Australia confirms AIC audit is ready for implementation

The Australian Department of Defence (DoD) has issued more details about the new audit programme it will introduce to ensure foreign contractors comply with industrial collaboration obligations.

The intention to implement the audit was announced in February 2020. Australia’s Minister for Defence Industry Melissa Price said at the time that the audit programme would be developed to “hold contractors to account” on their obligations, which are framed by the government’s industrial collaboration policy, the Australian Industry Capability (AIC) programme.

German shipbuilder Lürssen has achieved nearly 63% local content in its programme in Australia to build 12 Arafura-class offshore patrol vessels (pictured) for the Royal Australian Navy. (Lürssen Australia/ASC)

In comments in a defence industry summit on 24 September, Price said that the audit policy – which is officially known as the Independent AIC Audit Program – “is now in place as promised”. Although full details have not yet been disclosed by the DoD, Price confirmed that related audit mechanisms could result in non-compliant contractors failing to win defence contracts.

“[The independent audit] is a targeted programme that will look at specific contracts over time,” she said. “It has taken considerable time to develop because it so important – we need to get this right. It will be the tool we use to ensure AIC compliance across the board.”

Price added that once fully introduced, audit results would be easily obtained to assess a prime contractor’s performance in collaborating with local suppliers. “When an audit is established it will be targeted, and it will be forensic,” she said. “Independent auditors will be able to go on site, look at the books and thoroughly investigate if a company is compliant with AIC.”