DTC’s Analysis of the ASDEFCON and Defence Procurement Review

The Defence Teaming Centre (DTC) welcomes the intention to improve processes to realise time savings on complex projects that could amount to 12 months. For major projects where procurement processes can take four or more years this is a step in the right direction and applying continuous improvement principles, we hope to see this target continually challenged to realise greater efficiencies.

The review has highlighted the need to introduce capped evaluation periods. This will provide industry with greater certainty over procurement time frames and we look forward to seeing Defence’s performance reported to industry. The successful delivery of capability to the ADF on-time requires Defence and industry to work seamlessly together. Industry’s performance is regularly measured through contract performance and we welcome the opportunity to measure Defence’s performance so we can quickly identify areas for improvement that keep the Defence and industry partnership operating at peak performance.

Most importantly the DTC welcomes Defence’s intention to enhance and improve its communication with industry. Industry need the opportunity to better engage with Defence to inform requirements development which will produce more mature requests of industry and better-quality tender submissions from industry. The following initiatives are supported and welcomed by the DTC:

1. Provision of greater transparency of upcoming procurements through the Annual Procurement Plan on AusTender;
2. Investigation into how a centralised contractor accreditation framework could be adopted to cut red tape for industry;
3. Improve probity practices, guidance and training for procurements in order to reduce communication barriers between Defence and industry;
4. Provide greater opportunities for industry to brief Defence on tenders they submit to provide clarification on the offer proposed in support of Defence’s evaluation;
5. Improved updates to industry on tender progress and tender processes, especially where delays occur; and
6. Provision of timely feedback to unsuccessful tenderers so they can improve their future tender responses.

The implementation of a centralised contractor accreditation framework is an important step for industry. It presents the opportunity to realise efficiencies through the adoption of agreed common practices and recognition of standard information requirements common across all programs. The benefit to SMEs is a reduction in the overhead associated with bidding for defence work.

With regards to items 4-6, the DTC regards this as best practice and we encourage all DTC members who are prime contractors to apply these practices to their respective supply chains.

The DTC is deeply concerned with the findings and response with regards to the review’s terms of reference item 4: “Can Defence do anything to improve cash flow to the supply chain?”. This item explored payment terms and the variations of payment terms between primes and subcontractors. The DTC strongly advocates for subcontractors to be afforded the same payment terms as the head contractor, or, terms not exceeding 30 days at most. Unfortunately, responses to the review “…urged Defence not to be drawn into issues governed by a contract Defence is not party to and suggested that leaving contractors and subcontractors to negotiate payment terms would lead to better outcomes for all.” The DTC is aware of several situations where payment terms to subcontractors are standard 60 days. Australia’s Small Business and Family Enterprise Ombudsman (ASBFEO) recommends small businesses should not be waiting any longer than 30 days for payment. The DTC supports this approach and encourages all members and defence primes to apply this as the minimum standard.

Overall we are pleased by the results of the review and the recommended actions and we will continue to advocate for better payment terms for SMEs.

For more information on the findings and to see all the recommendations from the Australian Standard for Defence Contracting (ASDEFCON) and 2021 Defence Procurement Review click here.