All signs point to an increase in Defence purchasing activity in Australia, with Defence funding expected to exceed $575 Billion over the next decade.
There’s no better time to partner with the Commonwealth. This is particularly true for innovators that can support and develop the cutting-edge technologies outlined in Defence’s Sovereign Industrial Capability Priorities, such as cyber security and robotics.
While there are many opportunities for new players to enter the defence industry, the process of winning work will remain clouded by bureaucracy and politics.
Defence knows that it needs to be more proactive when partnering with the industry in order to achieve our sovereign’s strategic goals, but its unwillingness to modernise its processes and approaches makes it difficult for industry to win contract. Defence does not appear to be changing their behaviour any time soon, despite this being a major threat to the ability of our sovereign to innovate and to be quick to market.
The onus is on the industry to understand how to negotiate the numerous roadblocks and bureaucracies that are part of the Defence procurement process and the wider sector to ensure they can get their foot in the front door and integrate their solution into the Defence environment.
The procurement puzzle
Defence, unlike other industries is very specific about how it wants to be communicated and engaged. Understanding how to communicate with Defence is more than just knowing its acronyms. It’s also about understanding its structure, complex processes, protocol, and politics.
Procurement is usually written by people who have worked in Defence or government their entire careers. They are not corporate people, so the way they interpret value in the procurement is different from how corporations would do it in a business bid.
You should be aware of the steps you need to take to present your proposal to the Defence Department, as well as the documents you will be required to submit and the level of detail you must provide to demonstrate or explain elements in your proposal. Many of these details are available in the public domain, so do some research.
It is essential to fully understand the brief and show how your product or services meet these requirements. Remember that your product might not match exactly the requirements of the brief, so be transparent when you can’t meet them. It’s likely that you will need to prove your claims of performance, so don’t exaggerate. Be conservative when defining your specifications. You’ll not be able to meet deadlines if you don’t have a thorough understanding of the entire procurement process.
Unfortunately, high barriers to entry can limit the ability of a newcomer to be successful in procurement, no matter how well-versed they are with the process. This is particularly true for SMEs, and new start-ups.
The most innovative businesses still struggle to get work from defence, despite the fact that the Commonwealth Procurement Rules were updated in July 2022 to increase the threshold from $200K to 500K for SMEs to directly engage. Start-ups are often developing new technologies that Defence does not yet require.
It is often the case that without a partnership the SME/startup will be responsible for all financial risks, which prevents many from partnering with defence. This is a flawed system, but it’s one that new entrants need to be aware of.
In Australia, there are high standards of corporate governance for public companies. Those at the top must always put the company’s interests above their personal ones.
The same level of accountability does not always apply to the Defence sector. Defence personnel are more concerned with their career and rank than anything else. This means that they will not take a risk on a product, even if it is a small one.
As a result, new entrants need to have a clear message about how their product will benefit Defence. They should also be able to show how they will not harm the reputation of decision makers by demonstrating how risks will be minimized.
It is important that the representatives of a company have the same seniority (or even higher) as the representatives from the Defence Department with whom they will be dealing. In Defence, rank is extremely important. Sending someone with a lower ranking is highly frowned upon.
Don’t overpay for contracts
Defence publishes annual reports that communicate the risks and problems identified by the industry. These reports provide valuable data. To win work with Defence, you should approach them with a solution that addresses a specific risk.
It’s a good idea for newcomers to start with a modest contract. Take this contract very seriously. You’ll then be in a great position to move on to larger projects. Don’t forget that there are many challenges that defence organisations must overcome. It is therefore perfectly acceptable to tackle a small part of the problem.
Contractors to Defence often make the mistake of taking on contracts that are too big for them. This results in them not being able to meet Defence’s high expectations and may even cause irreversible damage to their reputation. People will not risk their career on a contractor with a bad reputation in such an environment.
Defence is all about relationships
Work with Defence requires a long-term commitment. Use this time to educate potential customers about your company, products, services and systems. They will get to know your company.
It is important to network with Defence personnel, as they will be the ones who evaluate your proposal if you decide to approach Defence for a new contract. You’ll be able to better pitch them if you know how they think. This understanding is only possible by investing the time to build long-lasting professional relationships.
You can build relationships by listening to what the people in Defence are saying about their challenges and pain points. You will be rewarded for your valuable assistance if you are able to provide a solution, whether it is by offering up your knowledge and expertise or connecting to someone outside of Defence. Over time, you will be able develop strong Defence relationships on which you can rely for future advice and assistance.