During the recent Senates estimates, NXT senator Rex Patrick raised concerns of the Department of Defence's spending on consultants in recent years, with some being paid around $4,500 a day.
Gillis confirmed he and Defence have been working on a new tendering process to significantly reduce the daily rates of consultants within Defence.
"On behalf of all the groups in Defence, I've been working on a re-tendering process for major service providers, which will result in a significant reduction in the daily rates that we're paying," Gillis said.
"That should be announced in the next couple of months."
Patrick floated the idea of Defence introducing a similar model to that of the Attorney-General's Department, which, under its Legal Services Directions, imposes a daily rate of no more than $2,300 for junior counsel and no more than $3,500 for senior counsel.
Gillis said the set daily rates is a possibility that we may see under the new payment process.
"I agree with you, high rates are not sustainable, and we are trying to make sure that we buy the most effectively priced consultants and contractors that we can," he said.
"And we've gone through a very detailed and extensive process to ensure that we get best value for money."
The Defence portfolio's 2017-18 budgetary commitments said it will find savings through the reduction of consultants and contractors.
The budget reads, "The government recognises the importance of ensuring that every dollar is spent effectively and efficiently. To that end, the government will realise more than $300 million in savings over the next four years through efficiencies resulting from reductions in the numbers of consultants and contractors used in Defence."