Pentagon Contractors Follow Increasing DOD Spending to Australia

Defense Department spending on contracts in Australia is rising as continued concerns about China spark heavy US military investments in the Pacific arena overall.

Well-established prime vendors as well as emerging players in the defense market are chasing opportunities to boost their business in support of a key Pentagon alliance.

Defense tech unicorn Anduril earlier this year announced plans to launch an expansion to Australia. Other companies looking to get in on the growth market include L3Harris Technologies Inc., Lockheed Martin Corp., and Leidos Holdings Inc.

The five vendors with the most revenue in contracts performed in Australia last fiscal year are Boeing Co., Patriot Team, Lockheed Martin, Chemring Group PLC, and Nova Nacap JV. This group has made up the bulk of Australia-based awards for the last four years.

Unclassified Defense Department awards for contracts performed in Australia in fiscal 2022 hit $207.6 million as of mid-August, according to Bloomberg Government data. There are seven weeks’ worth of fiscal 2022 contract awards from DOD yet to be fully reported because of the 90-day national security-related delay in data.

The largest contracts include construction of jet fuel storage facilities, maintenance and logistics support for the Australian Navy’s aircraft, and Australian Air Force training systems.

Procurement spending had been down from fiscal 2020’s $151.3 million to fiscal 2021’s $92.7 million before this past year’s surge.

Partners and Deals

In March, Anduril CEO Brian Schimpf said his company is banking on further growth in that part of the world.

A spokesperson for Anduril told Bloomberg Government in a statement last week, “We know there is strong desire on all sides of the AUKUS partnership to find ways in which to collaborate, and we are happy to help blaze that trail.”

The trilateral defense alliance of Australia, the US, and the UK includes among its focus areas development of artificial intelligence and autonomous systems. Contractors in the business of large weapons systems are also finding ways to get involved and have announced expansions and new business with DOD in Australia and with the Australian government.

Last month, Leidos bought the defense business of Australian company Cobham Aviation Services. Last year, Lockheed and the Australia-based subsidiary of France-based Thales Group announced a partnership to develop guided missiles.

A key element of the alliance is assisting Australia in building nuclear-powered submarines. Relying on a deal announced by the Biden administration in 2021 meant Australia scrapped a previous agreement with France.

To contact the reporter on this story: Caleb Harshberger at charshberger@bloombergindustry.com

To contact the editors responsible for this story: Amanda H. Allen at aallen@bloombergindustry.com; Fawn Johnson at fjohnson@bloombergindustry.com