Defence Innovation: Actions for Defence services | KPMG | AU
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Defence Innovation Redesigned: Actions for Defence services companies

Defence Innovation: Actions for Defence services

Services companies must build capacity to meet demand in the defence sector while collaborating with the Department to explore new ways of working.


Partner, People & Change

KPMG Australia


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The defence services sector (such as advisory firms, logistics and facilities management companies) will closely monitor the headcount and skill set changes in Defence. The steady reduction in the number of public servants will be halted by the Defence White Paper (DWP), and the total number of Defence employees will rise from 75,900 to 80,600 (ADF and APS permanent positions).

However, while the detail is still emerging, it seems clear that the goal is to reduce headcount in some administrative areas to enable increases in others. The areas that should benefit include intelligence, maritime and anti-submarine, strike and air combat and land and amphibious capabilities.

Defence Services can therefore reason that the agenda of ‘contractorisation’ in project management, engineering, logistics and supply chain services across the Department will continue. Just as in the ICT and Infrastructure sector, Defence Services companies must grow (through internal development or acquisition) the necessary capacity to satisfy this new demand.

As well as headcount reduction in key enabling capabilities that will need to be supplemented by industry, it is likely that Defence will require assistance in learning to work in an environment where contractors are a part of the integrated workforce required to deliver capability.

In addition to the guidance in the DWP, the First Principles Review indicates to this sector the requirements of Defence to enhance many of its enabling capabilities. The services sector has a key role in partnering with Defence to enhance these capabilities, including bringing innovation from other industries and helping Defence to identify how these experiences can be implemented in the Defence context.

Actions for Defence services companies

  1. Build capacity and the right talent to meet the needs of Defence spending on services aligned to the six new capabilities. Are there opportunities to diversify into new markets? 
  2. Believe the rhetoric in the DWP. There is a genuine desire at senior levels of Government and Defence to discover new ways of working, learning from sectors outside of the national security space. Services companies can be proactive and bring insights from the other sectors they support to help Defence. 
  3. Partner respectfully. Part of the defence services challenge is to work with Defence and other industry stakeholders as they journey to new ways of working. Defence is not ready to jump to a mature end state, weigh points are required. 
  4. The Integrated Support Contractor model (and similar arrangements) will evolve to become a more pervasive mechanism – not just for those above-the-line. Primes, SMEs, Infrastructure and ICT providers will all need to understand how to operate under this model.

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