SAPA welcomes government ambition to build Australian sovereign defence primes

The Sovereign Australian Prime Alliance (SAPA) has welcomed Defence Industry Minister Pat Conroy's vision to develop Australian-owned prime contractors capable of standing alongside global defence companies and delivering critical capability for the Australian Defence Force.

SAPA is an informal grouping of seven large Australian prime contractors formed in 2022 with the objective of highlighting the economic and social contributions of these prime contractors and to advocate for a strong sovereign defence industrial base.

The Minister’s comments, reported in the Australian Financial Review, recognise a reality long understood by Australian industry: Australia cannot achieve genuine sovereign capability if it remains solely dependent on foreign-owned prime contractors for the design authority, integration capability, intellectual property and strategic decision-making underpinning major defence programs.

SAPA supports the establishment of the new Defence Delivery Agency (DDA) and the Government’s ambition to support and grow larger, more capable Australian defence companies. However, the Alliance says success will ultimately be determined not by organisational reform alone, but by whether Defence procurement policies create pathways for Australian companies to become genuine prime contractors.

SAPA spokesperson Jamie Morse said the Defence portfolio now has an opportunity to align Defence procurement decisions with the Government’s Future Made in Australia, Buy Australian Plan, and broader national resilience objectives.

“Minister Conroy has issued an important challenge to Defence and to industry. The next step is ensuring Defence procurement practices actively support the emergence of Australian prime contractors,” he said. “Australian companies cannot become prime contractors if they are never trusted with prime contracts.

“If the Government wants sovereign Australian primes, Defence must deliberately create opportunities for sovereign Australian companies to lead, integrate and deliver capability in Australia’s national interest.”

The Alliance noted that Australia already possesses a number of globally competitive, Australian-owned companies operating at scale in strategically important sectors.

In space capability, Australian firms are developing sovereign launch capability, satellite technologies and space systems that contribute directly to national resilience and sovereign access to critical infrastructure. In cybersecurity, Australian companies already protect some of the nation's most sensitive government, defence and critical infrastructure networks.

In guided weapons and explosive ordnance as well autonomous systems, Australian businesses are manufacturing at scale, and increasingly export advanced technologies to allied partners, while in shipbuilding, Australia already has world-class end to end expertise in the design, development, delivery and sustainment of patrol boats and littoral manoeuvre vessels, including global exports.

Recently announced investments will see the Henderson and Osbourne precincts poised to become regionally and globally recognised centres of excellence in shipbuilding and sustainment, including for conventionally-armed, nuclear-powered submarines.

Australian-owned companies are also delivering sophisticated systems integration, communications technology, advanced manufacturing and maritime capabilities that directly support Defence operations and Australia’s national security objectives.

SAPA said these examples demonstrate that Australia’s challenge is not a lack of industrial capability or ambition. What we lack are policy settings designed to help Australian firms scale into major national champions.

“Australia is not starting from scratch. We already have exceptional sovereign companies operating in every Defence domain, producing leading capabilities backed by large balance sheets and strong governance,” Morse said. “The challenge is moving Australian firms from successful SMEs and mid-tier companies into globally competitive prime contractors.”

The Alliance welcomed Minister Conroy’s comments regarding industry consolidation and engagement with private equity, venture capital and long-term investment capital. However, SAPA cautioned that access to capital alone would not deliver sovereign primes.

“Investors will back Australian defence companies when they can see a credible pathway to growth,” Morse said. “That pathway ultimately comes from government procurement decisions. Defence acquisition policy remains the single most important lever available to government to build sovereign industrial capability. Defence is the only Australian customer available to Australian defence industry.”

SAPA said the creation of Australian prime contractors should be viewed not only as a defence objective but as a national economic development strategy. The Alliance noted that independent economic analysis commissioned by SAPA has demonstrated that procurement directed towards genuinely Australian-owned suppliers generates greater domestic economic benefit through higher local employment, stronger supply chains, increased reinvestment and reduced profit leakage offshore. These findings are outlined in the Defence Dividend report, by DeltaPearl Partners (2025).

The Alliance said Australia now has an opportunity to replicate many of the economic benefits previously delivered by the automotive industry through the development of sovereign capability in defence, space, cybersecurity, advanced manufacturing and critical technologies.

Call to action

SAPA calls on the Department of Defence, the Defence Delivery Agency and the future National Armaments Director to translate the Minister's vision into practical action by:

• increasing opportunities for, and contract awards to, Australian-owned and controlled companies to be prime contractors on Defence programs
• ensuring broader economic, industrial and strategic benefits are considered in acquisition decisions
• supporting sovereign Australian capability in strategically important sectors including defence services, cybersecurity, guided weapons, autonomous systems, space capability, communications, shipbuilding and systems integration
• developing acquisition frameworks that recognise the strategic distinction between foreign-owned subsidiaries operating in Australia and genuinely Australian-owned and controlled sovereign enterprises.
   

“The Defence Delivery Agency represents the most significant reform of defence acquisition in generations,” Morse said. “The true measure of success will not simply be whether projects are delivered faster: it will be whether Australia emerges with stronger sovereign industrial capability, more Australian-owned prime contractors, deeper technical expertise and greater national resilience.

“Minister Conroy has outlined an ambitious vision. SAPA stands ready to work with government to ensure Australia builds not only capability for Defence, but enduring sovereign capability for the nation.”

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