The intriguing case of the Sovereign Capability that quietly disappeared (based on a true story)

An Australian family-owned small business invests to become Defence-ready. With a long successful history of delivery in a non-Defence sector, the owner gets excited by the Defence carrot. They attend the many ‘Defence-ready’ workshops, seminars, etc, and invests in new skills, strengthens its governance, upgrades its security by working towards DISP accreditation, develops quality systems and purchases specialist equipment.

All is going well until the expected opportunity is then delayed, restructured or reprioritised.

At first, the small business remains optimistic. The founder/CEO assures the team that Defence programs are complex and delays are normal...which is what they’ve been told anyway. The board approves another quarter of investment, and they retain their skilled staff, renew their certifications and continue preparing for the opportunity.

Three months become six, then twelve, then….the company receives encouraging messages after release of another Defence Industry Development Strategy. The requirement remains important, and Industry is told that sovereign capability, resilience and speed to capability are national priorities.

…but no contract arrives.

The finance manager (who is also the CEO, COO & CTO) begins modelling how long the business can continue carrying the additional people and equipment. A senior engineer, one of only a handful with the required experience, is offered a more secure role in another industry. The company makes a counteroffer, but it cannot match the certainty and the money.

The senior engineer leaves, and the apprentice intake is postponed. A planned security upgrade is deferred with specialist equipment stagnant while finance payments continue. They decide not to renew an expensive certification in preference to going back to their non-Defence bread ‘n butter sector.

Twelve months later, another carrot dangles as the opportunity reappears. This time, Defence now needs the capability quickly. The small business is still operating, but the team that originally understood the requirement has now dispersed. The suppliers are no longer available, and rebuilding the necessary workforce, certifications and supply chain will require additional time and money based on the risk of the work happening or not.

The company is then asked why Australian industry was not ready.

This is how sovereign capability disappears

There is rarely a ceremony marking its loss. It disappears through delayed decisions, changing requirements, interrupted pipelines and skilled people making rational choices about their futures. Small businesses are particularly susceptible to this.

Sovereign Defence Industry Capability is a frog in boiling water! No single decision caused the capability to vanish, and each delay was understandable when considered in isolation. But together, they created an outcome that nobody intended.

Whilst this is based on a true story (anonymised of course), this is not the story of just one business. It is a pattern that Quintessential Consulting has observed while working alongside Australian businesses seeking to become Defence-ready over the past five to six years, especially after the urgency around the security of sovereign supply pipelines post-Covid. These businesses have invested in governance, security, quality systems, infrastructure and specialist people. They have accepted uncertainty because they believe in contributing to Australia’s national capability and a hope to grow their business.

Their commitment is not the missing ingredient. The question is whether the broader system can understand and work within their context, and offer a level of commitment that small businesses require because their ability to absorb delayed decisions is very limited. This story is personal…a business that was handed down to them by their parents, who established it over 30 years ago out of a shed in their backyard!

In her Defence Connect article, “Beyond Defence: Lessons in innovation from across industry”, Australia’s Chief Defence Scientist, Professor Tanya Monro AC, presents a compelling vision, which I applaud and agree with.

Australia needs an industrial ecosystem that is resilient, adaptive, collaborative and capable of carrying risk. Industry must understand the mission, integrate effectively and bring strengths Defence does not possess. The principles are sound and the intent is great, but haven’t we been here before?

The experience we’ve had in supporting small-medium businesses raises three harder questions.

1.   Are we truly serious?

Australia has many of the ingredients required to build sovereign defence capability right here in our own backyard, namely skilled people, capable research institutions, advanced technologies, trusted international partners, planned investment, and good old Aussie grit.

But resilience has a cost. It requires companies to retain specialists, maintain secure facilities, preserve qualified supply chains and keep equipment available before an urgent need emerges. You might call this ‘being proactive’.

Small businesses cannot finance that capacity indefinitely. Unlike multinational primes, they cannot spread risk across global programs or carry underutilised teams for years. For a small business, cash flow is CRITICAL as it determines whether people remain employed, certifications are renewed and specialist capability survives.

If Defence values resilience, it must be prepared to purchase the resilience premium through credible pipelines, continuity of work and real contracts, otherwise, resilience becomes an unfunded obligation imposed on those least able to carry it, i.e., SMEs.

2.   Do we understand that success lies in implementation?

Australia is not short of strategies, policies, reviews, grant programs or industry briefings. Success occurs when policy is operationalised and it changes what happens on the ground to build sustainable capability. It is visible when requirements become clearer, decisions become faster, contracts are placed, suppliers are paid and successful innovations reach the intended end-user.

For a small business, the difference between policy intent and implementation can be existential. A six-month delay may appear manageable inside a large program. However, for a small supplier it consumes the cash reserved for product development, force the loss of a critical employee or cause the board to abandon Defence as a commercially unviable endeavour.

Grants can help purchase equipment or achieve accreditation, but they cannot create demand. Experimentation can generate valuable knowledge, but without a pathway to timely evaluation, integration and implementation, it can also leave businesses trapped in permanent pilot mode, continually demonstrating capability without ever reaching sustainable work.

3.   Do we have the stamina for the long game?

Sovereign capability cannot be purchased at the beginning of a crisis. It takes years to build trusted workforces, secure facilities, technical knowledge and qualified supply chains. Yet it can take only months of uncertainty for those elements to disperse.

JORN demonstrates what long-term commitment can achieve. Its success emerged from decades of sustained scientific expertise, industrial capability, operational knowledge and international partnership. Australia maintained not merely a technology, but the capacity to keep solving the problem as circumstances changed and capability evolves to meet current and emerging requirements…just ask the Canadians.

That is the stamina that sovereignty requires.

Sovereign Stamina

Let’s face it, Governments will change and leaders will rotate. Organisations will restructure, reviews will continue, and priorities will evolve. But if every change resets the relationships and industrial investments that came before it, Australia will continually rebuild capabilities it could have sustained.

Industry must invest responsibly, collaborate and deliver, and Defence must match that commitment with clarity, pace, proportionate risk and importantly…continuity and clarity of commitment. Otherwise, one day the urgent requirement will arrive and we will discover that the company still exists, but the sovereign capability has quietly disappeared.