Speaking to Defence Connect, Phillips identified some core sovereign capabilities, which he said really needed to be maintained.
"We have some real skills and capabilities in weapons systems, things like Nulka, and particularly in electronic warfare," he said. "They tend to be in those areas where we’ve got existing sovereign capabilities and we need to make sure that we protect and grow."
Phillips also said that due to the nature of sovereign capabilities, the sheer concept needed to be continually re-defined.
"They've got to evolve with both technology developments, capability requirements and the way the market and skills set shifts," he added. "Those are the areas that I think we've got to invest in."
In addition, Phillips said Australia must look at sovereign capabilities in a slightly broader context.
"We need the capabilities in Australia to be able to deliver complex programs," he said. "This is … a sovereign capability in having the ability to deliver strong program management supply chain capability [and] the capabilities to draw in other industry participants to work in collaboration.
"There is both a focus on the technical capabilities that we want to sustain but, actually, I think it's slightly broader than that.
"We [could] develop a skill base that just allows us to do complex program management of which there may be niche capabilities within that but, actually, I think there's a more holistic level that we need to make sure we establish, too."