Albanese government's push to speed up delivery of military equipment as part of the Defence Strategic Review

Anthony Albanese will launch a major shake-up of defence procurement in a bid to combat lengthy delays and budget blowouts in major defence projects as part of the Defence Strategic Review.

Anthony Albanese and Chief of the Australian Defence Force Angus Campbell in Canberra on Monday. Picture: AAP

Prime Minister Anthony Albanese will launch a major shake-up of defence procurement in a bid to combat lengthy delays and budget blowouts in major defence projects.

The government’s Defence Strategic Review, released on Monday, recommended a paradigm shift in the nation’s procurement process towards realising the ambition of faster acquisition rather than striving for perfection.

The declassified version of the review, led by former defence minister Stephen Smith and former Defence Force chief Sir Angus Houston, was scathing in its finding that the nation’s current approach to capability acquisition was “not suitable” to achieve strategically significant capability outcomes “in a timely manner, or at all”.

The shift comes as the review recognised Australia no longer had a 10-year warning time to prepare for major regional conflict, with Defence no longer able to rely on the nation’s geography as the foundation for planning or capability development.

Australia’s longstanding reliance on a 10-year warning time has been ended by increased military modernisation, emerging and disruptive technologies that are being rapidly translated into military capability, and the notion that the threat of military force or coercion against Australia no longer required invasion.

Defence Minister Richard Marles acknowledged the review found procurement projects had sought perfectionism at the expense of time, and argued the government must speed up its capability processes in order to meet changing strategic circumstances with a sense of urgency.

“What the DSR is observing is that in the past, the pursuit of the perfect has often been done at the expense of time, and there is an opportunity cost and a capability cost associated with that. So we need to rebalance that,” Mr Marles said.

“It’s also important, I think, that we change our relationship with risk in order to get capabilities online quicker, we do need to be taking more or accepting more risk in the process of engaging in procurement.”

Defence Industry Minister Pat Conroy said the disappearance of a 10-year warning horizon meant defence acquisition “must speed up” and that Defence needed to embrace more risk in procurement projects to ensure the ADF was given equipment it needed “as soon as possible”.

He said the nation would shift towards a new focus of “minimum viable capability”, which would accept 80 per cent of a contracted capability into service and improve it steadily through upgrades, rather than wait for 100 per cent to be ready.

“So the ADF gets their equipment quicker, they can use it where they need to, and we involve the upgrade process to deliver on what’s been promised,” Mr Conroy said. “That’s a very different approach, but it reflects the change in our strategic circumstances and lessons, where a lot of projects have gone into trouble trying for that final 10 per cent of capability.”

The federal government will also move to refine its acquisition strategy by minimising competitive tenders when there is a clear frontrunner likely to win a contact, with Mr Conroy saying Defence currently ran competitions that “waste industry time, waste industry dollars and defence dollars”.

“We can ensure value for money for the commonwealth through smart contracting methods but being much more aggressive around sole source, where it’s a like-for-like replacement or it’s strategically complex. So it’s about smarter contracting strategy,” he said. “We’re running competitions now where it’s very clear who is going to win that contract. We’re running artificial competitions that waste industry time, waste industry dollars and defence dollars.”

Mr Conroy said Labor had inherited 28 projects that were running a cumulative 97 years late.

The review also found new projects entering the defence procurement pipeline had “little scrutiny” and that Defence had an over-reliance on “bottom-up” proposals and a “surprising lack of top-down direction”.

It found capability managers had too much latitude to make design changes, tinker with capability outcomes and “indulge in the quest for perfectionism”.

“These behaviours result in delay and strategically significant capability outcomes not being achieved in a timely manner, or at all,” the review said.