AUKUS—Where will this benefit Australian Industry?

The trilateral AUKUS partnership was launched in September 2021. It’s stated intent was to ‘promote deeper information and technology sharing’. It aimed at fostering ‘deeper integration of security and defense-related science, technology, industrial bases, and supply chains.’ How will AUKUS benefit industry is the question…

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

Who loses out?

Who loses out?

The Australian Shipbuilding industry might feel it could be the loser. Particularly on top of the recent announcement that the Pacific Support Vessel won’t be built in Australia. The Australian Government has given 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. They also need to 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.

AUKUS-related contracts will be designed to strengthen Australia’s Sovereign Industrial Capability Priorities (SICPs). The Australian Government and AIC specialists will closely monitor both expenditure and performance. Any organisation that fails to meet its contractual or performance obligations could face significant penalties or lose future opportunities. This may make it prohibitive for those organisations that don’t deliver. For Australian SMEs and shipbuilders, AUKUS has a downside.

And the winner is (or could be)….

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.

Beyond the high-profile nuclear submarine announcement, the AUKUS security agreement has also opened quieter opportunities for technology and intellectual property transfer. Australia is now looking to accelerate its sovereign guided-weapons manufacturing capability 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

Where the biggest opportunities lie

For those involved in the development and manufacture of precision-guided munitions, hypersonic weapons, and integrated air and missile defence (IAMD) systems, AUKUS could represent one of the most significant technological opportunities of the decade. The potential reaches far beyond Australia’s munitions industry, extending into decision-making technology, artificial intelligence, cyber, quantum computing, software, and the supply chains and training systems that connect them.

While some parts of Australian industry may see doors closing or new barriers to entry, others are about to see new ones open and possibly wider than ever before.

Author
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.

If you are looking to navigate the opportunities that may be presented through the AUKUS agreement or learn how the agreement may impact industry beyond the core nuclear submarines, then our team is happy to discuss with you. Salentis 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