ASPI Defence Conference, Q&A | Defence Ministers
Minister for Defence Industry Pat Conroy has announced the establishment of the Defence Delivery Agency (DDA), a reform moving $35 billion of the approximately $60 billion defence budget out of the Department of Defence. The agency will manage roughly 10,000 roles to streamline acquisition and bolster domestic sovereign industrial capabilities.
How will the Defence Delivery Agency change military procurement?
The Defence Delivery Agency shifts the Australian government from a contract management model back to a professional project management organization. According to Minister Pat Conroy, the DDA is not “DMO 2.0” but a more significant restructuring that grants the agency funding independence over its operational and capital budgets.
A National Arms Director (NAD) will lead the agency, reporting directly to the Minister for Defence and the Minister for Defence Industry rather than the Department Secretary. This removes layers of bureaucracy to allow projects to be run like commercial ventures. Simultaneously, capability development will be unified under the Vice Chief of the Defence Force (VCDF) to eliminate fragmented silos within the services.
Conroy stated that these reforms aim to instill “change discipline” to prevent cost and schedule overruns. The government is moving toward “spiral development,” as seen with the Land 156 project, where technology is updated in increments rather than buying large quantities of equipment that may become obsolete before delivery.
What are the Seven Sovereign Defence Industrial Priorities?
Australia’s approach to sovereignty relies on seven Sovereign Defence Industrial Priority (SDIP) areas. These are specific capabilities the government deems essential to maintain within domestic borders. One primary example is SDIP 2, which focuses on continuous naval shipbuilding.
To ensure these priorities are met, the government has assigned single lines of accountability for each SDIP. For instance, the Chief of the Air Force and the head of the Capability Acquisition and Sustainment Group (CASG) manage SDIP 1, which covers the maintenance, repair, overhaul, and upgrade of aircraft.
Investment is currently targeting high-growth sectors. Conroy highlighted a $7 billion line in the Integrated Investment Program (IIP) for counter-drone investment and a 50% increase in the drone budget. He noted that Australian firms are now leading in autonomous systems and drone manufacturing.
How is Australia contesting China’s influence in the Pacific?
The Australian government views its relationship with the Pacific as a “permanent state of contest” with China. Minister Conroy stated that China seeks a permanent security presence in the region, specifically through policing cooperation. Australia’s strategy is to remain the “partner of choice” for security, development, and economic engagement.
Australia is securing this position through a series of strategic bilateral agreements, including:
- The Falepili Union: A landmark agreement with Tuvalu addressing climate change and migration.
- The Pukpuk Alliance: A comprehensive security partnership with Papua New Guinea (PNG).
- The Nauru-Australia Treaty: Focused on economic resilience and banking services.
- Pending Treaties: Negotiations are ongoing for the Vuvale treaty with Fiji and the Nakamal treaty with Vanuatu.
A key pillar of this strategy is “local content.” Conroy cited a $60 million road partnership in the Solomon Islands where contracts required every dollar to be spent with Solomon Islands companies. This approach aims to build local skills and payroll dividends rather than relying on transactional foreign aid.
What are the biggest risks to domestic defence growth?
The primary bottleneck for Australia’s industrial mobilization is a systemic workforce shortage. Conroy reported that defence manufacturing employment grew by 11% last year, but the pace of capability ramp-up is outstripping the available labor pool.
To address this, the government is funding 4,000 additional university places in STEM subjects through AUKUS. There is also a push to mobilize the east coast maritime supply chain to support AUKUS and other projects, such as the Ghost Shark and Ocius Bluebottles, to ensure the burden of production doesn’t fall solely on South Australia and Western Australia.
Another risk involves the “middle bureaucracy.” Conroy noted that while political will and financing exist, the real barriers to co-development with allies like the US are licensing, certification, and the transfer of intellectual property (IP).
Frequently Asked Questions
What is the National Arms Director?
The National Arms Director is the head of the Defence Delivery Agency (DDA). Unlike previous roles, the NAD reports directly to the ministers for Defence and Defence Industry to ensure commercial discipline and independent project management.
Why is “spiral development” important for drones?
Because counter-drone technology evolves rapidly, buying large stockpiles can result in equipment becoming obsolete within months. Spiral development allows the military to establish a basic architecture and then plug in new capabilities as they mature.
How does the Pukpuk alliance differ from other partnerships?
The Pukpuk alliance is Papua New Guinea’s first alliance in over 50 years of independence. It includes tangible support such as Australian-made uniforms for PNG forces produced by Australian Defence Apparel in Bendigo.
Join the conversation: Do you think moving $35 billion to a separate agency will actually speed up military procurement, or will it create new bureaucratic hurdles? Let us know in the comments below.