Introduction to the defence industry
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It’s about the long term
Think about Defence as a market place rather than just one ‘client’.
The defence industry must be considered with the long term in mind - it’s an industry that might not be suitable for every business. However, there is a wealth of information available to help businesses assess the alignment between their capabilities, Defence procurement priorities and general market opportunities.
It can take several years for new and existing businesses to establish themselves in the defence industry and position themselves within supply chains and on Defence’s procurement panels. The development of necessary service offerings, skilling, tooling, accreditations and partnerships will take time, planning and investment.
The Government is encouraging a national approach to developing Australia’s defence industry. The CDIC and Defence are partnering with state and territory governments, industry associations (such as the Australian Industry Group Defence Council and the Australian Industry Defence Network), and defence major contractors.
The CDIC is also forming partnerships with major Defence projects, such as naval shipbuilding, to help standardise the way in which Defence projects engage with Australian industry.
Defence supply chains
Defence procures most of its major capabilities through global defence companies, known as prime contractors. Primes rely on their extensive domestic and international supply chains to build, deliver and sustain Defence projects.
Many businesses do not work directly with Defence, but are in the supply chains of these major defence companies providing services such as software development, precision manufacturing and specialist engineering.
Most of the new opportunities for Australian companies will exist in domestic supply chains. There are many tiers in a domestic supply chain, creating a network of subcontractors and their associated supply chains.
The involvement of Australian industry in supply chains is promoted through the Australian Industry Capability (AIC) Program. Under the AIC program, prime contractors wishing to compete for large Defence contracts are required to identify Australian suppliers.
Selling to Defence
Defence is the largest procurement agency in the Commonwealth and is responsible for some of Australia’s most complex procurement activities.
While there are direct supply opportunities to Defence, most opportunities are in the supply chains of the prime defence contractors. It is important to understand which area your products and 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, such as vehicles and submarines.
- Sustainment procurements relate to ongoing servicing, maintenance, upkeep and repair of current Defence capabilities and platforms.
- Commercial procurements covers a range of goods and services such as health services, logistics services, training, travel, information technology, stationery and personal protective equipment.
- Estate management and infrastructure services refers to the maintenance of Defence facilities, establishments and training areas, and a range of construction services.
- Research and innovation – Defence’s innovation programs seek research and technological innovations that will provide an advantage to Defence capability.
- Supply chain participation – for the majority of businesses, most commercial opportunities will be in the supply chains of the prime contractors and other major Defence service contractors.
Defence acquires its goods and services through standard Commonwealth procurement arrangements, such as AusTender, standing offers and procurement panels. Defence publishes an Annual Procurement Plan which lists significant planned procurements.
A number of business areas in Defence publish information about how to do business with them, including:
- Capability Acquisition and Sustainment Group (CASG)
- Chief Information Officer Group (CIOG)
- Defence Estate and Infrastructure Group (E&IG)
The Defence Portfolio Budget Statements (PBS) provide a detailed breakdown of how the budget will be spent by Defence and are an excellent source of information for businesses looking to understand upcoming business opportunities.
AusTender publishes Australian Government business opportunities, annual procurement plans, standing offer notices and multi-use lists. It also contains information about previously awarded contracts, making it a strong market research and analysis tool for businesses assessing the defence market.
A standing offer is an arrangement setting out the terms and conditions, including a basis for pricing, under which a supplier agrees to supply specified goods and services to a relevant entity for a specified period. Defence has established standing offers to provide a convenient, flexible, streamlined and efficient process for acquiring a range of goods and services.
- Defence Procurement Policy Manual, which Defence must comply with when undertaking procurements.
Research and innovation
Opportunities can be found through the two key innovation programs: the Defence Innovation Hub and the Next Generation Technologies Fund. These programs seek cutting-edge research ideas and technology innovations that meet the published annual investment priorities.
Defence publishes its innovation and research priorities every year, and accepts proposals all year round. From time to time, the Innovation Hub seeks specific technologies through its Special Notice program.
These two programs are accessed through the Defence Innovation Portal hosted by the CDIC.