BAE enters Aussie supply chain agreement

Sept. 15, 2011 at 6:12 AM
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CANBERRA, Australia, Sept. 15 (UPI) -- BAE Systems joined six major defense contractors when it signed a Global Supply Chain Deed allowing Australian companies to become part of BAE's global supply chain.

Australian Minister for Defense Materiel Jason Clare and the new chief executive officer of BAE Systems Australia, David Allott, signed the document at Parliament House in Canberra.

The deed is the first step in helping more Australian companies access BAE's global supply chain so the companies can compete not just for contracts in Australia but globally as well.

Apart from BAE, the other six major contractors that have signed a deed are Boeing, Raytheon, Thales, Eurocopter, Lockheed Martin and Northrop Grumman.

"The next step is to sign annexes to these agreements which give companies access to government funding to hire a team of people to identify and certify Australian companies as part of their global supply chains," a Ministry of Defense statement said.

Boeing, Raytheon and Thales have signed annexes.

The government has invested more than $11 million in the program over the past three years, Clare said.

"When the program was established everyone agreed that if it could provide a 10-fold return on the government's investment it would be a roaring success," he said.

"To date it has delivered more than a 30-fold return on investment with more than $356 million in contracts awarded to Australian industry. Australian small to medium-size businesses have been the big winners, winning about 90 percent of the value of these contracts."

In June, Northrop Grumman signed the Global Supply Chain Deed, saying it is a pledge to "work closely with the Australian Department of Defense to identify opportunities for Australian companies."

The company is a key subcontractor for the Wedgetail AEW&C, F-35 Joint Strike Fighter and the F/A-18 Super Hornet programs.

The GSC Deed concept was launched at government's Defense and Industry 2009 conference as an enhancement to the Australian Industry Capability program. AIC is "to maximize Australian industry participation in defense procurement, on a best value for money basis," the Ministry of Defense said.

The AIC program means for all defense procurement of $50 million or more or projects with a defense-mandated industry requirement, tenderers must submit an AIC Plan as part of the tender. Defense procurement below the $50 million threshold is required to maximize opportunities for Australian companies.

Under the AIC Plan, tenderers outline how they intend to maximize opportunities for Australian companies, including checking on their capabilities and assessing competitiveness. Each AIC Plan is assessed and form part of the overall tender evaluation. Contract winners will have their AIC Plans monitored and evaluated.

GSA Deeds were formalized in the Australian government's 2010 Defense Industry Policy Statement -- two years in the writing.

Importantly, the government's policy statement rejected the idea of using offsets -- local content quotas -- to ensure Australian defense industry input into Australian defense contracts.

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