Rising Defense Spend in Australia and The Impact on Contracting

Budget 2023 saw the Australian Federal Government bolstering its defense spend – to the tune of AU$52.588 billion*. This is the first time the funding has topped the AU$50bn mark. We’ll look at how this might impact government contractors and how tech solutions can help.
Micheál McGrath

Head of Marketing

6 min read


The planned $19bn spend, rolling out over the next four years, spans a number of areas. These include guided strike capabilities, buttressing northern bases, and investing in nuclear-powered subs.

The increased spend will also impact the growth and retention of the Australian workforce. No doubt, it will bring heightened innovation, and increase regional partnerships. Before noting the plus sides, let’s focus on why Australia is bolstering its defense in the first place.

Why defense is becoming more important to Australia?

At the risk of stating the obvious; the main mission is to defend its national interests; such as:

  • Advancing its prosperity.
  • Maintaining independent decision-making.
  • Ensuring the security, safety, and ongoing freedom of its people.

This has become paramount amidst the shifting power dynamic within the Indo-Pacific. Hence articles touting “historic defense spending” by the nation.

As outlined in The Guardian, the Australian government said “Manufacturing weapons and their critical components would improve Australia’s self-reliance.” Therefore, Ministers are considering “‘concrete, costed plans’ by the end of 2023.”

Where are the funds going?

Deputy Prime Minister, Richard Marles, and Defense Industry Minister, Pat Conroy, released a joint budget statement last May. It affirmed the government’s “reshaping of the Australian army. Modernizing it for current strategic circumstances. This investment in key capabilities sees the Australian army’s current range for artillery grow from 40km to in excess of 500km.”

According to further reports by The Australian Defense Magazine, this landmark budget incorporates:

  • $9 billion for the nuclear-powered submarine program through AUKUS
  • $4.1 billion for long-range strike capabilities and $3.8 billion to enhance northern base infrastructure.
  • $900 million to establish the Advanced Strategic Capabilities Accelerator and through AUKUS Pillar 2.
  • Additional funding for key defense partnerships in the Indo-Pacific. This includes delivering within Defense’s existing resourcing via “an initial $7.8 billion reprioritization of the Defense Integrated Investment Program.”
  • A series of projects for reprioritization. These comprise “mostly upgrades to base facilities.” This includes the “cancellation of a planned second regiment of self-propelled howitzers.” It also involves “a reduction in the acquisition of infantry fighting vehicles from 450 to 129.”

The budget statement, released in May, states the enterprise will “manufacture selected long-range strike missiles.” It will also “increase local maintenance of air defense missiles”. Furthermore, it will make other types of munitions, including 155mm artillery ammunition and sea mines.

The government added that the project would need an increase in Australia’s testing and research capabilities. It will also involve the “rapid expansion of its storage and distribution network.” The decision “doubles the investment for GWEO when compared with prior allocation.”

The Guardian further reports that “of initial funding that is certain, the government has earmarked $4.5bn over 10 years.” This is “to support the initial steps in Australia’s acquisition of a conventionally-armed, nuclear-powered submarine capability”.

The majority of this ($4.2 billion) is to “establish and fund the operations of a new Australian submarine agency.” The government has earmarked $127m, over four years, for 4,000 additional commonwealth-supported places at universities.” This also includes “other higher education providers”.

As for how much will go on American munitions?

Well, quite a sizeable amount. As BreakingDefense.com puts it: “For 2023-2024, the ADF disclosed its plans to spend AU$12.3 billion (US$8.3 billion). This is on new equipment.”
It states that: “About AU$1.2 billion (US$800 million), or just under 15% of the overall annual total, will be spent on American PGM.” Why so much? Australia currently doesn’t manufacture precision-guided munitions, although there are plans to change that.
These missiles – equipping Australian warships, combat aircraft, and land forces – will be sourced via the US Foreign Military Sales (FMS) system.
According to the report, there are four key projects, including…

  • The acquisition of maritime strike weapons over five years (AU$751 million)
    Equipping “RAAF F-35A and Super Hornet aircraft with JASSM-ER missiles”(AU$558 million).
  • Acquiring “war and training stocks of AIM-9X and AIM-120D air-to-air missiles” (AU$1 billion).
  • Obtaining additional stocks of “small diameter bombs”, plus “500- and 1,000-pound guided bombs” (AU$810 million).

The initial impact on the contracting industry

The build-up to May’s budget saw defense contractors laser-focused on Australia. Speaking via Reuters, Stephen Forshaw (Airbus’s chief rep for the region), said: “Everyone is reading the tea leaves. But we know a lot of capability will be coming out of that DSR.”

Senior analyst at the Australian Strategic Policy Institute, Malcolm Davis, was a bit more frank in his assessment. He said: “When the DSR comes out there will be diplomatic language that doesn’t squarely target China by name. However, I think everyone gets the reality is being driven by China, its rapid growth, and its military capabilities.”

The Reuters report further states that Australia is “a major buyer of U.S. equipment. Having operated alongside the U.S. in conflicts around the world. In 2021, it formed an alliance with the United States and Britain to buy nuclear-powered submarines.” Australia is “also focusing on securing more local production and supply stocks. This is after observing the depletions caused by the war in Ukraine.”

As for the main contractors reputedly vying for contracts? There are reportedly five in the mix. These include Boeing as well as Airbus. Incidentally, both companies use VisibleThread products to support their defense pursuits. Here’s Boeing talking about the benefits. And Airbus cite major efficiency gains too.

Australian building contractors also want a slice of the pie. The AFR reports that while contractors are “excited” at the prospect of more work, they’re “also concerned”. Why? They’re questioning how “a government struggling to manage its existing expenditure will cope with twice the volume.”

This is where efficient planning is crucial. It will result in a positive impact on domestic manufacturing and supply chain industries.

How VisibleThread can help you with the bid process

Contracting teams are notoriously lean given the level of complexity involved. You have to review hundreds, often thousands of pages of important content. You have to carefully evaluate the initial RFP, handle any amendments, understand scope changes due to changing requirements, get feedback from multiple stakeholders, the list goes on. And the turn-times for these review cycle are short, sometimes weeks. Additionally for major defense contracts, managing the supply chain and dealing with sub-contractors who all must adhere to the same requirements increases complexity. In most cases, vetting is done with often nothing more than Search (CTRL + F). It’s a pressurized context with long hours for all involved.

This is where solutions providers, such as VisibleThread, come into play. Our Customer Success Stories showcase how we help both the largest and smallest contractors compete for multi-million-dollar proposals.

Airbus saves between $50k – $100k per bid in the final proofreading stage of Proposal Responses.

Our offerings have had a large impact on contracting. For instance, Airbus, saw clear savings for every bid cycle.

Interestingly, the same considerations apply in other industries too. For example Australian-based global law firm KWM and Government Agency, Services Australia.

My Applied Legal Technology team has seen a significant business impact from using VisibleThread. Once started, users became fast advocates for the solution. The lawyers noted that the accuracy VT Docs provides gives them confidence that they haven’t missed any critical requirements and provides peace of mind.

An Example Use Case: The Dept Of Defence – DSRG AUS $40M MUTR Contract

The Australian Department of Defense is inviting companies to register their interest in providing design services for the AUS $40 million Maritime Underwater Tracking Range project. 

One of the first things most organizations will do is to take the RFP and “shred” it. This involves copying/pasting every requirement in the RFP and putting it into an Excel spreadsheet. It gives you a compliance matrix and you manage the requirements here. The process of copying is very time consuming and sometimes people make mistakes. Depending on the size and number of docs, it could take hours, possibly days.

An obvious way to help is to take the manual burden of that copy/paste activity, and automate it. 

To show this in real-terms, we took the Australian Department of Defense draft RFT (ATM ID: AZ6490). We converted the full PDF to Word using Adobe Acrobat. Then we ran a shred/burst on the Word doc using VT Docs. 

  • A Full Shred of the Maritime Underwater Tracking Range (MUTR) RFT in Minutes.
  • 570 Rows of Copy/Paste Saved.
  • We shredded the doc fully sentence by sentence.
  • No sections or elements removed.

That’s a lot of copy/paste time that you don’t have to worry about, as you review how compliant you’ll be against the requirements.  If you are planning on pursuing this specific contract, you can download the Excel shred for free here.

In every piece of content, we have done our best to meet the user’s need, to include the user, to make it accessible for our audience. As a comms professional it is key, knowing that we’ve achieved that is really important.

What tasks can you automate?

As described above, VisibleThread can save a huge amount of time getting to a compliance matrix. But that’s just a starting point. Our platform helps with multiple tasks during the bid lifecycle.

Here’s just a few examples: 

  1. Creating a Requirements Compliance Matrix or RTM (Requirements Traceability Matrix)
  2. Handling contract amendments – Comparing revisions, draft vs. final, etc.
  3. Acronym Checking
  4. Readability, scoring docs for single tone of voice, saving editing time
  5. Concept Tracking – e.g. Search across docs for risk etc.
  6. Discovery – e.g. Gap analysis across docs
  7. Responsibility Matrix – allocating who needs to review what content
  8. Excel Compare – Comparing Pricing workbook revisions, labor rates, etc.

To get a sense of the time savings you can expect, here’s our ROI calculator. See how more efficient you can be today.

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