De-risking procurement in the Australian Defence estate

Australian Defence embarks on an ambitious capability growth and procurement journey over the next decade, with the Integrated Investment Program announced in August by the federal government boosting Defence spending by $330 billion.

Infrastructure is a major focus of the program, including the modernisation of training institutions, accommodation, and further development of the Defence estate particularly across the north of the country.

However, there is one aspect of getting these works underway that requires new focus: the procurement of contractors and supplies.

Technological advancements, geopolitical tensions and escalating demands for transparency and accountability is making the procurement landscape both challenging and full of opportunity. Crucially, it demands strategic de-risking.

“Procurement has become a multi-layered ecosystem of diverse stakeholders and sophisticated technologies,” says Geoff Camp, JLL’s Defence lead. “The priority has got to be to de-risk processes, bolstering supply chain integrity and strategic readiness.”

As contractor onboarding begins, high-profile failures like the global Crowdstrike IT outage must remain front of mind as an example of enormous ripple effect of cybersecurity vulnerabilities.

JLL’s Camp says: “The Defence estate is under scrutiny to not only ensure compliance and ethical conduct but also to foster innovation without compromising security and sovereignty. The sector is embracing cutting-edge technologies and supplier diversity, but it stands at a crossroads where the balance between cost-efficiency and quality assurance becomes increasingly precarious.”

In an environment more interconnected and volatile than ever, these four considerations below could be some of the most important for averting a crisis.

Defence operations rely heavily on digital infrastructure, and inadequately planned procurement can compromise not only operational effectiveness but also national security. Thorough vetting of IT service providers, ongoing cybersecurity training for Defence personnel, and rigour around the digital components of estate projects must be part of procurement plans.

Maintaining ethical procurement practices amid increasing geopolitical and financial pressures requires greater diligence than ever. Mandating transparent reporting through AusTender and a strict adherence to the Commonwealth procurement rules are some mechanisms that should be implemented. This is in addition to embedding a culture that fosters integrity, and the vetting of suppliers.

Globalisation has woven international suppliers into the Defence procurement fabric. While this can enhance capabilities, it also raises concerns about what is sovereignty and dependency. National security could be at risk if geopolitical tensions escalate. Sourcing from domestic suppliers or allies should be prioritised and robust contractual safeguards and contingencies should be in place for supply chain disruptions.

Balancing budget constraints with the need for high-quality, reliable equipment and services is a challenge. But while cost-efficiency is crucial in delivering a minimal viable product, it should not come at the expense of quality. Evaluating projects for their long-term value over immediate cost savings has long been a principal in the value-for-money proposition. Fostering transparent and diverse supplier relationships to build and strengthen sovereign supply chains will help procurement teams navigate tight budgets while ensuring that subpar materials or services do not undermine Defence capabilities.