This page provides basic information for companies who are not familiar with Defence or the defence industry sector.
On this page:
Why Australian industry is important to Defence
The Australian defence industry includes all businesses and organisations that provide products or services or are developing products or services that have a specific application for Defence. In total, there are around 25,000 people employed in the industry, with over 3,000 SMEs operating in the defence marketplace (SMEs are typically defined as organisations with less than 200 employees).
Industry is a fundamental input into capability. Australian businesses, partnerships and academic organisations — micro, small, medium and large — are essential to delivering operational capabilities (such as ships, land vehicles and aircraft) and support functions (logistics, ICT, health, fuel & energy, infrastructure supply and maintenance).
Defence has set out its requirements and approach to working with Australian industry in three publications released in early 2016:
- The 2016 Defence White Paper sets the direction for a significant capability modernisation program, which offers exciting new challenges for Australian defence industry.
- The Integrated Investment Program outlines Defence investment of around $195 billion and provides industry with the certainty to invest in people and infrastructure.
- The Defence Industry Policy Statement provides the foundation to take the partnerships between Defence and industry to new levels of cooperation, with a focus on stronger, more strategic partnerships and closer alignment between industry investment and Defence capability needs.
Overview of the defence market
The defence market is made up of a broad industry base dominated by global defence companies known as ‘prime’ contractors and their extensive supply chains accounting for around 50% of employment in the industry. This provides a wealth of opportunity for innovative and capable Australian companies.
If you are looking to enter the defence market, you will need to understand upcoming Defence projects, who the prime tenderers are likely to be and their future requirements.
SMEs can find opportunities to work with the prime contractors through the Australian Industry Capability (AIC) program. The AIC program is a mandatory requirement for Defence procurements when the:
- maximum anticipated value exceeds AU$20 million, and/or
- procurement impacts on a defence industry capability, regardless of value.
Prime contractors also provide access to international opportunities under the Global Supply Chain program.
About Defence procurement
Defence is the largest procurement agency in the Commonwealth and is responsible for some of Australia’s most complex procurement activities. Recent changes to the Commonwealth Procurement Rules (CPRs) include providing more information than was previously required. The changes came into effect on 1 March 2017. The new rules can be found on the Department of Finance website.
While a limited number of direct supply opportunities to Defence exist, most opportunities are in the supply chains of primes. It is important to understand which area your products and/or services fit so that you can find the right opportunity for your organisation.
- Acquisition procurements require goods and services that can be integrated into Defence platforms or used by Defence personnel on operations. Primes are engaged by Defence on long-term contracts with possible sub-contracting opportunities for businesses.
- Sustainment procurements relate to ongoing servicing, maintenance, upkeep and repair of current Defence capabilities and platforms.
- Commercial procurement – covers a range of non-materiel goods and services provided to Defence such as health services, logistics services, training, travel, information technology, stationery and personal protective equipment. Non-materiel goods and services are typically procured via an open tender process or through a Standing Offer arrangements.
- Procurement of Defence estate management and infrastructure services – refers to the maintenance of Defence facilities, establishments and training areas, and a range of construction services. Prime contractors are engaged by Defence to provide these services. There are opportunities for business to be engaged directly by the Prime contractors to undertake particular Defence estate and infrastructure related services.
- Innovative technology procurements – Defence seeks innovation proposals aligned with the six Defence capability streams identified in the Integrated Investment Program. More information about Defence’s approach to supporting innovation from Australian industry is in the Defence Innovation Portal.
Are you ready to work with Defence?
Working with defence can be complex and the defence market can be difficult and costly to enter. To work with Defence, companies will often need:
- an appropriate quality assurance program (e.g. ISO9001 certification)
- a history of supply performance (on schedule, on budget and to specifications)
- a broad customer base which demonstrates supply capacity
- a broad supplier base to ensure supply continuity
- ownership of Intellectual Property or authorised re-seller rights with authority to offer Original Equipment Manufacturers warranty
- compliance with necessary security requirements
- compliance with relevant legislation and codes of conduct.
Defence encourages Indigenous businesses to apply for contracting opportunities with Defence. The Australian Government has an Indigenous Procurement Policy which focuses effort to drive improvements in Indigenous economic development and Indigenous employment. More information on Indigenous procurement is available through the Defence Procurement Policy Manual.
Our business advisers can assist businesses navigate the defence marketplace and identify domestic opportunities to work with prime contractors or Defence, or facilitate international and export opportunities.
Advisers can also assist Australian businesses to connect with other AusIndustry programs.