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the opportunity to compete for and win within Australian and global
procurement programs while based upon merit. Wisely recognising that
workforce skills are essential elements of any procurement and bidding
process combined with a regular requirement for up skilling, encouraging
innovative capacity and productivity growth of the Australian Defence
Industry are key elements of the Policy. New Zealand firms will not miss
out as they are considered to be part of Australia’s local defence industry
based upon the long term trans-Tasman free trade agreement of Closer
Economic Relations. However, New Zealand firms will not be eligible to
access all elements of the Policy. The Policy is a culmination of over two
and half years of defence industry engagement and analysis of the strategic
requirements that shape Australia’s Defence Policy.
The Minister for Defence Material and Science in his speech at the
launch of the Policy was clear when affirming that the Commonwealth will
not use offsets or local content quotas to assist with protecting Australian
Defence industry from overseas competition. This is viewed as a driver
to encourage sustainable international best practice by defence industry
across the spectrum of Australian domestic providers.
PRIORITY INDUSTRY CAPABILITY
The policy will be supported by new bodies and programs in order to
implement the aims of the paper. One element will be the Priority Industry
Capability or PIC Innovation Program which will be funded in order to
encourage innovation. An amount of $44.9 million has been allocated
to support this process - particularly aimed towards Small to Medium
Enterprises. The PIC concept represents the broader element of industrial
capability that provides the Australian Defence Force with a strategic
advantage. To quote the Policy document “the PIC represents the tip of the
PIC participants may also be given access to a wide range of existing
programs such as the Skilling Australian Defence Industry (SADI) program,
Capability and Technology Demonstrator (CTD) Capability and Technology
Demonstrator Extension,(CTDE) programs and the Australian Industry
Capability Program. Foreign companies are able to invest and be involved
in the program and establish workforces within Australia if they so chose.
SMEs are encouraged to be involved in the process as the Commonwealth
seeks to retain the capabilities rather than the specific company remain
There are 12 listed PICs which include areas such as acoustic technologies
and systems, electronic warfare, in-service support of the Collins Class
submarine etc which Defence will be closely monitoring to ensure that
industry capacity remains at a sufficient level to support Australia’s
defence capability needs.
A number of identified potential PICs known as Strategic Industry
Capabilities or SICs that will be monitored by the Government. These SICs
are capabilities which provide the nation with ADF operational means,
longer term procurement certainty and enhanced defence self reliance.
Examples of identified SICs include composite and exotic materials,
guided weapons, naval shipbuilding, secure test facilities and test ranges
- amongst others.
PIC programs will be regularly reviewed and updated as the nation’s
strategic defence needs will constantly change. This will occur via the
annual classified Defence Planning Guidance process.
Under the PIC Innovation Program, companies will be encouraged to
submit to Defence innovative proposals, relating to one or more PICs,
to Defence for direct funding. In order to attract funding an industry
proposal must clearly support one or more PICs and have solid prospects
for delivering additional work within Australian industry or alternatively
provide cost savings for future Defence contracts. Funding under the PIC
Innovation program will be purely contractual between the company and
the Government whilst limited to AS$3-4 million in any one instance.
Defence will develop a set of guidelines for the operation of this program
in time for the first annual funding round in late 2010.
The newly established Defence Industry Innovation Board will oversee
the PIC Innovation Program and advise Defence and the Government on
appropriate resource allocation under the program.
The policy identifies $445 million of Government programs that industry
can access to improve their competitiveness, their capacity for innovation,
their ability to enter export markets, their opportunity to win work locally
and enhance the skills of their workforce.
The policy is based on four key principles to guide defence industry
policy which are: Setting clear investment priorities, Establishing a
stronger Defence – industry relationship, Seeking opportunities for growth
and Building skills, innovation and productivity.
Defence Innovations Centre
The Defence Innovations Centre role is to assist SMEs to break into
the global supply chains providing mentoring whilst working towards
achieving international benchmarks and best practice. This also includes
facilitating access to State and Federal Government programs. Once
SMEs are able to demonstrate that they have the resources, capability
and capacity to compete internationally they will be judged as competent
to enter the global supply chain or GSC program. The natural order of
business is such that Primes are not able to meet the requirements of
customers without reliance upon SMEs. Approximately one third of all
of Defence spending on acquisition and sustainment goes to SMEs. It
Examples of identified SICs include composite
and exotic materials, guided weapons, naval
shipbuilding, secure test facilities and test
ranges - amongst others
Nothing like this here: JSF production line
Credit: Lockheed Martin
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