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Minister pushes AIC reform, industry development and SME growth

The Minister for Defence Industry, Melissa Price, has flagged a ‘Five Pillars’ approach to supporting defence industry. In an Op-Ed published

Hunter class frigate
Defence Industry Minister Melissa Price will strengthen AIC and overhaul commonwealth procurement rules in order to support Australia’s defence industry in the future. Photo: Defence

on 24 September she said the ADF must have the best capability on offer: “This cannot be compromised.”

She added, “We also need to strike the right balance to ensure … large companies comply with the rules set by our Government and deliver on contractual obligations to help us deliver a stronger defence industry. This means transferring IP from overseas to Australia, investing in the Australian economy, creating new Australian jobs, opening long-term opportunities for Australia’s small and medium businesses and developing new Aussie-know-how and know-why for our workforce.”

Declaring, “We are placing small business front and centre of Defence decision-making,” Minister Price listed the five pillars as:

  • A new and enhanced Australian Industry Capability (AIC) contractual framework – this involves strengthening core AIC commitments and significantly expanding AIC provisions in contracts
  • An independent AIC Plan Audit Program to provide guaranteed protections for the Australian taxpayer and our small and medium businesses this will be the tool used by Defence to ensure major Defence companies are meeting their AIC obligations
  • Commonwealth Procurement Rules (CPR) guidelines update – for procurements above $4 million, the guidelines now define AIC and sovereign capability as an economic benefit to be assessed as part of the value for money consideration in the CPRs. Defence will amend its procurement templates to strengthen the application of AIC policy and will develop AIC-specific training for Defence tender evaluators
  • Centre for Defence Industry Capability (CDIC) Review and its implementation – Defence will ensure it implements the Review’s recommendations to provide more tailored and enhanced support to Australian businesses. Implementing the review’s recommendations will ensure that the CDIC continues to connect Defence and small business in a simpler, more cost-effective and more outcomes-oriented way.
  • Australian Standard for Defence Contracting (ASDEFCON) Review – this aims to simplify and streamline contracting and subcontracting templates and remove unnecessary complexities that put unnecessary pressures on Australian businesses. The Terms of Reference to remove the barriers within ASDEFCON, and the consultation process, will be finalised and released in November.

“These five pillars are the culmination of a substantial change to how we do business with industry,” said Minister Price. “We are going to provide enhanced and more tailored support to Australian businesses. And we will cut red-tape, processing times and costs to businesses who contract with Defence.”

The CDIC Review was published in mid-September. Among its recommendations was a strengthening of the AIC program and its relocation in a new Division within CASG. Inside this Division would also be a strengthened and re-branded CDIC.

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