• The first Boxer combat reconnaissance vehicle delivered to Army.
    The first Boxer combat reconnaissance vehicle delivered to Army. Defence

The Australian Industry & Defence Network (AIDN) has called for an urgent review of the Australian Industry Capability (AIC) program.

“The current AIC policy framework is well intentioned and has been warmly received by Australian industry,” Lester Sutton, National Board Chair of AIDN, said. “However, the AIC Program as implemented is not facilitating development of sovereign industry capability or business opportunities for the local Australian defence supply chain to the extent envisioned.

“Australian industry is now at risk of losing out on sovereign industry capability, billions of dollars of work, and thousands of local jobs.”

According to AIDN, its members are reporting ‘significant frustration’ in getting Australian industry involved to the extent envisioned across major new defence programs, including big ticket items like Sea 1000, Sea 5000, and Land 400 Phase 2.

The industry body is calling for a number of reforms, including: the creation of an assurance regime to monitor, review and audit contractual commitments; the improvement of enforcement mechanisms; and new incentives to lower the number of local subsidiaries.

“These are relatively straightforward changes, which we believe can and need to be implemented without delay,” Sutton said.

“AIDN members are grateful for the significant reform achieved in defence industry policy by the government over the last five years and fully support the drive to generate more local capability and corresponding jobs through the transfer of overseas technology. But we need to ensure the intent and extent of these good policy settings, particularly around AIC, are actually achieved.”

ADM Comment: AIDN’s statement comes as no surprise to those who spend a lot of time with the SME community. There have been rumblings for some time that the mega programs mentioned above may talk a good game but the details of contracts and cash flow are not what industry was led to believe. Indeed, on the shipbuilding front there is talk that both BAE Systems and Naval Group will be using their own supply chains almost in their entirety for the first one to three boats/ships in class.

Once again, no company was willing to speak on the record on the issue for fear of endangering their business. This is the value of bodies like AIDN to be able to raise the matter.

AIC plans are publicly available but the list does not reveal what happens when they are not followed. Indeed, many of the docs listed on there are so vague and lacking in detail that they are almost unhelpful.

There has yet to be a case, that has been made public at least, where a prime has been held to account for failing to comply with their AIC offering. But since the offerings are so vague, it would be hard to make a case, ADM suspects.

Either way, it will be interesting to see how government, Defence and primes respond to the AIDN claim.

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