Op-Ed: Five pillars approach to support defence industry

From the moment it was established, the Defence Industry portfolio had a crystal clear focus.

It was to deliver world-class capability for our Defence Force, export our Aussie ingenuity abroad, broaden the horizons of Australia’s small and medium businesses – and create thousands of Australian jobs in the process.

In June 2019 I was honoured to be asked to take the reins to ensure our Defence programs were delivering for the Australian defence industry.

It has been an extremely rewarding experience and has made me very proud knowing my primary responsibility is to not only deliver for Australian industry, but to ensure the men and women of the Australian Defence Force have what they need to keep Australians safe.

Soon after taking on the role, I embarked on what I called my “100-Day Review”.

This was about identifying the areas in the Defence Industry portfolio that our Government needed to address to deliver on our long-term plan to create a truly sovereign defence industry.

Most in industry would know that my unwavering focus has been to deliver greater support for small business, both in Defence and in industry.

We must also recognise, though, that we need international prime contractors in our defence industry and must develop partnerships with them to deliver major Defence programs.

This is so the men and women of the Australian Defence Force, who are entrusted to protect Australia and Australians, have the best capability on offer. This cannot be compromised.

We also need to strike the right balance to ensure these large companies comply with the rules set by our Government and deliver on contractual obligations to help us deliver a stronger defence industry.

This means transferring intellectual property from overseas to Australia, investing in the Australian economy, creating new Australian jobs, opening long-term opportunities for Australia’s small and medium businesses and developing new Aussie-know-how and know-why for our workforce.

Over the decade ahead and through the Morrison Government’s ambitious $270 billion investment in Defence capability, we will achieve a truly sovereign defence industry.

This has all culminated in a new ‘five pillars’ approach to supporting defence industry:

1. A new and enhanced Australian Industry Capability (AIC) contractual framework
2. An independent AIC Plan Audit Program
3. Commonwealth Procurement Rules (CPR) guidelines update
4. Centre for Defence Industry Capability (CDIC) Review and its implementation
5. Australian Standard for Defence Contracting (ASDEFCON) Review

These five pillars encapsulate my vision and approach to changing the way we support and do business with defence industry.

The first pillar, the creation of the new and enhanced AIC contractual framework, involves strengthening core AIC commitments and significantly expanding AIC provisions in contracts.

The second pillar, the establishment of the Independent AIC Plan Audit Program, is to provide guaranteed protections for the Australian taxpayer and our small and medium businesses in defence industry.

The audit program is a targeted program and the tool we will use to ensure major Defence companies are meeting their AIC obligations.

The third pillar was the significant update to the CPR guidelines aimed at better supporting Australian businesses.

For procurements above $4 million, the guidelines now define AIC and sovereign capability as an economic benefit to be assessed as part of the value for money consideration in the CPRs.

Defence has started to roll out more effective guidance to its tender evaluators with respect to AIC.

It will amend its procurement templates to strengthen the application of our Government’s AIC policy and will develop AIC-specific training for Defence tender evaluators.

The fourth pillar, the review of the CDIC, will now turn to ensuring we implement its recommendations to provide more tailored and enhanced support to Australian businesses.

Given the challenges thrown up by the COVID-19 pandemic, it is more important than ever that we continue to develop new ways to support the Australian defence industry.

After almost four years in operation, the CDIC has shown its value in helping more small and medium sized businesses access opportunities in the defence sector.

Implementing the review’s recommendations will ensure that the CDIC continues to connect Defence and small business in a simpler, more cost-effective and more outcomes-oriented way.

The fifth and final pillar is the overhaul and review into ASDEFCON.

I will oversee this review, which will aim to simplify and streamline contracting and subcontracting templates and remove unnecessary complexities that put unnecessary pressures on Australian businesses.

The Terms of Reference to remove the barriers within ASDEFCON, and the consultation process, will be finalised and released in November.

These five pillars are the culmination of a substantial change to how we do business with industry.

We are placing small business front and centre of Defence decision-making.

We are going to provide enhanced and more tailored support to Australian businesses.

And we will cut red-tape, processing times and costs to businesses who contract with Defence.

I am here to support Australian businesses, deliver a sovereign defence industry and ensure the men and women of the ADF have what they need to keep Australians safe.

Our Government will continue to deliver on this commitment.