The annual Defence + Industry Conference has moved online this year due to the COVID-19 pandemic. Recorded in Canberra, this year’s D+I Conference saw defence leaders speak about what has happened since last year’s conference and what the future holds beyond COVID-19.
The Australian Defence Force has faced a number of humanitarian relief challenges this year including devastating bushfires and floods across various parts of our country. Then the COVID-19 pandemic hit, which threw everything off course.
Chief of Defence Force General Angus Campbell said Australia needs to be ready for conflict if Australia were to be threatened. He said we need a force that can be sustained in high-intensity conflict.
Why does Defence need industry?
We are in a technological age that has never seen so much disruption in the areas of autonomous vehicles, artificial intelligence (AI), cyber and space capabilities. These technologies have the potential to be used in the defence force which is why the Defence Department needs to engage with industry.
Australia needs to adopt these technological capabilities and we need to do it fast so we can keep up with other nations, as this could affect how we fight for decades to come. It will also ensure Australia’s security and prosperity.
Chief of Defence Force General Angus Campbell said Australia needs to be ready for conflict if Australia were to be threatened. He said we need a force that can be sustained in high-intensity conflict.
Not only do we need strong maritime, land and air capabilities, but also cyber. Although cyberattacks affect both private and public sectors, malicious cyber-attacks from state actors can have detrimental consequences if we were to go to war.
General Campbell mentions a few Australian success stories working with defence including CEA Technologies building radars, Sonartech Atlas working in signature management technologies and PMB Defence which is on the cutting-edge of end-to-end submarine battery design and manufacture.
He also adds that PMB has gone on to win contracts in Canada to supply batteries for submarines and also in the UK for battery design.
It’s great that these Australian small-to-medium enterprises have managed to gain international exposure after working with Australian Defence, but is this a common occurrence or is it rare that SMEs win large contracts with government departments, such as defence?
According to data published on AusTender in 2018-19, just over a quarter of 80,000 contracts were awarded to SMEs. Of course, this isn’t only looking at defence contracts, but the numbers are stark.
Why is it difficult for small to medium enterprises to win government contracts?
The first problem for SMEs is that often the procurement process requires the business to be on a panel. If they’re not on the panel, they won’t even get a look in. This is why contracts often get awarded to big companies with deeper pockets. Arbitrary changes to panel arrangements, such as the 30 Jun 20 adoption of the Major Service Provider model at Land Systems Division can also cause significant disruption to the vibrant SME community.
It’s also time-consuming for small businesses to submit a proposal to be considered for a contract and they may have heard horror stories of dealing with government departments from other SMEs.
Another reason SMEs may be hesitant to work with defence is due to intellectual property. Businesses that have developed innovative technology may not be willing to make that government property.
Governments are notoriously risk-averse and choosing an SME means they are taking a gamble on whether that company has the capability to ensure a project is successful.
How can Defence protect smaller enterprises?
The short answer: provide more opportunities for small to medium enterprises to gain contracts with Defence. Invest in the Australian SMEs that have invested so much in Defence.
In September, the federal government announced that they planned to ensure major prime companies were meeting their contractual obligations to provide local suppliers with work. Under the plan, the Defence Department will use independent auditors. The new rules will come into force on January 1, 2021.
Australian small businesses make up more than 98% of all businesses, but larger organisations have the upper hand and can often intimidate or even bully smaller businesses to meet the needs of large businesses. The government could be bold and design a system that actively supports small businesses, which in turn, creates more jobs for Australians.