AUKUS—Where will this benefit Australian Industry?

The trilateral AUKUS partnership was launched with a stated intent to ‘promote deeper information and technology sharing’ and aimed at fostering ‘deeper integration of security and defense-related science, technology, industrial bases, and supply chains.’

Putting aside French disappointment and British delight, for Australian industry, the announcement represents something of a win-lose situation.

Who loses out?

The Australian Shipbuilding industry might feel as if it could be the loser, coming on top of the recent announcement that the Pacific Support Vessel won’t be built in Australia. With the Australian Government giving itself 18 months to determine how best to acquire and sustain at least eight nuclear-powered submarines, Australian industry, including associated Small and Medium Enterprises (SMEs), will be waiting with bated breath.

However, before bidding for contracts, industry should consider carefully the significant demands of the Enhanced Australian Industrial Capability (AIC) Contractual Framework, launched at the start of 2021.

The updated framework implores large primes to create more opportunities for Australian companies and demonstrate value for money in their efforts to enhance defence industry capability and capacity. This new framework has elevated AIC to a core clause that must be comprehensively addressed within any tender response. The cost of under-delivering against Australian contract expenditure requirements and performance indicators, which is the way AUKUS-associated contracts will build and deliver on Sovereign Industrial Capability Priorities (SICPs), will be closely monitored by both the Australian Government and AIC experts alike and may be prohibitive for those organisations that don’t deliver. For Australian SMEs and shipbuilders, AUKUS has a downside.

And the winner is (or could be)….

Where there are losers, there may also be winners. The currently released SICPs aim to upskill Australian industry. A significant focus has been placed on the transfer of Technical Data and Intellectual Property (TD/IP) to the Australian workforce. The  Government intends to drive knowledge within industry, academia, and the workforce, therefore evolving and enhancing Australia’s sovereign capability and local economies.

Off the back of the AUKUS security agreement, and to much less fanfare than the nuclear submarine decision, examples of identified opportunities for this type of TD/IP transfer include Australia looking to accelerate its sovereign-guided weapons manufacturing enterprise through the procurement of:

  • Tomahawk cruise missile for the Hobart class Air-Warfare Destroyers
  • Extended Range Joint Air-to-Surface Standoff Missiles (JASSM) for the F/A-18 A/B Hornets (and future  F-35s)
  • Long-Range Anti-Ship Missiles (LRASM) for the F/A-18F Super Hornet
  • Precision strike-guided missiles for the land domain

For those interested in the development and manufacture of precision-guided munitions, hypersonic weapons and integrated air and missile defence (IAMD) systems, defence industry, relevant SMEs and academia, it may prove to be one of the most significant technological opportunities of the decade. This extends beyond the existing and emerging local munitions industry to decision making technology, artificial intelligence, cyber, quantum computing, software and the associated supply chains and training systems of these interconnected systems.

While it might appear that doors are closing on one part of Australian Industry, and barriers to participation are being added for some, there may be many new doors about to open just around the corner.

Clinton Maughan is a Navy Veteran of more than 23 years specialising in C4ISREW, Interoperability and Joint Operations. Working in his core military fields and AIC, he is a tender writer, bid and proposal specialist now working exclusively with Salentis International.

If you are looking to navigate the opportunities that may be presented through the AUKUS agreement or how the agreement may impact industry beyond the core nuclear submarines, then our team is happy to discuss with you. Clinton and other Salentis SMEs can help your company better position itself to become involved in the Defence industry supply chain and help you grow your own business, workforce and expertise.

Article published: December 2021

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