Industry alliance calls for more SME involvement in major projects

West Australian defence industry body, the Henderson Alliance, has called on the government to safeguard the involvement of small-to-medium-sized enterprises (SMEs) ahead of the upcoming SEA 5000 Future Frigates announcement.

Henderson Alliance chairman Rohan Green said the $35 billion project is a keystone project for developing Australia's defence industry capabilities.

"The very basis of our alliance’s existence is the belief that SMEs are critical to overall industry success and we offer primes significant delivery and risk management benefits," said Green.

"As SMEs we are prepared to invest in developing our business capabilities, train and retain quality staff and develop new execution processes and technologies – while continually introducing smarter productivity and reducing schedule and cost risks.

"SMEs provide 70 per cent of Australia’s non-government employment but job growth in small business has been horizontal for years while the top end of town has boomed – so now is a true opportunity to stimulate the SME sector."

While the alliance is complimentary of the commitments Australian SMEs have seen from all three SEA 5000 contenders BAE Systems, Fincantieri and Navantia there are concerns throughout the industry the supply chains of the primes will back out of these arrangements.

"Here is the chance for Australia to ensure the economic benefits of the new defence industry maximise sustainable job creation at the grass-roots level SME jobs are real jobs as they support families, careers and communities," Green said.

"We have been buoyed by the excellent local content commitments of the three primes but remain cautious they may be diluted if European supply chain providers speciously claim that prospective Australian partners are not quite ready.

“We know that the current minister won’t let this happen on his watch but given the acquisition works will go on for another decade or more, we feel there should be reserve enforcement powers for future ministers to fall back upon in the last resort."

The Henderson Alliance is calling for the Australian industry content (AIC) plan to be included in the main contract and regularly scrutinised.

"We believe the AIC Plan needs to be locked into the head contract and subjected to transparent ongoing scrutiny  with either a financial penalty or performance guarantee in the distant background to hopefully never be called upon," Green said.

"If this approach had been in place during the WA resources construction boom, the local economic outcomes would have been significantly higher."

A decision on the SEA 5000 project is expected before the end of June. BAE Systems has offered the Global Combat Ship-Australia, a variant of the UK Navy's Type 26 vessel, Fincantieri has put forward its FREMM design while Navantia has tendered the F-5000.

Industry alliance calls for more SME involvement in major projects
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