EXCLUSIVE INTERVIEW

By Stephen Bunce,

Defence Writer, WA DEFENCE REVIEW &

Managing Editor, WA DEFENCE REVIEW

As regional tensions continue to escalate, the importance of Sovereign Industrial Capability has taken on a more urgent tone in national security calculations. In this wide-ranging interview with WA DEFENCE REVIEW, the Australian Minister for the Defence Industry, the Hon Melissa Price MP, reveals how federal government policies and investment is addressing this key issue. The minister also discusses the vital role regional firms can play in infrastructure and technology projects, and the economic and security benefits that can flow to Western Australia.

I have said this many times over the course of the past 18 months, and it remains as true today as it has ever been - we have kept the wheels of defence industry turning throughout this pandemic, and done a remarkable job. Feedback from industry has been that it remains resilient and flexible, and I am confident that it will emerge from COVID-19 as strong as ever. Of course, there have been many challenges, but the ability for industry to utilise exemptions for essential workers and have supply chain access resolved has allowed our defence industry to continue to deliver.

We have been closely monitoring outbreaks and Defence has been meeting with industry to understand changing needs. We introduced several initiatives to support defence industry during the pandemic, such as establishing a COVID Industry Support Cell and the Accelerated Payments scheme, which has been critical. It has provided financial stability and security to Australian suppliers by making payments within 48 hours after approval of invoices, and encouraging industry primes to pass early payments through to their sub-contractors. The total value of invoices paid early from contracted payments since March 2020 exceeded $30bn.

The five pillars are: (1) a new and enhanced Australian Industry Capability (AIC) contractual framework, (2) the Independent AIC Plan Audit Program, (3) the Commonwealth Procurement Rules (CPRs) guidelines update, (4) the Centre for Defence Industry Capability (CDIC) Review and its implementation, and (5) the Australian Standard for Defence Contracting (ASDEFCON) and Defence Procurement Review. Defence has progressed the five pillars, and I am pleased to say, we are continuing to see strong advancements in supporting defence industry.

The new and enhanced AIC contractual framework will see AIC be more prominent during tender evaluations. AIC obligations will be expressed as essential contract terms and Defence will have enhanced contractual remedies for failure to achieve these.

The Defence Industry Pathways Program is an initiative of the Australian Government supported by South Metropolitan TAFE. Valued at $9m it is designed to build a pipeline of talent that is defence industry ready. Minister for Defence Industry and Minister for Science and Technology, the Hon Melissa Price MP, Head of Maritime Systems Rear Admiral Wendy Malcolm and Civmec, Executive Chairman, Jim Fitzgerald mingle with Year 12 and South Metropolitan TAFE students at the launch of the Defence Industry Pathway Program at Civmec’s Henderson shipyard in Western Australia. © Department of Defence. Photographer: POIS Yuri Ramsey.

The Independent AIC Plan Audit Program started in December 2020 with three pilot AIC Plan audits; LAND 121 Phase 3B and 5B (Haulmark Trailers Australia and Rheinmetall) and the SEA 1180 Offshore Patrol Vessel program (Luerssen). The three audits are progressing well, with strong engagement and support from the suppliers. These three AIC Plan audits will be finished in the third quarter of 2021.

Since August 2020, the guidelines to the CPRs now allow Defence to consider how procurement will benefit the wider Australia economy, and develop Australian industry capability and capacity as part of assessing value for money. Additionally, the new CPRs released in December 2020 further provide an exemption which allows agencies, including Defence, to directly engage small businesses, for procurements valued up to $200,000.

We remain on track to launch the new CDIC by the end of the year, under a new name and banner, ensuring we have a one-stop shop that is the centre of all support for defence industry.

Lastly, the ASDEFCON and Defence Procurement Review is on track to be completed and submitted to me this quarter.

Defence is working closely with the WA government on planning for the future development of the Henderson Marine Precinct to meet Defence’s evolving needs. A range of detailed planning studies, funded by the Morrison government as a COVID-19 economic stimulus measure, are building on earlier planning conducted by the state. This work is still at a concept and feasibility stage. Development of new large ship infrastructure at Henderson will provide the federal government with another option for the construction of the larger ships identified in the 2020 Force Structure Plan. It will strengthen national resilience and redundancy in large ship sustainment. Like all Defence projects, there would be opportunities for local companies in all phases of development and operation of the new infrastructure, and the large vessel dry berth will open new market sector opportunities for large ship construction and sustainment.

WA is home to a proud and thriving local defence industry, one which covers many different areas. On 31 March 2021, the Prime Minister, Minister for Defence, Minister for Industry and I jointly announced the accelerated development of a new Sovereign Guided Weapons and Explosive Ordnance (GWEO) enterprise. Over time, the enterprise will increase Australia’s self-reliance and mitigate supply chain risks and vulnerabilities by developing a truly sovereign Australianguided weapons capability.

This enterprise will be a national endeavour, providing opportunities to WA’s small businesses and defence industry. The enterprise extends beyond just manufacturing. For example, it includes research and development,

The 12th Guardian-class Patrol Boat built as part of the Pacific Patrol Boat Replacement Project was gifted by the Australian Defence Force to Vanuatu during a ceremony held in Henderson, Western Australia on 30 July 2021. Minister for Defence Industry, the Hon Melissa Price MP and the Republic of Vanuatu Ship (RVS) Takuare’s Commanding Officer - Chief Inspector Dicky Obed - sign the commemorative handover certificate at handover ceremony held at the AMC Jakovich Function Centre. © Department of Defence. Photographer: LSIS Richard Cordell.

testing, as well as warehousing, with maintenance and support as important elements. It is important for your readers to understand that Australia already has a very capable and mature GWEO capability. For example, here in WA we have a specialist Torpedo Maintenance Facility at Garden Island.

There are also many opportunities beyond the GWEO enterprise to grow Australia’s defence manufacturing capabilities – particularly among SMEs that have received grants to grow and develop their capabilities. For example, four WA companies have received over $1.1m through the Defence Global Competitiveness Grants program since July 2019, supporting and developing their global export capabilities. Similarly, four WA companies have received nearly $2.5m through the Sovereign Industrial Capability Priority Grants program over the last two years, developing projects that meet the government’s Sovereign Industrial Capability Priorities – particularly those in the maritime sector.

In addition to grants, WA’s defence industry has benefited from Defence support to assist in raising awareness of their products and services to international markets. Illustrating this, the number of WA companies listed in the Australian Defence Sales Catalogue rose from 12 in 2020 to 15 in 2021, while 15 WA companies participated in pitch training provided by Team Defence Australia in late 2020 to help them refine their offering and messages to potential export clients.

Of course, as we continue to grow and develop a thriving sovereign defence industry, we must also ensure that we have a workforce with the necessary skills to continue to deliver this cutting edge military technology and equipment. The Defence Industry Skilling and STEM Strategy, released in February 2019, funds a range of programs nationally that support defence industry to meet current and future workforce needs. These include initiatives to help SMEs build critical workforce skills and create opportunities for people looking to transition into defence industry.

In WA this has included the defence industry pathways program, aimed at boosting Australia’s future maritime workforce. Developed with WA’s South Metropolitan TAFE and the state’s maritime defence industry, the program provides a taster course that sets participants on the path to an exciting defence industry career.

Submarines are integral to the defence of Australia’s Indian Ocean Territories and remote mainland North West region. Seen here, the navy’s Collins-class submarine HMAS Sheean passes Christmas Island on its way to Singapore for the multinational Exercise Bersama Shield. © Department of Defence.

In early October 2021, German frigate FGS Bayern docked in Fremantle, to undertake a week-long goodwill visit to Western Australia. The frigate’s commander hosted a VIP Reception and Ceremonial Sunset to mark Germany’s Unity Day. L-R: Assistant Minister for Defence, the Hon Andrew Hastie MP, the Hon Consul of the Federal Republic of Germany in Western Australia, Dr Gabriele Maluga, Minister for Defence Industry, the Hon Melissa Price MP, Commanding Officer FGS Bayern, Commander Tilo Kalski and Ben Morton MP. © Department of Defence. Photographer: CPOIS Damian Pawlenko.

Development of new large ship infrastructure at Henderson will provide the federal government with another option for the construction of the larger ships identified in the 2020 Force Structure Plan. It will strengthen national resilience and redundancy in large ship sustainment. Like all Defence projects, there would be opportunities for local companies in all phases of development and operation of the new infrastructure, and the large vessel dry berth will open new market sector opportunities for large ship construction and sustainment.

Another initiative is the schools pathways program, which informs young people about the varied pathways and career opportunities in the defence industry sector and encourages student engagement in relevant STEM studies. This program will help build the required future industrial workforce capability and capacity to meet Defence capability needs.

The government also recently sponsored the resources technology showcase in Perth to provide an opportunity for some 10,000 schoolage participants to interact with the technology and innovation that drives growth in the defence and space industries, as well as to learn about science, technology, engineering and mathematics careers within defence industry.

Finally, five WA companies have received grants to the value of $270,599, under the Skilling Australia’s Defence Industry Program, to skill and retrain their workforces to support Defence capability needs including for engineering, cyber, as well as command and control capabilities.

On 15 October 2021 the Minister for Defence Industry, the Hon Melissa Price MP was welcomed at the Pilbara Regiment Colours Parade in Dampier, which celebrated the Consecration and Presentation of Colours that acknowledged the unique role the unit plays in the detection of activities that threaten Australia’s sovereignty. © Department of Defence. Photographer: SGT Gary Dixon.

Through the government’s 2020 Force Structure Plan, approximately $2.5bn will be invested over the coming decade into the refresh and redevelopment of Defence facilities in WA and the Indian Ocean Territories including Irwin Barracks, Defence Establishment Harold E Holt, RAAF Base Curtin, RAAF Base Pearce, RAAF Base Learmonth, Cocos (Keeling) Islands, Campbell Barracks, and HMAS Stirling. These works will deliver significant business opportunities for the WA industry. Further investments in these and other WA Defence facilities will be undertaken over the next decade.

Some examples of the proposed investment include upgrades and major maintenance to the airfield at RAAF Learmonth. These works will allow larger aircraft to operate from Learmonth and will ensure that the airfield continues to support both military and civilian aircraft operations into the future. Refurbishment of RAAF Curtin is another proposed investment. These works will include the replacement of existing facilities and infrastructure that are nearing, or are beyond, their useful economic life. Major maintenance will also be carried out to the airfield. Cocos Keeling Island will also receive an upgrade and refurbishment of its airfield, strengthening and widening the existing runway.

As is usual for Defence planning, a range of options are carefully considered before decisions are taken by government in relation to specifics such as the location and nature of new capabilities, including infrastructure. This is to ensure that these projects achieve the best capability outcome, get best value for money for taxpayers, and maximise local industry involvement in the delivery of facilities and infrastructure to support these capabilities.

The Morrison government’s investment will include facilities and infrastructure works at Defence bases and training areas and ranges across WA. Details on specific projects will be announced as the projects develop, and will include information to help local businesses position themselves to

The Royal Navy nuclear-powered submarine HMS Astute arrived for a routine logistics and crew respite visit at HMAS Stirling on 29 October 2021. The Minister for Defence, the Hon Peter Dutton MP, Minister for Defence Industry, the Hon Melissa Price MP, British High Commissioner Vicki Treadell and Chief of the Australian Navy, VADM Michael Noonan welcomed its crew on arrival. © Department of Defence. Photographer: LSIS Richard Cordell.

maximise their opportunities to win work through the government’s Local Industry Capability Plan initiative.

Subject to our government’s approval, Defence is also intending to invest in an upgrade to the Defence High Frequency Communications System in the North West Cape region, specifically the Transmit Station at Exmouth and the Receive Station at Rough Range. The facilities are planned for upgrade in FY2024-25 and the communications capability will be modernised to expand its coverage over the Indian Ocean as part of Joint Project 9101, known as the Enhanced Defence High Frequency Communications System.

WA also has a key part to play in the $1.169bn Defence Fuel Transformation Program, which will reduce enterprise risk, increase Defence fuel supply chain resilience, and optimise total cost of ownership through a combination of actions, including targeted risk reduction and increased industry collaboration.

The program is being delivered through a series of tranches which commenced in July 2018 and is due to conclude by 2045-46. Tranche 1 saw the significant reduction of immediate risks across the Defence Fuel Supply Chain and set the foundations for work to be delivered in Tranche 2. Aptly, Tranche 2 was approved by the government in June 2021 and will see delivery of Defence’s most critical fuel network transformation projects, including $89.8m of capability infrastructure projects in WA over the next five years. Further, Tranche 2 will also include the implementation of a new fuel services contract that will see Defence partner with a single industry provider for the supply of fuel and for the operation and maintenance of Defence fuel installations.

There are great opportunities for people in regional and remote Australia to become part of our massive investment in defence industry. I have seen and spoken to fantastic young Australians in my own electorate who are already champions of our defence industry. There is no doubting WA’s regional capability. Dongara Marine is an excellent example of a boat builder capable of contributing to our ambitious shipbuilding program. We need to tap

into other industries, such as mining engineering and manufacturing, where there is a transferrable skill set.

COVID has shown thanks to increasing connectivity and communications technologies, there are no reasons why businesses outside of Australia’s major urban centres cannot participate in defence industry. A key example is digital twinning technology, which facilitates businesses working on major platforms through the creation of a digital representation. This includes modifications to the design of a capability, or diagnosing remedies to issues that require resolution in order to keep capabilities ready for deployment.

Achieving a high level of local industry content for Defence infrastructure and development is important, especially in regional locations, to ensure local companies have opportunities in the market. On average, 75% of industry content is sourced locally on Defence infrastructure projects, and procurement rules set out requirements for contractors to develop local industry capability plans to provide fair opportunities for local businesses.

This is also a key aspect of the GWEO enterprise. The $1bn investment in the enterprise will provide opportunities for small businesses and defence industry in regional WA, and more broadly, regional Australia. We need Australian industry, including in regional Australia, to support the development and sustainment of the elements required to create a sovereign guided weapons capability, namely: maintenance, testing and evaluation, manufacture, training and education, storage, disposal, and research and development. Development of these capability elements will provide opportunities for regional Australian small businesses to contribute to the enterprise and grow jobs.

The 2020 Defence Strategic Update reaffirmed the need for increasing our industrial sovereignty and delivering a strong, secure and sustainable defence industry base. The Sovereign Industrial Capability Priorities are a key component of this endeavour, highlighting the areas of greatest priority for the ADF, but also areas to grow Australia’s industrial capacity. We are continually reviewing our policy settings to ensure they remain fit for purpose.

Every day, the Morrison government is working to bring more Australian businesses into the Defence marketplace, working to employ more Australians, to nurture Australian talent and to strengthen Australia’s industrial base. I have no doubt that it will enhance Australia’s safety and security, as well as deliver countless and significant opportunities for Australians to boost our economy for many years to come.

On 29 October 2021, the Minister for Defence Industry, the Hon Melissa Price MP, addressed a joint press briefing at HMAS Stirling on the symbolism of the visit of the nuclear submarine HMS Astute and its implications for future bilateral cooperation between Australia and the United Kingdom. © WA DEFENCE REVIEW. Photographer: Serge DeSilva-Ranasinghe.