Minister for Defence Industry Melissa Price appears to have rejected AIDN’s call for an urgent review of the Australian Industry Capability (AIC) program.
The peak industry body made the call last week. According to AIDN, its members are reporting ‘significant frustration’ in getting Australian industry involved to the extent envisioned across major new defence programs such as Sea 1000, Sea 5000, and Land 400 Phase 2.
“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,” AIDN National Board Chair Lestor Sutton said.
However, in response to a question asked during the unveiling of 3D printing technology for RAN’s patrol boats in Darwin last week, Minister Price rejected AIDN’s criticism.
“I don't agree with that. I don’t agree with that at all, and in fact that's not my experience,” Minister Price said. “As I said at the outset, every day I'm coming across new participants in our defence industry supply chain. So, I don't accept that at all.”
Minister Price then acknowledged that the federal government needed to do more to pull local suppliers into major programs.
“We actually need to make sure we're identifying those companies who've got capability, and often they don't know they've got capability,” Minister Price said. “So rather than waiting for them to walk through the door we, as the Federal Government, together with state and territory governments, have actually got to drag these companies through the door to make them realise that there are enormous opportunities across naval shipbuilding but also on Land 400.”
In response to a question over whether Naval Group is preferencing French suppliers over Australian companies for the Attack class submarine build, Minister Price appeared to reference Rheinmetall instead.
“In recent weeks, defence suppliers have accused Naval Group… of selecting other French companies for lucrative contracts,” a journalist said. “Are Aussie contractors missing out?”
“No, that is not my experience at all, and in fact, every day I'm coming across new defence industry players that are coming into our supply chain, not just with respect to shipbuilding but with respect to all the different Land 400 projects as well,” Minister Price responded. “I mean, five or six weeks ago I announced another 11 contracts with Rheinmetall.”
Earlier this week it was announced that Naval Group signed Babcock International for the design of the weapon discharge system for the Attack class.
ADM Comment: The Minister’s comments are in line with the Government’s stance since the release of the 2016 White Paper and partner documents. In a nutshell; we’re doing it but it takes time.
As ADM as pointed out in previous articles, the AIC plans that are publicly released are vague and success is a relatively low bar with very little metrics behind them. It’s easy to reach the goal and tick the box when it’s a moving feast with no concrete numbers.
News this week that the giant integrated C2 program for the ADF under JP9111 has not seen one Australian company even get a look in is another example of the rhetoric not matching up with action. Surely if sovereignty is aim of government policy, this would be a perfect chance to grow a capability in country? There were Australian companies in the mix for this program. ADM understands that the usual suspects in terms of large international primes are in the mix and the program office has yet to conduct the formal debrief on the choice.
“But they have invited us to a workshop where they can still access our IP,” one industry source close to the program quipped on the condition of anonymity.
Therein lies the other conundrum; no one is willing to bite the hand that feeds them by openly speaking about the issues facing Australian industry - about the dreaded O or Q words; offsets or quotas.
Defence is not a level playing field internationally. The majority of our Five-Eyes partners have varying levels of offset programs, either formally or informally, and there are a number of respected partners in this space that also have much tighter management of offsets and preference for their home markets.
Minister Price confirmed this week to ADM that both the CDIC and Defence Export Control bodies are being reviewed (keep an eye out for the From the Source interview with her in the Top 40 Defence Contractors/Top 20 SMEs in our December 2019/January 2020 edition) to make sure they are fit for purpose and delivering what needs to be done in a timely and efficient way.
Perhaps it is time to review more than just these two bodies when it comes to Australian Industry Capability that is teetering on the being of once again being Australian Industry Content – low value, simple and low technology. We can do more and be better.