Amid delays and cost blowouts in Defence, the Australian government on 1 December announced a sweeping overhaul of Defence procurement with the creation of a Defence Delivery Agency (DDA). This will occur from the merger of three existing groups—the Capability Acquisition and Sustainment Group (CASG); the Guided Weapons and Explosive Ordnance (GWEO) Group; and the Naval Shipbuilding and Sustainment Group.
This establishment process will be a lengthy one, across 18 months. Firstly, there will be a whole-of-government task force to develop an implementation plan and report to the deputy prime minister and the minister for defence industry in early 2026. Then, functions from the defence services, the Joint Capabilities Group and the Contestability Division will be transferred into the Vice Chief of Defence Force Group by mid-July 2026. This will occur shortly after the release of the 2026 National Defence Strategy (NDS) and associated Integrated Investment Program (the IIP, a spending plan), and then the DDA will be fully established by 1 July 2027. Most importantly, it will be an independent agency that reports directly to the minister for defence and minister for defence industry.
Defence Minister Richard Marles said:
… this is one of the most significant reforms to defence that we have seen. It will greatly change the way defence operates. It will greatly improve the quality of the defence spend, and it will make sure that as we spend more money in the defence budget, we are doing so in a way which sees programs delivered on time and on budget.
At the same press conference, Minister for Defence Industry Pat Conroy stated that:
… these reforms, historic in nature … will deliver speed to capability for the men and women of the ADF, making sure that the record increase in the defence budget will be spent wisely, delivering equipment as soon as possible into the warfighter’s hands.
There is a clear need for a more efficient, streamlined and cost-effective capability acquisition process. If handled well, this reorganisation may streamline the actual process of capability development. That would be a good step forward and the government is to be commended for making this decision now. But there are opportunities and risks ahead.
The DDA will be led by a national armaments director, with recruitment for that role about to begin. This creates an opportunity to ensure that this person be able to engage with the Australian people, as well as industry, to explain the nature of defence acquisition and be able to take political risks when problems occur, rather than be constrained by political interests.
Decisions on the capabilities that the defence force needs will be consolidated under the vice chief of the defence force. Having then determined that a particular capability is required, that project will be given to the DDA along with a budget to make sure that that project is delivered on time and on budget. That sounds simple, yet in delivery there are risks. A new organisation demands new ideas and thinking, and it’s not clear there will be any. Marles made clear there will be no job losses, saying, ‘the same people who are currently undertaking their work in these three groups will be undertaking their work in the new Defence Delivery Group.’
There is value in embracing a new generation of decision-makers and taking the opportunity to push the decision-making process further down to operational leaders. In creating the DDA this opportunity for embracing new thinking should not be missed. If this reorganisation simply sees the same processes and culture for management of defence projects under a new organisational structure—in effect, business as usual under a new organisation chart—then it is not likely to produce significant change in how capability is acquired and could in fact slow capability development. The DDA needs to avoid simply becoming the disbanded Defence Materiel Organisation (DMO) under a different title.
Therefore, in undertaking this reorganisation the government and Defence should embrace bold thinking. Both within VCDF Group and in the new DDA, there should be an emphasis on a fundamental change to how capability is conceptualised, developed and acquired, deployed into operational service and then sustained and ultimately modernised as a continual and constant process.
Certainly, some types of military capability are large and complex—warships and submarines are examples—and thus are slow to develop. Yet a great deal of capability can be acquired quickly by embracing the paradigm of small, cheap and many. This would be based around lower-cost capabilities, including investment in autonomous systems that rapidly deliver mass to the ADF. Such an approach is demonstrated through the quick delivery by Anduril Industries of the Ghost Shark uncrewed submarine. How the DDA can exploit such rapid capability development will be a vital task.
Because the reorganisation brings together CASG, GWEO and Naval Shipbuilding and Sustainment, this is a perfect opportunity for the consolidated organisation to support the development of new approaches to acquisition, such as capability ecosystems that can deliver combat mass swiftly and ideally ensure interoperability with allies and partners. But tough questions do need to be asked. For example, are there ways whereby national shipbuilding can be accelerated to deliver vital naval capabilities sooner? Should greater investment be directed to ensure sustainment of existing Australian and allied naval capabilities, both in peacetime and during protracted major power war, rather than focusing on shipbuilding? This also raises issues about the importance of more rapidly delivering defence infrastructure that’s needed to support shipbuilding and sustainment.
Speed and mass both matter now, more than ever. Defence capability development needs to incorporate both experimentation and actual operational testing that then informs acquisition and a rapid continuous modernisation process. It’s not clear how this reorganisation will lead to Defence acquiring more capability, faster, at lower cost and at the same time be more responsive to rapid change in military technology and the threat environment.
The risk is that the reorganisation is just transferring existing capability acquisition processes as well as mindsets and culture from the existing three groups into a new agency that will maintain them. There will be a more streamlined reporting process to the government, but the actual capability acquisition process will be the same. That would be a missed opportunity.
Perhaps Defence could consider the experience of others, such as Ukraine’s Brave1 innovation hub. Instead of traditional approaches to procurement, the DDA should prioritise spiral development to fund rapid capability acquisition. That means challenging ossified regulatory and bureaucratic practices and being prepared to embrace change to workplace culture, a challenge confronting defence industry in Europe.
There is also a risk that the process of establishing the DDA, necessarily increasing uncertainty on key decisions, will slow down acquisition even as the 2026 NDS and IIP approach delivery and the process for the 2028 NDS and IIP begins.
Finally, it is yet to be clear that the government will significantly increase defence spending from the current trajectory, which rises modestly from 2.05 percent of GDP now to around 2.33 percent by 2033. Marles wouldn’t commit to increasing defence spending during the press conference called to announce the DDA. Yet, this reorganisation will take both time—and money—to complete. With the challenge of funding AUKUS and building a class of general-purpose frigates draining funding from other areas of Defence, it’s clear that if the changes suggested are not accompanied by greater funds, then once again, the success of this new reorganisation may come under question.