• AIC currently places an emphasis on capability over content.
    AIC currently places an emphasis on capability over content. Getty
  • Figure 1: the top 5 companies that received contracts and the relevant categories.
Graphs generated via Data Ventures
    Figure 1: the top 5 companies that received contracts and the relevant categories. Graphs generated via Data Ventures

If you saw the following list of priorities in an Australian Industry Capability (AIC) context, when would you place them along the timeline of Defence industry policy?

  1.      Significant investment in local facilities and plant
  2.      Significant employment of Australian citizens
  3.      Successful participation in major Defence contracts
  4.      Significant levels of R&D in Australia including developing indigenous intellectual property
  5.      Demonstrated independence of action from overseas parents, including through exports from Australia
  6.      Nurturing Australia’s small to medium enterprises

If you guessed former Minister for Defence Industry, Science and Personnel Bronwyn Bishop in 1997, you have an excellent memory.

For the better part of two decades, government (and by extension the Department of Defence) have blown hot and cold on Australian Defence industry and how best to treat it. Over the years it has been treated with passing interest, barely concealed contempt, outright support, and almost cheerleader-like enthusiasm depending on the government of the day.

Right now there is an emphasis on capability (knowledge transfer) rather than content (stuff); but there is no coherent approach on how to measure this. When AIC is spoken of, what does the ‘C’ refer to; capability or content or, more ideally, both?

And to further muddy the waters, Defence Secretary Greg Moriarty said yesterday at Senate Estimates said he uses the terms “interchangeably”.

The current iteration of thinking is somewhere in the middle of that spectrum. Working from the most recent suite of policy documents released in 2016 around the Defence White Paper, the Integrated Investment Program and Defence Industry Policy Statement that were later joined by the Defence Export Strategy and the Naval Shipbuilding Plan there is a lot of policy guidance on what should be happening. But is it?

Big data

A new resource from Data Ventures lets the public access a wide range of Austender data in a more user friendly way.

For example, in calendar year 2019 CASG executed 10,466 contracts worth $12.32 billion. They also had 1,625 contract amendments with $6.7 billion during that same period; a total of 19.02 billion taxpayer dollars out the door. If you assume 261 workdays in a year (conservative but standard), that’s 40 contracts and six amendments every day. Not bad for an organisation that has gone from almost 7,000 to 5,000 people over the past few years, topped up by contractors. They have the task of delivering $200 billion worth of programs with essentially a frozen, if not decreasing, APS workforce.

Figure 1 below shows the top 5 companies that received contracts and the relevant categories they sit under. The data at this point shows the total value of the contract awarded in the calendar year but not how long the contract runs for. For example, some contracts spread across 3-5 years (in some cases, much longer) and as such does not reflect year on year actual spending under said contract.

Figure 1: the top 5 companies that received contracts and the relevant categories.
Graphs generated via Data Ventures
Figure 1: the top 5 companies that received contracts and the relevant categories. Graphs generated via Data Ventures

Apart from an eyebrow lift at the Austender term ‘war vehicles’, the list makes perfect sense when you think about the capabilities/programs each of these companies provide to the ADF. ASC for Collins sustainment, Rheinmetall for Land 121 vehicles, both BAE and Raytheon for a range of programs across multiple domains, and the inevitable reliance on US technology under FMS. Unsurprisingly, both BAE and Raytheon also have a large number of contracts for professional engineering services.

What does concern me is the lack of correlation with what these companies reported as turnover in the ADM Top 40 list released in January this year. Figure 2 refreshes the figures below.

Figure 2 Top 40 performance for 2019


Turnover $m









Did not report


BAE Systems Australia



Figures generated from Australian Defence Magazine’s Top 40 Defence Contractors Survey, released in December 2019/January 2020 edition

* The FMS account is not a reportable entity

There is an element, as mentioned earlier, that year on year spending is harder to capture under long term contracts. ADM asked ASC and BAE Systems Australia where the major discrepancy could have come from and confirmed that despite separating the ASC submarine and shipbuilding businesses in December 2018 between the two companies, Austender has holes when it comes to the contract transfer (novation) process. Rheinmetall confirmed that their Top 40 data came from their audited 2019 financial statement. Companies also use a range of contracting entities under different Australian Business Numbers (ABNs), a key tracking measure on Austender. The task of lining up apples with apples is a tough one.

The ADM Top 40 for example asks for turnover in a calendar year while Austender does not account for year on year spending, only the initial contract award and variations after that point. It is also worth noting that contract amendment data available on Data Ventures is eye opening; there are amendments greater than the value of the original contract.

But, as with every data set, the devil is in the detail.

Big numbers

However, all these contracts were dwarfed by the Next Generation Health Services tender awarded last year, the biggest single contract let by government in that period: $3.4 billion from Defence’s Joint Health Command to Bupa. The six-year contract will be delivering “a range of primary and specialist health services at both on-base health facilities and through a comprehensive network of off-base service providers.”

"Delivering health services to over 80,000 ADF members and reservists is a complex and important undertaking and after a rigorous procurement process, Bupa demonstrated it is able to deliver Defence’s requirements," then Minister for Defence Pyne said in announcing the win.

Health services meet all of Bishop’s rules without hesitation. It’s the platform and technology side of the house where the friction points arise on AIC. 

AIC test

Do the companies listed in Figure 1 meet Bishop’s rules? Mostly, except for the Foreign Military Sales cases. Numbers 1-4 are a strong yes for the rest of the field. Points 5 and 6 are harder to quantify. There is little hard data available on culture and SME flow downs once a contract is awarded. ‘Best endeavours’ on AIC are not a number that can be tracked. ADM’s Top 40 tries to capture part of this but the survey is voluntary, as are specific questions around these issue which are still relatively new. We’re not getting the full picture, and the picture we do have is blurry.

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