Corvus Technology Solutions

Delays cost defence contractors millions

Australian defence firms say they have been forced to delay investment and hiring decisions because the federal government is holding off making acquisition decisions while it prepares to unveil the findings of the Defence Strategic Review.

For some procurements, the review has meant a six-month pause on decision-making, while delays on plans for new armoured troop carriers for the army worth up to $27 billion extend back to the Morrison government.

Defence Minister Richard Marles has indicated the review will be released in late April, including a decision on the infantry fighting vehicle contract, known as Land 400 Phase 3 by the military.

Melbourne-based Corvus Technology Solutions is one company frustrated by the uncertainty.

The company is part of South Korean defence contractor Hanwha’s bid team for the lucrative contract. Corvus will produce precision machine tools for Hanwha to make parts for the vehicles, which will be assembled near Avalon Airport in Victoria.

The other bidder is German firm Rheinmetall, which has a factory near Brisbane.

Corvus managing director Martin Ripple said tenders for Land 400 had closed in late 2021, but companies were none the wiser to the outcome.

If Hanwha succeeded, the subcontract for Corvus was a “three digit million dollar number”. His business was among 45 companies in Hanwha’s supply chain.

“With this uncertainty, we can’t invest in machinery, we can’t invest in upskilling our staff. Hundreds of jobs are held up,” he said. “We hear the announcements [of new defence spending] but we’re not seeing the dollars quite yet. It’s time for the rubber to hit the road.”

In the case of Land 400, the Morrison government held off on a decision amid suggestions of a split between ministers who should get the contract.

Defence Industry Minister Pat Conroy announced in September a decision would be delayed pending the Defence Strategic Review, with speculation the Albanese government will dramatically reduce the number of vehicles it orders.

Australian Industry and Defence Network chief Brent Clark, who represents defence SMEs, said local firms had been in limbo awaiting the outcomes of the review.

“It is industry’s expectation that this review will clearly and in a timely manner layout how Australia’s defence capability will be shaped for the years to come,” he said.

“Industry will be extremely concerned if the release of the DSR has no detail included or it sends the government’s requirements simply to Defence to undertake further detailed planning, a process that can only induce further delays to this program.

“Industry has patiently waited for the Albanese government, in good faith, to finalise and announce the findings of the DSR. To not then have a clear and fast pathway to acquisition assigns a further burden to Australian Industry and questions the government’s commitment to our industry.”

Mr Conroy rejected criticism of the government’s record on defence procurement, saying significant decisions had been made while the strategic review was underway.

In that time, the government had approved the purchase of the HIMARS rocket system and naval strike missiles, and upgrading the Growler attack aircraft.

Mr Conroy said making a decision on the infantry fighting vehicle as part of the review was “the only responsible course of action for a procurement worth between $18 billion and $27 billion”.

“The government understands the urgent need to build Australia’s defence capability, after the bungling and inaction of the Liberals, making more than 17significant capability decisions in the 10 months since coming to office,” he said.

The government commissioned former defence force chief Angus Houston and former defence minister Stephen Smith in August to produce the Defence Strategic Review. An interim draft was handed to the government in November, and the final report was delivered in February.

You may also be interested in: