Strategic initiatives

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Defence Industry Policy Division

The Defence Industry Policy Division informs and improves how Defence approaches industry engagement and innovation. The division has responsibility for effective implementation of the Government's approach to Defence industry policy, creation of a strategy-led program of industry engagement and innovation, and the CDIC.

The figure below summarises the defence industry policy agenda.

The image shows the Strategic Direction covers the 2016 Defence White Paper, the 2017 Foreign Policy White Paper, Defence Capability and Industry Policy. Defence Capability covers the 2016 Integrated Investment Program and the 2016 Defence Industry Policy Statement.Industry Policy covers the Australian Industry Capability Program, Naval Shipbuilding Plan, Defence Industrial Capability Plan (forthcoming)and the Defence Skilling and STEM Strategy (forthcoming).


Recognising industry as a Fundamental Input to Capability

Recognising industry as a Fundamental Input to Capability reflects the importance of industry in Defence capability planning and provides industry with an earlier and stronger voice across the Defence Capability Life Cycle. Defence capability managers are now required to consider the resilience and capacity of industry as capability plans are developed. The CDIC will help bridge the gap between Defence and industry by:

  • identifying strategic industry capability gaps and funding defence industry skilling, growth and development projects
  • guiding defence industry capability and the development of a sustainable defence sector
  • providing advice and analysis to Defence of the capabilities within Australia’s industrial base
  • supporting engagement between Defence and industry in the formal capability development process, by matching Australian industry capabilities with Defence requirements
  • building Australian industry’s capability and competitiveness to ensure Defence’s needs are met, by providing support to individual businesses and the sector as a whole.

Defence Capability Life Cycle and Smart Buyer

Defence has reformed its Capability Life Cycle (CLC) to ensure that Australian industry contributes more directly, earlier, and throughout decision-making about capability. Smart Buyer is an integral part of the new CLC. It enables tailoring of the way in which projects pass through the CLC based on key project risks.

A naval shipbuilding industry

The Naval Shipbuilding Plan, released in May 2017, outlines the Government’s vision for the Australian naval shipbuilding enterprise and the significant investment required in coming decades.

The Australian Government is laying the foundations for an Australia-wide naval shipbuilding enterprise, ending the boom-bust cycle that has afflicted the Australian naval shipbuilding and sustainment industry. This will provide certainty to local businesses and shipbuilding workers.

The Government’s vision to maximise Australian industry involvement in the naval shipbuilding enterprise will see Australian industry actively involved in domestic and global supply chains, and workforce development and skilling initiatives.

The CDIC is at the heart of the new collaborative approach required to grow and sustain Australia’s defence industrial base, including the naval shipbuilding industry, and will have a key role in driving the industry’s long-term development and capacity.

Sovereign industrial capabilities

Sovereign industrial capabilities are those capabilities that are so important they must remain within Australia’s exclusive control to ensure uninterrupted access. The CDIC will work with Defence to identify the sovereign capabilities required to be maintained and supported in Australia.

A Sovereign Industrial Capability Assessment Framework will replace the existing Priority and Strategic Industry Capability policy. The sovereign industrial capabilities will be identified in the Defence Industrial Capability Plan, to be released in 2018.

Existing contracts and programs that support the current Priority and Strategic Industry Capability policy will continue until the transition to new sovereign industrial capabilities.

For updates, register for the Defence Industry and Innovation newsletter.

Defence Industrial Capability Plan

A Defence Industrial Capability Plan was recognised in the 2016 Defence White Paper and 2016 Defence Industry Policy Statement, and builds on the Naval Shipbuilding Plan released in 2017.

The plan will identify the sovereign industrial capabilities that are required to be maintained and supported in Australia and the industrial strategy to grow Australia’s defence industrial base over the next decade.

The Defence Industrial Capability Plan will be released in 2018.

For updates, register for the Defence Industry and Innovation newsletter.

Defence Export Strategy

The Defence Export Strategy, released in January 2018, builds on the Government’s defence industry policy by setting out a comprehensive system to plan, guide and measure defence export outcomes over the coming decade.

The Government recognises that Australian industry cannot sustain itself on the needs of the Australian Defence Force alone. New markets and opportunities to diversify are required to help unlock the full potential of Australian defence industry to grow, innovate, and support Defence’s future needs.

The strategy provides $20 million in additional annual funding from 2018-19 to support Australia’s defence exports. A new Australian Defence Export Office will be created within the Department of Defence to provide a focal point for defence exports and drive implementation of the strategy.

Defence Export Strategy cover

Global Supply Chain Program

The Global Supply Chain (GSC) Program involves working with multinational defence companies, or ‘primes’, to identify opportunities for Australian companies within their international supply chains. See Global Supply Chain Program.

Defence Industry Skilling and STEM

Over the next decade and beyond, demand will increase for Australian workers with trade, technical and science and technology skills to build and maintain Defence capabilities. Australian design, construction, integration, sustainment, services and support capabilities will all be critical.

The CDIC works with businesses to help improve business capabilities, including advice and funding for skills development for their existing workforce.

Defence runs initiatives that aim to expand the pool of skilled workers from which the defence industry is able to recruit, to enhance work and career pathways, and to address specific skills gaps within defence industry capability.

Initiatives include the following:

  • The long-term Defence Industry Skilling and STEM Strategy to help the Australian defence industry to have a workforce with the right skills to meet future capability requirements and support the delivery of the Integrated Investment Program.
  • The Naval Shipbuilding College scheduled to open in 2018, providing courses and retraining for individuals wanting to be part of the naval shipbuilding enterprise.
  • The Defence Engineering Internship Program and the School Pathways Programs, run as part of the Industry Skilling Program Enhancement initiative.
  • Adopting a more coordinated approach to investment between Defence, industry, state and territory governments and the research sector. This is critical to maximise the return on our investment in skilling our industry for the future.

Read more about Defence Industry Skilling and STEM Support.

Australian Industry Capability Program

The Australian Industry Capability (AIC) Program encourages involvement of Australian industry in supply chains. Under the program, prime contractors wishing to compete for Defence tenders over $20m are required to identify Australian suppliers to meet the needs of Defence contracts.

The AIC Program aims to:

  • provide opportunities for Australian companies to compete on merit for defence work within Australia and overseas
  • influence foreign prime contractors and original equipment manufacturers, including Australian subsidiaries, to deliver cost-effective support
  • facilitate transfer of technology and access to appropriate intellectual property rights
  • encourage investment in Australian industry.

Read more about the AIC Program on the Defence website.

Defence Industry Participation Policy

The Defence Industry Participation Policy will provide a policy framework for maximising Australian and local industry involvement across Defence materiel and non-materiel Defence procurement of $4 million and above.

The policy, which is expected to be released in mid-2018, will aim to ensure local companies in the vicinity of Defence bases, facilities and training areas are properly considered and provided the opportunity to compete and win work.

Three Local Defence Industry Capability Requirements pilot projects were announced in August 2017:

  • The Explosive Ordnance Logistics Reform Program, a $230 million project covering 12 defence sites.
  • The Shoalwater Bay Training Area Redevelopment, a $135 million substantial infrastructure upgrade project.
  • The Townsville Field Training Area Mid-Term Refresh, a $24 million project to ensure the training area is fit for purpose, safe and environmentally compliant.

In addition, a further three projects were announced as part of the redevelopment of Western Australian naval base HMAS Stirling, at around $367 million.

For updates, register for the Defence Industry and Innovation newsletter.

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