Defence Department reforms set to usher in new era with creation of Defence Delivery Agency

A new agency dedicated to delivering multi-billion-dollar military projects “on time and on budget” will be set up by the Albanese Government but won’t be fully operating independently from the Defence Department for another 18 months.

On Monday Defence Minister Richard Marles announced sweeping changes to his department that would see three existing agencies absorbed into a new body that will report directly to government.

Defence’s Capability and Sustainment Group, the Guided Weapons and Explosive Ordnance Group and the Naval Shipbuilding and Sustainment Group will be integrated into a new Defence Delivery Agency, which will be independent in mid-2027.

“It will make sure that as we spend more money in the defence budget, and we are doing so in a way which sees programs delivered on time and on budget,” Mr Marles told reporters in Canberra.

“The establishment of the defence delivery agency will see a much bigger bang for buck for the defence spend, and that is at the heart of the decision that we have made.”

Defence Industry Minister Pat Conroy described the impending organisational shakeup, which will begin in July next year, as the “biggest reform to the defence organisation in 50 years”.

“These reforms, historic in nature … will deliver with speed the capability to the men and women of the ADF, making sure that the record increase in the defence budget will be spent wisely,” he said.

Immediate job losses have been ruled out, but The Nightly has been told that numerous senior figures responsible for capability delivery are expected to be moved on when the new Defence Delivery body begins operating in July 2026. Earlier this year it was reported that military service chiefs had been directed to cut 1-star and above positions by 30 percent, with a similar reduction considered for defence public service staff, which would equate to roughly 270 people shown the door.

A recent review of the Australian Submarine Agency which sits outside the Defence Department is understood to have made strong criticisms of the agency which overseas the AUKUS endeavour to acquire nuclear-powered submarines.

Sources familiar with former Defence official Dennis Richardson’s findings, say he has made numerous recommendations on how to improve the direction of the agency which sits outside the Department.