Minister for Defence Industry Telecon 9 April 2020

Key Points

  • Still early days. Pleased that control measures appear to be having desired effect but need to remain disciplined.
  • All participants very happy re communications between Defence, States/Territories and industry groups.
  • Positive feedback from SMEs in relation to payments flowing down from Defence to Primes to SMEs very quickly.
  • Generally, defence industry SMEs in good shape – considerable amount of work is being brought forward.
  • Definition of essential services – PM reiterated people to work from home to maximum extent possible. Defence and industry operate while managing risk.
  • Cross border transfer of goods and people being worked by Defence.
  • Defence working to start transition to more deliberate/sustained work rate
  • March 23 – 50,000 invoices paid, over 70% paid early, average value $70k.
  • Expect primes to flow payments down as quickly as possible.
  • Sovereign Industrial Capability – overseas primes, look at what they can achieve on AIC – no need to wave big stick. Have seen Australian industry can perform. Hoping for new attitude towards SMEs.
  • Structural issue – giant primes – early payments understood at local level, not so good overseas – perhaps a written form to parents of primes from Government or CASG.
  • Liquidity will be an issue, particularly as we look forward. This needs to be looked at closely by SMEs and advise if you are looking at issues with this as Defence rolls out contracts.
  • Definition of essential services – PM reiterated people to work from home to maximum extent possible. Defence and industry operate while managing risk.
  • The stand still deed is still being worked on – a lot of work on concerns from industry about cost/schedule/freight issues and there is thought about drafting and developing a ‘stand still deed’ to assist Industry in these times. Some future contracts will include such a provision.
    • This is currently being discussed with Primes and looking to resolve by Dec 2020.
    • Key points being payment order, flow down, recovery plans and presentation of rights.

Points for Local Industry to Consider

  • It is worth considering providing letters to your employees to say they are working in a defence Industry company that is providing work for extant contracts to Defence/ADF and that they are on their way to work. That way if police stop them, then they have a letter from the employer.
  • Consider now as we move through this COVID-19 regime and it appears now that there may be some relaxation of restrictions, what would your business consider the best effect restriction that could be relaxed that would provide most benefit to your business at the lowest risk. I am in a position to push that forward at our weekly meeting with the Minister.
  • Also consider in your business Continuity Plan, that if you happen to have a staff member test positive to COVID-19, what are your business contingency plans to keep operating on a temporary or full-time basis following something like that?
  • Take the opportunity to look at the ICN COVID-19 Portal and also the NSW Government’s Emergency Suppliers Portal for contract opportunities.

PLEASE LET US KNOW:

  1. A brief summary of how the pandemic has impacted your business
  2. What do you see as potential impacts or the main risks to your business in Short (1-3 months), Medium (3-6 months) or Long Term?
  3. What has Defence done well to support your business? Include broader government measures here.
  4. What could Defence consider to improve your outlook for your business?

Share your feedback direct with our Chairman Tim Owen


How Hunter Defence Can Help:

  • The Centre for Defence Industry Capability (CDIC) has been tasked to be the primary coordination agency between Defence and Industry. Hunter Defence is engaging closely with CDIC and we ask you to please come to Hunter Defence in the first instance so we can table ideas and issues
    • Hunter Defence is involved in weekly conference calls with CASG and Ministers when available.  Hunter Defence is the only regional cooperative group included in these calls outside of the state bodies.
    • Hunter Defence is also in weekly contact via conference call with Defence NSW and is working closely with the NSW state government in looking at ways and means of supporting NSW Defence Industry businesses.
  • Take this opportunity to advise Tim Owen what your issues are
    • Tim has been successful in the last two weeks in bringing attention to the higher Defence organisations the plight of regional SMEs
  • Hunter Defence, in coordination with AIDN, is working to convert the Defence Readiness Seminar Series to an online format, with support from the Federal Government. This will ensure access to relevant training is available for regional SMEs in the Hunter to during this very difficult period.

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