The wide-ranging review into the Centre for Defence Industry Capability (CDIC) has been released by government. It has recommended a series of changes aimed at boosting support for Australian defence businesses, according to Minister for Defence Linda Reynolds.

The review recommended strengthening of the alignment between Defence, defence industry and the CDIC by relocating it to the Department of Defence rather than resting in the Department of Industry, Science, Energy and Resources with Defence secondees.

The review, announced at the end of 2019, received strong industry feedback on how the CDIC’s services and operations could be improved, with more than 140 submissions and more than 50 interviews taken into consideration.

Minister Reynolds said a genuine partnership between Defence and industry was critical to ensuring our industrial base effectively supports Australia’s national security, as reinforced in the Defence Strategic Update 2020.

“Making it easier for industry to work with Defence to access opportunities in the defence sector, such as through the work of the CDIC, is essential in this endeavour,” Minister Reynolds said.

“This Government has faith in Australian businesses to help provide the technological advances and superior capability that Defence needs to protect Australia’s national interests.”

Among the key recommendations to be implemented is a scrapping of the 200-employee limit on businesses (Defence’s definition of an SME) being able to access the CDIC’s services, with the change set to increase opportunities for small businesses to win Defence work.

Businesses in regional Australia will also be given greater opportunities through an outreach program, while indigenous and veteran-owned small businesses will become a focus of the CDIC.

Minister for Defence Industry Melissa Price, said the review had provided an ideal opportunity to strengthen the CDIC at a time when businesses were dealing with the economic fallout out of the COVID-19 pandemic.

“Given the challenges thrown up by the COVID pandemic, it is more important than ever that we continue to develop new ways to support Australian defence industry,” Minister Price said.

“The CDIC has a valuable role to play in supporting small and medium sized businesses access Defence work and the review has identified a continuing need for the services provided by the CDIC.

“After almost four years in operation, the CDIC has shown its value in helping more SME businesses access opportunities in the defence sector.

“Implementing the review’s recommendations will ensure that the Centre continues connecting Defence and small business in a simpler, more cost-effective and outcomes-orientated way.

“In particular, aligning the CDIC more closely with Defence will build stronger stakeholder relationships that serve to maximise its value for building Defence capability.”

The Ministers confirmed they have accepted the key recommendations regarding the relocation of the CDIC and scrapping the employee limit to boost access to services.

This will provide more clarity for planning and support for industry.

One recommendation regarding Ministerial representation on the CDIC Advisory Board will not be supported.

The remaining recommendations have been accepted in principle.

The Department of Defence will examine the recommendations to provide formal advice to Government on their implementation.

Both Defence and the Department of Industry, Science, Energy and Resources provided support for the review of the CDIC’s role and future operating model.

Over the next six months, both departments will work through the review’s recommendations and implementation.

ADM Comment:

The much-anticipated review into the CDIC is now here. The next steps will be implementing the recommendations from it.

As the report itself notes, “business satisfaction levels with the CDIC’s business advisory and industry facilitation services are mixed. Satisfied clients typically attributed their contentment with the services to their overall experience with a ‘specific’ adviser or facilitator.

“Less satisfied clients cited inconsistency or relevance of advice provided, being generic and transactional in nature. The review also notes mixed feedback on the CDIC’s engagement and workshop offers.

“Some businesses praised them as informative and useful for networking, while others see them as one size fits all and not appropriately tailored to the different needs of our industrial base.

“The review notes that there is an increasing volume of training content offered by other entities such as industry associations and state and territory government agencies, which in some cases have overlapped with the CDIC’s offerings.”

The government has decided to go with the so called Option B when it comes to the structure of the CDIC, bringing into Defence but keeping access to the Department of Industry, Science, Energy and Resources grant system.

The other noteworthy recommendation is that of more engagement of industry bodies, particularly in regional areas.

“Evaluate outsourcing opportunities for select Defence business training and development to consider regionally based elements of industry groups/associations rather than consultancies or large companies,” the report states.

“In cooperation with Defence Science and Technology (DST)Group, and Strategic Policy and Intelligence (SP&I) Group, evaluate outsourcing opportunities for select innovation stewardship to consider whether organisations such as DMTC might provide the required responses and informed management of businesses seeking to enter Defence innovation programs.”

What this means for industry organisations such as AIDN, ADA, DTC etc remains to be seen but I expect that the overlap that many stakeholders raised in terms of services will be addressed.

As always, any review is only as good as its implementation. ADM will be keeping an eye and ear on how this process performs over the coming 6-12 months.

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