s expected to translate into clearer visibility of Defence’s future demand signals, priorities and overall direction – feeding directly into the parallel 2026 Defence Industry Development Strategy released alongside the report.

The Deputy Prime Minister said: “We are rebuilding a defence capability system that is disciplined, accountable and focused on outcomes. This is what Australia’s security environment demands, and what the Australian people expect.”

These changes were echoed by Minister Conroy, who added: “For too long, Defence has struggled to deliver major capability projects on time and on budget. These reforms are about fixing that. They’re the biggest in 50 years. We are putting in place clear accountabilities and improving leadership performance so Australians can have confidence that Defence will deliver what the National Defence Strategy demands.”

The government said the combined effect of the Rebuilding Defence Capability report and the Defence Industry Development Strategy will be a more integrated, resilient Defence enterprise, one better placed to accelerate capability delivery and respond to emerging threats in the national interest.

The full Rebuilding Defence Capability report is available here, and the full 2026 Defence Industry Development Strategy is available here.