Australia — Reforms to strengthen Australian Defence Industry

Min­is­ter for Defence Materiel Jason Clare today announced reforms to increase oppor­tu­ni­ties for the Aus­tralian indus­try to com­pete for Defence work.
Mr Clare announced reforms to broad­en and strength­en the Aus­tralian Indus­try Capa­bil­i­ty Pro­gram.
Cur­rent­ly Defence projects val­ued at more than $50 mil­lion require ten­der­ers to sub­mit an Aus­tralian Indus­try Capa­bil­i­ty Plan.
These plans out­line how a com­pa­ny intends to involve Aus­tralian indus­try in the project through things like the use of sub-con­trac­tors or involve­ment in glob­al sup­ply chains.
Mr Clare today announced the fol­low­ing reforms to Aus­tralian Indus­try Capa­bil­i­ty Plans:
The thresh­old for manda­to­ry AICPs will be reduced from $50 mil­lion to $20 mil­lion. This means around 27 addi­tion­al projects in the Defence Capa­bil­i­ty Plan will now require AICPs. It means more oppor­tu­ni­ties for Aus­tralian busi­ness­es. It will apply to all ten­ders from 1 July 2011.
The abil­i­ty of a com­pa­ny to arbi­trar­i­ly reduce the lev­el and type of work includ­ed in an AICP will be removed. Any Con­tract Change Pro­pos­al which alters the intent or out­come of a con­tract­ed ACIP will need to be approved by the Head of Com­mer­cial and Enabling Ser­vices DMO. Com­pa­nies that breach their AICP oblig­a­tions will be list­ed in the Defence Annu­al Report.

A new clause will be includ­ed in the Con­di­tions of Ten­der allow­ing a com­pa­ny to be exclud­ed from a ten­der if they have pre­vi­ous­ly failed to meet their AICP oblig­a­tions. 

AICP per­for­mance will be includ­ed in the Com­pa­ny Score­card used by Defence to assess a company’s per­for­mance. It will be made a cat­e­go­ry in its own right and will receive an appro­pri­ate weight­ing as a result.

Project teams will be made more account­able for AICP per­for­mance by includ­ing them in the DMO Project Manager’s Char­ter.
“I have met with a lot of small busi­ness­es since I got this respon­si­bil­i­ty. In the past 42 weeks, I’ve vis­it­ed 48 fac­to­ries, ship­yards and oth­er Defence indus­try sites,” Mr Clare said.
“Every­where I go small busi­ness talks about this. These reforms are based on their feed­back.
“This will cre­ate more oppor­tu­ni­ties for Aus­tralian com­pa­nies.”
Glob­al Sup­ply Chain Pro­gram – Update
Mr Clare also pro­vid­ed an update on the Glob­al Sup­ply Chain Pro­gram.
Five mul­ti-nation­al Defence com­pa­nies have signed a Glob­al Sup­ply Chain agree­ment with the Aus­tralian Gov­ern­ment – Boe­ing, Raytheon, Thales, Euro­copter and Lock­heed Mar­tin.
Through these agree­ments, the Gov­ern­ment funds mul­ti-nation­al Defence com­pa­nies to hire a team of peo­ple to iden­ti­fy and cer­ti­fy Aus­tralian com­pa­nies as part of their glob­al sup­ply chains.
Glob­al Sup­ply Chain Agree­ments are designed to out­line the way a multi­na­tion­al Defence com­pa­ny engages and facil­i­tates oppor­tu­ni­ties for Aus­tralian indus­try to com­pete for work in their sup­ply chains.

The Gov­ern­ment has invest­ed more than $11 mil­lion in the pro­gram over the past three years.
When the pro­gram was estab­lished every­one agreed that if it could pro­vide a 10-fold return on the Government’s invest­ment it would be a roar­ing suc­cess.
To date it has deliv­ered more than a 30-fold return on invest­ment with more than $356 mil­lion in con­tracts award­ed to Aus­tralian indus­try.
Aus­tralian SMEs have been the big win­ners, win­ning about 90 per cent of the val­ue of these con­tracts.
The agree­ment signed with Boe­ing has led to about more than $200 mil­lion worth of con­tracts to Aus­tralian com­pa­nies.
The agree­ment signed with Raytheon has led to more than $100 mil­lion worth of con­tracts, and the remain­der with Thales.
“In Jan­u­ary Lock­heed Mar­tin also joined the pro­gram and I’m hope­ful with the award­ing of the new naval com­bat heli­copter con­tract we will see more work for Aus­tralian com­pa­nies from the Glob­al Sup­ply Chain Pro­gram,” Mr Clare said.
“It is obvi­ous­ly already a great suc­cess and I’ll have more to say about the future of the Glob­al Sup­ply Chain Pro­gram lat­er this year.”
Strate­gic Reform Plan pilots
In Feb­ru­ary Mr Clare announced the first four Smart Sus­tain­ment pilot projects.

Today he announced two more. These are:

BAEBAE and DMO will work togeth­er at the Hydro­graph­ic SPO in Cairns to tri­al an Inte­grat­ed Project Team con­cept.  This pilot will allow DMO, Navy and BAE staff to apply lessons learned and work seam­less­ly togeth­er to sus­tain the ADF’s hydro­graph­ic capa­bil­i­ty.

H.I Fras­er – H.I. Fras­er will set up a pilot project to estab­lish a rotat­able pool of spares to reduce lead times and keep busi­ness in Aus­tralia.  This pilot will be con­duct­ed in Syd­ney at the Mine War­fare and Clear­ance Div­ing SPO with sup­port from the Naval Inven­to­ry Pro­cure­ment Office.

“This is all about test­ing good ideas. The Defence indus­try has a lot of good ideas. I want Defence to test them and if they work, roll them out across Defence,” Mr Clare said.

Press release
Min­is­te­r­i­al Sup­port and Pub­lic Affairs,
Depart­ment of Defence,
Can­ber­ra, Aus­tralia

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