The Global Supply Chain (GSC) program from the DMO has come
ahead in leaps and bounds with the majority of international Primes now taking
part. Since the inception of the program in 2009, the program has seen $556
million worth of business completed.
The GSC program establishes agreements, deeds and associated
annexes, with major multinational defence companies to facilitate access to
opportunities for Australian industry to supply directly into each company
across its whole product range, as well as participate in the supply chains of
major sub-suppliers. The aim is to get smart Australian SMEs onto the world
stage in international programs from large primes.
The GSC Program funds the multinationals to establish staff
inside their organisations to act as the internal sponsor promoting Australian
industry into the business units of the company. These units aim to actively
seek out opportunities for Australian industry, train Australian industry in
the company’s purchasing practices and methods, and educate Australian industry
in the company’s requirements.
Currently there are seven multinational primes with active annexes:
- The Boeing Company implemented by its Office of Australian Industry Capability (OAIC) in 2007 ahead of the formal launch of the GSC Program in 2009.
- Raytheon implemented by its Industry Development Unit (IDU) who joined the program in 2009.
- Thales Australia implemented by its Industry Engagement Unit (IEU) who joined the program in 2009.
- Northrop Grumman implemented by its Australian Collaboration Team (ACT) joined the program in 2011.
- Lockheed Martin implemented by its Office of Australian Industrial Participation (OAIP) who joined the program in 2011.
- BAE Systems implemented by its Global Access Program (GAP) who joined the program in 2012.
- Finmeccanica implemented by its Finmeccanica Global Sourcing Cell – Australia (FGSC-A) who joined the program in 2012.
Each of the companies has had successes in the program that aims to have a truly collaborative approach. Thus far, the GSC program has seen 67 companies sign 267 contracts, according to DMO’s Brendhan Egan, Director General of the Australian Military Sales Office (AMSO). The funding for the program comes from two streams: a long-term 10-year strategic fund worth $59.9 million and from individual projects. At the time of writing, the DMO had spent $31 million on the program since its inception with the funds roughly split 50:50 between to the two funding sources.
Facts and figures
The GSC program is delivering real value to the Australian
defence supply industry and to companies like Boeing, according to a statement
from the company. Over the past five years, the OAIC has delivered some 426
bidding opportunities for Australian SMEs and has facilitated contracts worth
more than $285 million. Boeing is currently engaged with over 100 SMEs through
their OAIC. A lot of the GSC program funding for Boeing came from existing
provisions under FMS contracts for the Super Hornets, C-17s, Romeo helicopters
and Chinooks, Egan said.
Raytheon’s IDU has supported close to 150 Australian
companies that are engaged in 120 opportunities across 27 of Raytheon Company’s
program areas. This list of IDU achievements includes more than 70 contracts
totalling $250 million awarded to Australian SMEs as part of Raytheon’s global
supply chain.
As an example of the work carried out by the IDU, Micreo
Ltd, a Brisbane based high technology firm, was chosen by Raytheon’s Space and
Airborne Systems business to be part of the company’s global supply chain for
its proven ALR67(V)3 radar warning receiver.
As part of this agreement, Micreo manages the production of
radio frequency modules used as components for Raytheon’s ALR67(V)3 radar
warning receivers currently fitted on Australia’s fleet of Super Hornets.
Raytheon’s support to Micreo has included execution of a Raytheon Six Sigma™
project to enhance the SME’s skills and streamline its processes.
Of the seven companies involved in the GSC program, only
Thales Australia declined to give any specific information about the
performance of their company through the program citing confidentiality
reasons. None of the other companies involved showed such reticence.
“While we cannot give out names and capabilities of the companies
we are currently engaged with, we can say that Thales is always on
the lookout for innovative companies who can not only supply our bids and
programs on a value for money basis, but who can also become an integral
partner in the solutions we provide to our customers worldwide,” according to a
statement from the company.
For Lockheed Martin, the biggest win so far for the program
has been a $6 million contract with Ferra for MH60-R wing pylons. Not only will
Ferra produce parts for the 24 helicopters Australia will buy, they will also
manufacture parts for helicopters being built for the US Navy. The company
confirmed in July 2013 the MH-60R contract was a key driver in a decision to
expand its international network, by opening an aerospace manufacturing
operation in Oklahoma, in the US. The Oklahoma facility will complement other
Ferra facilities overseas, including an assembly plant in Los Angeles, stock
services in Seattle, and a machine shop in Bangalore, India BAE Systems GAP activities have resulted in more than 80
RFIs, RFQs and RFTs being issued to over 40 different Australian companies,
across a breadth of product areas, according to BAE Systems Steve Wynd, General
Manager Global Access Program. The company has signed contracts across the
breadth of their business from vehicles to aircraft.
“The Global Access Program has been raising the profile of
Australian companies across the global procurement community,” Wynd explained
to ADM. “This has identified companies that are able to solve key supply chain
challenges within the US and the UK, adding value to our global products. There are other small to medium enterprises
that have novel and world leading products and capabilities that we are
considering for integration into our future solutions.”
Finmeccanica is the newest player in the program but has
already started engaging with a number of companies and has run education trips
for some SMEs to their Italian facilities to get a sense of the opportunities
available. Recently Finmeccanica supported Australian SMEs who travelled to Le
Bourget Air Show as part of the Team Defence Australia industry delegation. In
addition to the 17 company visits conducted by Finmeccanica since joining the
program, each of the Australian SMEs that attended Le Bourget were formally
introduced to Finmeccanica procurement executives and staff to discuss capabilities and
engagement strategies for potential opportunities.
Making connections
The DMO is also keen to get some alignment between their
various industry programs. New Head of Defence Industry Division Michelle
Kelly highlighted how the Australian Industry Capability (AIC) plans, Priority
Industry Capability (PICs) and the GSC programs fit together.
“What we’re trying to do is link all of these programs
together in a more targeted way,” Kelly explained to ADM. “A key focus is to
encourage and highlight Australian industry innovation and to see those
companies and products succeed on the world stage.
“We acknowledge that sometimes that innovation will be in
areas we’ve already identified as PICs, while sometimes it will be in other
domains. Where it does support a PIC we are particularly keen to feed that back into the GSC program to promote and better
utilise these niche Australian capabilities.”
The current GSC framework is under review, now that is has
been four years since the program began. DMO is also looking at how it can best
make use of the global Australian Defence attaché network as well engaging more
effectively with foreign Defence attaches in Australia, through AMSO. There was
also an acknowledgment that it was hard to get definite figures about some
programs that blurred the lines between the various DMO programs but the issue
has been raised in six monthly review meetings of the GSC deed holders and the
DMO where both parties are actively seeking to remedy this.
“Like many programs, there are big returns in the early
days, and there needs to be a refocusing to make sure that the program is still
relevant and making the most of its resources and opportunities into the
future,” Kelly said. “That’s what this review is about.”
Both Kelly and Egan were keen to point out that GSC work
with the primes was not limited to just their Defence business or to programs
involving the ADF as a customer. It was open to wider interests within the
international companies such as mining, resources, security, aviation and any
market where an Australian SME was able to offer a point of difference.