In December 2025, the Australian government announced “the biggest reform to the defence organisation in 50 years”. It relates to centralising arrangements for capability development (deciding what military equipment to buy), and acquisition and sustainment (actually procuring and then maintaining it).
Since 2015, these functions have been spread out across Defence. The responsibility for capability requirements setting – where military personnel determine what levels of performance new equipment needs and identify solutions – has rested with the Chiefs of Navy, Army and Air Force, and the Vice Chief of the Defence Force (VCDF).
In turn, capability contestability, where mainly civilian staff provide independent “arm’s-length” critical assessments of the requirements work to assure it makes sense and isn’t “gold plated”, has mainly resided within the Contestability Division, reporting most recently to the civilian Deputy Secretary Strategy, Policy, and Industry.
Separately, acquisition and sustainment has been conducted through three organisations: the Capability Acquisition and Sustainment Group (CASG), Naval Shipbuilding and Sustainment Group (NSSG), and Guided Weapons and Explosive Ordnance Group (GWEO).
Now Canberra has declared that across 2026 and 2027, the capability function will be centralised under VCDF, while CASG, NSSG, and GWEO will join in a new Defence Delivery Agency (DDA) that will be autonomous from Defence itself. All this is intended to lead to better performance in delivering projects, including to “ensure that money is well spent” and to deliver a “much bigger bang for buck”.
Those of a certain vintage might note that Defence appears to be moving forwards into the past. Before 2015, a very similar state of affairs was in play, with acquisition conducted by the independent Defence Materiel Organisation (DMO) and capability development by the Capability Development Group (CDG).
If Canberra truly does seek to improve Defence’s performance, it must ensure that the organisation is set up for success.
While the merits of the different organisational arrangements can be debated, it was flaws with the CDG-DMO model that led to the current structures, following the First Principles Review (FPR) in 2015. However, an important element of the government’s new reform plans remains unclear: what happens to contestability.
So far, the announcements simply say that capability development will fall under VCDF, which would imply that contestability does too. Yet the only mention of contestability is with reference to DDA, which will apparently “drive stronger contestability [and] more accurate cost estimation”. Which seems a bit odd for an acquisition organisation.
Reading the tea leaves a little, what the government seems to be saying is that DDA will provide an external source of contestable advice on things like the technical maturity of the assets (tanks, aircraft, ships) that Defence proposes to buy, and the robustness of the estimates of the expected price tag.
But which organisation will provide the actual capability contestability – the analysis to check for logic and gold plating? This might seem like a bureaucrat’s concern over lines on an organisational chart, but there is good reason to be worried if contestability does fall under VCDF or any other military officer: it will lose its independence and ability to provide good advice. We know this because it has happened before.
CDG was led by a three-star military officer. As someone who worked there on contestability for half a decade, I saw any number of reports flagging problems with projects disappear into the boss’s office and never come out. Why? The most obvious answer is a conflict of interest: the head of CDG had every reason to support gold plating, not least since he might command these forces in a future role.
This view was backed up by the FPR. It noted Defence projects performed so poorly that other departments “lack confidence in the capacity of Defence to exercise internal contestability”, and this in part stemmed from contestability being “not at arm’s-length…[instead it] reports directly to the military 3 star position responsible for the development of requirements”.
Hence the FPR recommended moving contestability to a civilian home, where it has been over the past decade – something which may now be undone.
Of course, all this may be a storm in a teacup, or perhaps a shuffling of deck chairs on the Titanic. Contestability may stay independent. And even if it does, this is no guarantee of performance: debacles like the Hunter Class frigate occurred even with an arm’s-length contestability function in place.
Yet if Canberra truly does seek to improve Defence’s performance, it must ensure that the organisation is set up for success. Going back to the old ways, without heeding the lessons that led to current settings, sets up the government and taxpayer to reap the same disappointing outcomes. Leading to perhaps another review in a decade or so that re-reinvents the wheel and brings us back to 2025 again.
