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If you spend any time in defence circles then you are likely to hear the term ‘sovereign capability’ mentioned from time to time – but what does that term refer to?

The term itself is an industry shorthand for the concept of Australia’s sovereign defence industry capability – Australian-based industry that produces defence systems and materiel to support Australian defence projects, while also being an exportable commodity in its own right – as well as the policies from the Commonwealth that support it, and the actions from industry that enable it. This is distinct from overseas companies using Australian subsidiary companies as retail shopfronts while not genuinely taking part in the native industrial landscape.

The growth of Australia’s defence industry in many ways reflects the growth of Australia as a nation, with such milestones as the first Australian small arms factory being established in 1907 only a few short years after Federation. Early investment in the nascent defence industry by government paid dividends in the First and Second World War when Australia manufactured small arms for the Royal Australian Army, and the industry continued to develop from there.

There has always been a clear interest from government in how the Australian defence industry operates, and what it produces. In the early days the bulk of the ‘local’ defence industry actually came from overseas and set up Australian offices where they could retail their products ‘off the shelf’ without particularly tailoring them for the local market, and local defence requirements.  This all changed when the Howard Government introduced their defence industry policy, clearly outlining a desire for a sovereign defence industry as a national asset and indicating that international defence companies must invest in native Australian industry if they intended to win Australian defence contracts.

The latest iteration of this policy is the Defence Industrial Capability Plan 2018. The plan has several important things to say about the importance of sovereign capability including:

  • ‘…as Australia builds its defence capability, we must also grow our defence industrial capability. By 2028, Australia will require a larger, more capable and prepared Australian defence industry that has the resident skills, expertise, technology, intellectual property and infrastructure to enable the conduct of ADF operations today, support the acquisition, operation and sustainment of future defence capability; and provide the national support base for Defence to meet current needs and to surge if Australia’s strategic circumstances require it.’
  • ‘…Our defence industry is a critical national strategic asset for Australia. We must build a strong, sovereign naval shipbuilding and broader defence industry to manage strategic risk, defend our nation and grow our economy.’
  • ‘…a strong, sustainable and secure Australian defence industry is fundamental to achieving Defence’s mission today, and to support a future force that is positioned, resourced and structured to defend our nation and advance our regional and global strategic defence interests.’

In a global strategic environment that is increasingly marked by a return to great power competition –particularly in the contested Asia-Pacific—Australia simply cannot afford to rely on off-the-shelf overseas products. We need to continue to develop our sovereign industrial capability so that Australian industry, using Australian ingenuity, can develop technology for our military, while also creating an export market.

Industry has responded to this policy with the overseas primes expanding their Australian operations, Australian small-to-medium enterprises (or SMEs) setting themselves up, and the professional services industry increasingly turning establishing themselves in the defence sector.

The Major Service Provider model that has been implemented by CASG, and for which Team Downer MSP is a component part, contributes to sovereign industrial capability by providing expert workforce management including the provision of skilled staff to the Capability Acquisition and Sustainment Group (or CASG). By assisting CASG to deliver their acquisition and sustainment projects on time and to budget, Team Downer makes a solid contribution to Australia’s sovereign industrial capability.