Ask a minister about the Defence Delivery Agency – we did – and the first thing you’ll hear is that it won’t be DMO 2.0. From information released over the past few days, including by way of the 2026 Defence Industry Development Strategy (DIDS), it’s become clear that the differences between the planned DDA and the former Defence Materiel Organisation are more significant than they first appeared. They reflect a change in thinking about how to govern the defence organisation – from contract to partnership, from commercial discipline to stewardship – which mixes its own distinctive cocktail of risk.
Ministers wouldn’t need to disclaim the similarity if it weren’t both ominous and superficially compelling. Like the government of prime minister John Howard in the early 2000s, Anthony Albanese’s government is unhappy with capability delivery as it stands. Like Howard, Prime Minister Albanese is taking advantage of a period of unusual political strength to pair a major defence spending uplift with structural reform. Like Howard, Albanese has centred reform on separating capability delivery from Defence proper.
From 2005 to 2015, the DMO existed as a quasi-independent agency to deliver capability for Defence. The DDA, as indicated in the reform plan Rebuilding Defence Capability, which quietly went public while the Defence Industry Development Strategy was being launched on Thursday, will do something similar, though with more formal independence and control over its own budget. As that plan admits, the problems the DDA is to solve – poor through-life costing and ‘incomplete implementation of clear, senior accountability for capability outcomes’, among others – were identified in the Kinnaird (2003) and Mortimer (2008) reviews. The DMO was designed to solve them. It was abolished in 2015 because, as the First Principles Review saw it, it became part of the problem.
That’s far from an argument that the DMO was a waste of time, still less that history is fated to repeat itself. In the long run, as Mark Thomson wrote for ASPI in 2015, Defence reform ‘owes as much to trial and error as it does to intelligent design …. It’s one more opportunity to discard failed ideas and try some new ones.’ And it’s on the level of ideas that the historical analogy fails instructively.
The DMO was the product of a reform era saturated with the idea that government could, and should, be run more like a business. The relationship between Defence and the DMO was explicitly designed as a purchaser-provider relationship, with the notion that this would impose commercial discipline on capability delivery. The DDA is visibly a creature of a different ideological climate. The design doesn’t imagine Defence as the DDA’s customer. You won’t find a word in the strategy documents about the need for a businesslike relationship between Defence and the DDA. Above and beyond delivery of individual projects, the DDA’s purpose – noted as a ‘key function’ of the agency and a specific responsibility of its chief, the national armaments director – is ‘long-term stewardship of the sovereign defence industrial base’.
That would have been alien to Howard-era reformers. It reflects a newer bundle of ideas known as New Public Governance – broadly speaking, the idea that government should deliver policy outcomes by creating collaborative networks across sectors and levels of society. While you’ll find similar promises in both about creating clearer accountabilities and a now-familiar language of performance contracting and reporting, the DDA’s overall design, unlike the DMO’s, belongs to a post-neoliberal vision of the public sector. It places immense emphasis on trust and partnership (themes strongly underlined at Defence’s annual Defence and Industry Conference on 1 July) within government and with industry, rather than market mechanisms or top-down authority, to deliver capability outcomes.
This would be of purely academic interest if it weren’t that stewardship shapes risk differently. The reform plan envisions both the DDA and Defence having a cozier relationship with industry: to know industry better, engage earlier and, where necessary, protect industrial capacity that the market otherwise wouldn’t. Issues of how to manage industry underperformance and assure probity in procurement are perennial. But the insertion of a duty to steward an Australian industrial ecosystem (and, indeed, to lead development of future iterations of the DIDS and thus decisions over the long-term goals of stewardship) will require DDA officials to walk a much finer ethical line. Long-term stewardship is a big, vague and extraordinarily hard-to-measure policy outcome, and judgements over whether and how any particular action the DDA takes will contribute to that outcome will be both highly involved and difficult to scrutinise from outside the building.
And they will need to be scrutinised, because building a domestic defence industrial base will be messy and uncomfortable. The strategic advantages of doing it are clear, and the new DIDS spells them out well. But the need to assure Parliament and the public that the risk of stewardship edging into regulatory capture is being managed is imperative. For all its flaws, the neoliberal fixation on contract performance had a natural affinity for public scrutiny and audit. The post-neoliberal vision of ecosystem performance doesn’t.