Russell Buzby

Australia abolished the Defence Materiel Organisation on 1 July 2015 because, in the judgement of the First Principles Review, the acquisition bureaucracy had become part of the problem it existed to solve. On 2 July 2026, almost exactly eleven years later, the government announced its successor. The Defence Delivery Agency will consolidate the Capability Acquisition and Sustainment Group, the Guided Weapons and Explosive Ordnance Group and the Naval Shipbuilding and Sustainment Group into a single body under a new National Armaments Director from 1 July 2027 (Department of Defence Ministers, 2026b). A transitional Defence Delivery Group already exists, with Nadine Williams appointed interim director. The Defence Industry Minister, Pat Conroy, calls the package the biggest reform in fifty years.

The agency announcement arrived alongside the 2026 Defence Industry Development Strategy, the biennial refresh that sits under April’s National Defence Strategy. DIDS26 is built on an argument Conroy has been making for a while and InnovationAus distilled into a headline: industry policy is security policy (Hendry, 2026). The strategy commits Defence to “Continuous Capability Development and Delivery” and “Minimum Viable Contracting”, deliberately borrowed language that signals a shift away from monolithic, fully specified acquisition programs toward faster and more iterative delivery (Department of Defence, 2026). An additional $80 million takes the Defence Industry Development Grants Program to around $250 million out to 2030, and prime contractors will carry new apprenticeship and learning worker targets scaled to the nature of their work (Department of Defence Ministers, 2026a).

There is a great deal to like here. The criticism that Defence specifies everything upfront, contracts slowly and delivers late has been standing for decades, and it is not unique to Australia. On the same day the DDA was announced, the US Government Accountability Office reported that the average time for the Pentagon’s costliest programs to deliver a capability has stretched to more than twelve years (U.S. Government Accountability Office, 2026). Against a strategic environment that every recent Australian planning document describes in terms of shrinking warning time, a twelve-year delivery pipeline is a policy failure in itself. Pursuing faster, increment-based delivery is the right instinct, and putting weapons acquisition under one accountable director along with guided munitions and naval shipbuilding is a defensible way to chase it.

The doubts worth taking seriously are about everything the structure does not touch. ASPI’s Linus Cohen published the sharpest version the day after the announcement, arguing that the DDA’s expanded role as a steward of industry carries real governance risk: “Long-term stewardship is a big, vague and extraordinarily hard-to-measure policy outcome” (Cohen, 2026). An agency accountable for vague outcomes is an agency that is hard to hold accountable for anything. He adds the warning from history. The DMO ran from 2005 to 2015 and was dismantled because it had drifted from enabler to obstacle. Nothing in a machinery-of-government change prevents its successor from repeating the drift, and the closer relationship with industry that stewardship requires is also the classic precondition for regulatory capture.

His colleague William McDowall pushed from a different direction: the reforms do not go far enough, because procurement reform alone cannot build an industrial base. “Defence procurement is designed to buy capability, not build industries”, he wrote, proposing a dedicated sovereign investment fund aimed at munitions manufacturing and critical minerals processing as well as AUKUS-aligned technologies (McDowall, 2026). Successive strategy documents, from the 2016 White Paper through the 2020 Force Structure Plan to the 2023 Defence Strategic Review, have acknowledged the industrial depth problem without closing it. A third ASPI piece the same day completed the set, arguing that greater industrial self-reliance would make Australia’s deterrence strategy more credible (Stewart, 2026). Three pieces in one week, from one institute, all circling the same anxiety: the announcement is necessary and insufficient.

Europe is the cautionary case study. Recent analysis of European defence industrial cooperation traces how post-Cold War budget cuts and just-in-time procurement hollowed out the continent’s ability to scale production (Industrial cooperation in Europe, 2026). The Ukraine war has made that constraint brutally visible, as governments discovered that money cannot buy artillery shells that no factory exists to make. Australia is trying to build its industrial base before the equivalent moment arrives here, rather than after it. That window is a strategic asset, and it is narrowing.

The pattern underneath all of this is one I see constantly in consulting: the strategy-execution gap, in its most expensive form. Structures are the easy lever. A minister can announce one, and government controls the org chart directly, which is why reform so often begins and ends there. Culture and incentives are the hard levers, and they are the ones that decide whether “Minimum Viable Contracting” becomes a genuine operating model or a slogan on a slide. Contracting in increments requires Defence officials to accept and defend imperfect first versions, requires delegations that let program managers move at the speed the strategy advertises, and requires central agencies to tolerate a different risk profile when something inevitably goes wrong. None of that is created by proclamation. I wrote separately about the parallel problem in the ADF’s AI adoption, where spiral development is arriving faster than the governance built for linear programs can adapt, and about the Collins life-of-type extension as a study in what happens when program governance lags the program. The DDA inherits both dynamics on day one.

The eleven-year arc from DMO abolition to DDA creation should discipline our expectations. The DMO was itself a reform, created to fix the failures of its predecessors, and it ended as the case study in the failures of centralised acquisition bodies. Its successor starts with the same theoretical advantages and the same exposure. What would distinguish it is behavioural, and behaviour is observable. Watch for the first minimum viable contract signed in weeks rather than years. Look for the first increment fielded imperfect on purpose, defended publicly as the plan working rather than the plan failing. And note the first troubled program the new agency kills early, before sunk cost turns it into a decade of remediation. Those are the tests that matter, and not one of them can be passed at a press conference.

A new agency is an easy thing to announce and a hard thing to make matter. The DDA will be judged the way the DMO was, on whether the behaviour inside it diverges from the behaviour that made its creation necessary. Eleven years is roughly one capability cycle. If the culture does not shift with the nameplate, we already know what the review in 2037 will say.

References

Cohen, L. (2026, July 3). Australian Defence acquisition’s turn to stewardship of industry brings new risks. The Strategist. https://www.aspistrategist.org.au/australian-defence-acquisitions-turn-to-stewardship-of-industry-brings-new-risks/

Department of Defence. (2026). 2026 Defence Industry Development Strategy. https://www.defence.gov.au/about/strategic-planning/2026-defence-industry-development-strategy

Department of Defence Ministers. (2026a, July 2). 2026 Defence Industry Development Strategy [Media release]. https://www.minister.defence.gov.au/media-releases/2026-07-02/2026-defence-industry-development-strategy

Department of Defence Ministers. (2026b, July 2). Rebuilding Defence capability to keep Australians safe [Media release]. https://www.minister.defence.gov.au/media-releases/2026-07-02/rebuilding-defence-capability-keep-australians-safe

Hendry, J. (2026, July 2). ‘Industry policy is security policy’: Conroy’s defence industry plan. InnovationAus. https://innovationaus.com/industry-policy-is-security-policy-conroys-defence-industry-plan

Industrial cooperation in Europe. (2026). Routledge. https://doi.org/10.4324/9781003562474-11

McDowall, W. (2026, July 3). Australia’s defence industry needs a government investment fund. The Strategist. https://www.aspistrategist.org.au/australias-defence-industry-needs-a-government-investment-fund/

Stewart, C. (2026, July 3). Greater industrial self-reliance can make Australia’s deterrence strategy more credible. The Strategist. https://www.aspistrategist.org.au/greater-industrial-self-reliance-can-make-australias-deterrence-strategy-more-credible/

U.S. Government Accountability Office. (2026, July 2). Weapon systems annual assessment (GAO-26-108457). https://www.gao.gov/products/gao-26-108457