Australian Industry Capability (AIC) Program
AIC Program News
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The Defence and Industry Policy Statement (DIPS) 2010, Building Defence Capability: A Policy for a Smarter and More Agile Defence Industry Base, aims to ensure that the Australian Defence Force (ADF) receives the materiel, systems and support it requires on a value for money basis and sets out the policy requirements to be implemented through the Australian Industry Capability (AIC) program to help achieve this objective.
Contacts and Resources
AIC Program Resources
Public AIC Plans
AIC Program Contacts
Within DMO, an AIC Directorate has been established to lead, facilitate and monitor implementation of AIC program policy requirements in eligible DMO procurements.
Where required, the AIC Directorate also coordinates and integrates input from other Defence industry programs, including the Global Supply Chain (GSC), Concept Technology Demonstrator (CTD), Priority Industry Capability (PIC), PIC Innovation and the Skilling Australian Defence Industry (SADI) program.
To contact DMO’s AIC Directorate, click here.
To contact DMO’s Director AIC Program, Mr Wade Buscombe, click here.
Complementary Programs and Contacts
Several Defence industry programs are closely linked to the AIC program. These include the Priority Industry Capability (PIC) program and the Global Supply Chain (GSC) program.
To find out more about the PIC program, click here.
To find out more about the GSC program, click here.
To assist implementation of AIC program requirements, DMO has developed a range of resources.
To access Chapter 3.12 – Australian Industry Capability of the updated Defence Procurement Policy Manual, click here.
To access the updated ASDEFCON suite of tendering and contracting templates, click here.
To access the awareness-level presentation ‘Introducing the AIC Program’, click here.
Under the AIC program, it is a requirement that tailored versions of AIC Plans be prepared for public release. These documents are known as Public AIC Plans.
To access published Public AIC Plans, click here.
About the AIC Program
AIC Plans and Deeds
Defence strategy, the capability needs of the Australian Defence Force (ADF), and the requirement to achieve value for money, determine Defence’s investment priorities and the need for any specific in-country industry capabilities.
Under DIPS 2010, the AIC program aims to:
- provide opportunities for Australian companies to compete on their merits for Defence work within Australia and overseas;
- influence foreign Prime Contractors and Original Equipment Manufacturers (OEM), including Australian subsidiaries, to deliver cost-effective support;
- facilitate transfer of technology and access to appropriate Intellectual Property (IP) rights; and
- encourage investment in Australian industry.
Building on DIPS 2010, Defence further strengthened the AIC program in 2011, implementing the following initiatives:
- lowering the threshold for companies to submit an AIC Plan in tender responses from $50 million to $20 million;
- removing the existing AIC-related Liquidated Damages clauses from the ASDEFCON Conditions of Contract, and replacing them with a clause in the Conditions of Tender that enables a company to be excluded from consideration in the tender if they failed - in previous contracts - to meet their AIC program obligations;
- introducing AIC program performance as an assessment category in its own right in the Company ScoreCard system and hence in the tender evaluation process;
- removing the ability of contractors to reduce the level and type of work to be subcontracted to Australian industry; and
- recording the requirement for appointees to manage AIC program responsibilities in DMO Project and Product Charters.
Additionally, in late 2011, Defence introduced the requirement to publish Defence AIC Plans. Defence’s approach to this latest requirement entails requiring tendered responses to include a version of their AIC Plan tailored for public release.
Each Public AIC Plan is expected to vary in range and detail depending upon the nature of the procurement in view and the size, scope, and complexity of the Australian industry component. The level of detail to be published in each case will depend upon a number of factors, including the security or commercial restrictions or caveats that may apply to various information elements of the AIC Plan and the likelihood of any requirement to amend contracts and their associated AIC Plan over their agreed term.
To access published Public AIC Plans, click here
Unlike its predecessor, the Australian Industry Involvement (AII) program, the AIC program is not percentage-based. Rather, the AIC program aims to create opportunities for Australian companies to compete on their merits for Defence work on a value for money basis. Consequently, for tendered solutions to represent value for money, tenderers must describe how their proposed approach will enhance Defence industry capability and capacity.
Industry Requirements define the activities, tasks, or work packages in tender documentation, or equivalent, that tenderers are to respond to. While Industry Requirements are specific to individual procurements, in each case they will address the relevant industry capability categories, these being defined as follows:
- Priority Industry Capabilities (PIC) are those industry capabilities deemed to confer an essential strategic advantage by being resident within Australia and which, if not available, will significantly undermine Defence self-reliance and ADF operational capability. The PICs are discussed in greater detail in DIPS 2010.
- Strategic Industry Capabilities (SIC) are those industry capabilities that provide Australia with enhanced Defence self-reliance, ADF operational capability, or longer term procurement certainty. Defence plans to review the definition and health of each SIC following completion of the PIC health review program in late 2012. The SICs are discussed in greater detail in DIPS 2010.
- Project / Product Specific Industry Capabilities (PSIC) are those industry capabilities determined by procurement sponsors as being required to enhance the capability being delivered through inclusion of Australian industry. PSICs are determined on a case by case basis.
Industry solutions proposed in tender responses are to identify the Local Industry Activities (LIA) that address each Industry Requirement.
While addressing issues as diverse as AIC program management arrangements, supply chain management, industry program integration, performance reporting and commercial strategy, AIC Plans focus on how Industry Requirements will be satisfied through implementation of the agreed LIA.
AIC Plans are sought for all Defence procurements where the value of the tender is expected to exceed $20 million or where the procurement will impact on a PIC.
To access the AIC Plan Data Item Description (DID) in the ASDEFCON Template suite, click here.
Government to Government (e.g. Foreign Military Sales (FMS)) and Direct Commercial Sales (DCS) procurements are not exempt from AIC program requirements. AIC program requirements for these procurements are to be addressed through AIC Deeds. All industry arrangements recorded in AIC Deed Annexes are contract deliverables.
AIC Deeds formalize Defence’s expectation that international primes will market test and engage Australian industry, where cost effective to do so. Owing to the requirement to achieve value for money under the AIC program, any determination that an AIC Deed is required for a particular procurement is to be underpinned by a business case.
Last updated: June 2012