How will Marles’ defence procurement plan make a difference?

No one has cracked defence procurement. How will Marles’ plan make a difference?

Published in The Mandarin, Dec 3, 2025

Deputy Prime Minister Richard Marles. (AAP Image/Lukas Coch)

Deputy PM Richard Marles announced a restructure of the Defence procurement organisations this week. In a nutshell: the three current internal organisations merge internally to become the Defence Delivery Group as of 1 July 2026. It then becomes an autonomous agency reporting to the Minister for Defence and the Minister for Defence Industry as of 1 July 2027.

The announcement comes with the great promises and hyperbole of a politician: “This is one of the most significant reforms to defence that we have seen. It will greatly change the way that defence operates. It will greatly improve the quality of the defence spend, and it will make sure that as we spend more money in the defence budget, we are doing so in a way which sees programs delivered on time and on budget.”

The “how” is light on detail. The decision on what capabilities are needed are captured in the Integrated Investment Plan, consolidated under the VCDF, then the project and its budget are handed to the Defence Delivery Agency to make sure the project is delivered on time and on budget. I’m not sure that’s a big change.

It feels like this autonomous structure was the inevitable end game from the establishment of DMO in 2000, and the appointment of Dr Gumley as the CEO in 2004. “Give me the requirements and get out of the way” has been a recurring theme. DMO was given independence of budget as a Prescribed Agency in 2005. In 2008 it was proposed that DMO become an independent executive agency, separated from Defence. It was one of the few recommendations of what was known as the Mortimer review that was rejected by the government.

DMO as a prescribed agency was unwound in 2015 by the First Principles Review. CASG was established with “reduced management layers”, resulting in a reduction in the number of SES Band 3’s. 

Guided Weapons and Explosive Ordnance and Naval Shipbuilding and Sustainment were split out of CASG into separate organisations in 2021 and 2022 respectively. Each with their own Band 3 in charge. They are now back under the umbrella of the Defence Delivery Group/Agency, with a Secretary equivalent to head it. So much for simplified structure.   

I’m not sure that the new structure will really help. It’s not like the Ministers haven’t had direct access to the heads of the three procurement organisations. The budgets for sustainment and acquisition are already transferred to the procurement organisations with requirements. One would have to be sceptical if nothing else changes.

To be fair, Capability Managers are not blameless. They do change priorities and requirements and that makes schedule and cost a challenge for a delivery agency. The alternative is to allow decades long procurements to continue without adapting to changing circumstances such as changes to the international threat level and new government endorsed Defence Strategies. I don’t know that the new arrangements will solve the underlying need for responsiveness, speed and adaptability. Frankly, the organisations are bogged down in process and their own history.

From Gumley onwards, the objective of every “chief” has been for professionalisation, rationalisation, standardisation, engineering and centralisation. They have all advocated for clear requirements setting, independence, and business-like relationships between the capability groups and the procurement organisation. In fact, I think I still see Gumley’s slides appear on occasion. Not surprising, the people who developed under him are now in charge.

The reality is we have been trying to make that cultural change and develop expertise for over 20 years. Despite multiple reviews, leaders, organisational and structural changes, we have been unsuccessful.

Culture and process haven’t changed, the need for intervention, oversight, and control it has become further reinforced. Relationships with industry seem to be ever declining. Partnerships are one way.  Innovation is best done through very selective press releases.

We shouldn’t feel too bad for no one else has cracked the code for defence procurement either: Canada, UK, US, Germany, Norway, to name a few.

There is evidence that centralisation of procurement and delivery reliably improves some things: cost control, compliance, and oversight. It provides pricing leverage and transactional efficiency. It is also known to come at the expense of end-user service, quality of goods, flexibility and innovation. It has a weak record of achieving cultural and behavioural change.

The Canadian parliament commissioned, in 2020, a comparative study of Defence procurement worldwide. They concluded that in complex, high‑technology environments (across defence and industry), that centralisation alone does not fix schedule, integration or innovation problems. Without deep domain expertise, empowered project teams and constructive industry relationships, structural reforms risk becoming another cycle of re‑branding rather than genuine behavioural change.

The other big finding by research – centralisation stifles innovation.

I forecast the announced structural changes will have two effects. Firstly, it will slow todays progress: “we can’t do anything new because there is change in the wind, we are getting a new boss, and we don’t want to do anything until we know what that change looks like.”

Secondly, and I say this because of the language in the announcement. Capability outcomes will slide in order to achieve the agency outcomes of schedule and price. Not necessarily a bad thing if it has enough visibility and tension. That puts the onus on Capability Managers not just to specify what they need, but how it is to be procured, how flexibility is to be built in, and how they – as the customer – will have their needs satisfied, and know that they are being met.

Without doing something else, ever-increasing centralisation and a more complex organisation further removed from the end user isn’t going to deliver on at least some of the outcomes that a modern, reactive, Defence needs. If this e pathway doesn’t scream success, then we need more than one. 

Just so I am balanced, I have found the industry most disappointing. Symptomatic of being beaten down, cowed.  It is sycophantic, claiming cautious optimism publicly while much less so individually and privately. If you are a small company, the fear of upsetting your only client is palpable, so they remain silent. Large companies? It just doesn’t matter; the game goes on. Defence procurement has immense power and needs to wield it with care for it simply does not have the skills and experience to deliver better outcomes for Defence alone.  It needs to embrace criticism and objection, not avoid it.

Defence is too important to leave to Defence. The industry needs to speak out.