Local businesses will have the opportunity to secure up to $7.7 billion in contracts for major Defence infrastructure projects under a new pilot program.
Minister for Defence Marise Payne unveiled the Local Industry Capability Plan in the Northern Territory, which she said will allow increased access for NT companies to participate in improving Defence's capabilities over the next decade.
"I have recognised both the contribution local companies make to our defence capability and that we can, and should, do more to maximise those opportunities," Minister Payne said in Darwin.
The pilot projects will require tenderers bidding for major capital facilities projects to state clearly how they have engaged with local industry in providing their tendered solution, and how local industry will specifically be involved in delivering the work packages that underpin the project.
The framework will be piloted on three projects that will go to market in the next few months:
- The Explosive Ordnance Logistics Reform Program, an around $230 million project covering 12 defence sites;
- The Shoalwater Bay Training Area Redevelopment, an around $135 million substantial infrastructure upgrade project; and
- The Townsville Field Training Area Mid-Term Refresh, an around $24 million project to ensure the training area is fit for purpose, safe and environmentally compliant.
"This is fundamentally about ensuring that local companies in the vicinity of our Defence bases, facilities and training areas are properly considered and provided the opportunity to compete and win work," said Minister Payne.
The pilot projects will inform the development of a Defence Industry Participation Policy the Minister for Defence will release in the first half of 2018.
The policy will provide a more consistent approach to maximising Australian and local industry involvement in Defence procurement of $4 million and above, recognising that Defence procures a range of different equipment, services and support across many sectors of the Australian economy.
"I will consider further major capital facilities pilot projects while the policy is being developed," the minister said.
Minister Payne also discussed another initiative the government will be undertaking with hopes to maximise local industry involvement is to change the way that managing contractors sub-contract.
"At present, the typical arrangements are for sub-contracts to be based on ‘trade packages’," explained the minister.
"Defence has considered feedback from Northern Territory enterprises and will instead trial the use of smaller ‘work packages’ for the upcoming Larrakeyah Redevelopment and Naval Operations in the North projects."
Under this approach, buildings or work elements may be tendered separately, rather than by individual trade. It is expected that this initiative will provide greater opportunity to local industry in the territory.