The Commonwealth government “won’t be afraid to use a big stick” if defence primes do not meet their AIC obligations, Minister for Defence Industry Melissa Price has warned.
In an address to the annual Defence Connect Budget Lunch, Minister for Defence Industry Melissa Price reaffirmed the government is committed to supporting Australian industry capability (AIC) across acquisition and sustainment programs.
Minister Price stressed that it is “not enough” for global defence primes to comply with AIC objectives as a “box ticking exercise”, instead calling for a targeted approach to addressing local capability gaps.
“We have to keep focusing on the gaps and what it is that we need to build at home to keep our nation safe,” Minister Price said.
“And there is no cookie cutter approach to filling those gaps – it needs a full-court press of investing significantly in innovation, skilling and capability improvement.”
Minister Price acknowledged that given the evolving regional situation, the government may need to select a “sole source” for defence projects.
However, the minister warned that in such scenarios, primes would not get an “easy ride”.
“We are independently and forensically examining whether prime contractors are meeting their AIC contractual obligations. There are primes being audited as we speak,” she continued.
“We will take a carrot and stick approach to ensure there is AIC compliance across the board.”
Minister Price said she would “not be afraid to use the big stick” if primes fall short of their obligations.
This comes amid ongoing scrutiny over Naval Group’s management of the Future Submarines program, with Minister for Defence Peter Dutton recently flagging that the government would carefully monitor the prime’s progress before determining whether to proceed with the program.
“[Like] with any contract that the Commonwealth enters into, those people that have contracted with us know that we are going to hold them to the conditions of the contract and if there are penalties to pay or there's other action that we can take, that will happen,” he said.
“I want greater performance than what we’ve seen previously.”
Earlier this week, Naval Group appointed Lilian Brayle as the permanent replacement for Jean-Michel Billig as executive vice president of its Future Submarines program, effective from 31 May.
Brayle will take over from Laurent Espinasse, who has been serving as interim EVP.