Insight – Overseas R&D programs a viable export route for Australian defence contractors

Increases in global defence spending are creating fresh opportunities for Australian companies to participate in overseas defence-innovation programs – especially in North America.

According to defence industry observers, SPIRI, global military spending rose 2.6% in 2018. After a seven year downward trend, US defence spending is again on the rise, and reached US$649 billion last year.

Some of the biggest beneficiaries are defence-related research and development (R&D) programs. As defence forces seek to maintain competitive edge, investment in long-term innovation programs is increasing.

For example, the United States Department of Defense’s Defense Advanced Research Projects Agency, DARPA, gained an 8% rise in its 2019 budget allocation, to US$3.4 bn. This followed a 10% rise in 2018[1].

Participation in overseas R&D programs by Australian companies can provide an effective source of funding for critical research. Participation also generates contacts with R&D personnel that lead to export opportunities as programs move into the production phase.

Overcoming export barriers

One key advantage from participating in R&D programs is that it can help to address export barriers – including limited access to end users and finance.

As applicants progress through the defence program-application process, they will usually gain exposure to decision makers and possible partners. Participants will also gain an indication of end-user appetite for specific technologies.

Successful applicants may also receive contracts that help establish an in-market presence – and gain valuable cash flow.

Not all innovation programs are open to Australian applicants, however, and some may require partnerships with local entities

Working with US defence programs

Austrade and the Department of Defence are working together to identify new programs and find new ways to access them.

The United States is a particular focus for Australian efforts. Australian agencies have identified multiple innovation programs that are open to Australian submissions. These include:

Defense Advanced Research Projects Agency (DARPA): DARPA submissions are well-suited to advanced organisations with significant R&D capabilities, such as universities.

Defense Innovation Unit (DIU): The DIU seeks to identify commercial solutions that can meet US Department of Defense needs, and has a strong focus on fast turnaround times. DIU submissions are well-suited to businesses with commercial products that match a DIU call.

AFWERX: The US Air Force’s innovation program AFWERX issues specific challenges, partners with technology accelerators and holds the annual AFWERX Fusion Experience conference.

US AID: US AID operates an open Development Innovation Ventures program that covers work in any country where US Aid is active. The program has multiple grants available, ranging from proof of concept to scaling.

The Defence Innovation Marketplace: provides a centralised resource that consolidates many of the above (and additional) defence innovation solicitations in the United States.

Canada’s defence investment program

Canada is also a potential market for Australian defence exporters with Canada’s defence spending projected to rise in 2019.

Within the Canadian Government’s 2018 Defence Investment Plan, the Canadian government has identified priority areas for increased defence spending over the immediate and longer term, which include cyber, space, unmanned air vehicles, satellite communications, surveillance and logistics.

Canada also has an innovation program which offers an additional means of accessing global funding, innovation opportunities and entering the Canadian market.

Canada’s Innovation for Defence Excellence and Security (IDEaS) program: The IDEaS program operates a range of mechanisms including contests and solicitations and innovation networks.

Eligibility for the program is limited to educational institutions chartered in Canada, or international collaborators who partner with a Canadian recipient.

Companies seeking more information on these programs should contact the Austrade Defence, Advanced Manufacturing and Space team at defence@austrade.gov.au


[1] US Department of Defence, FY 2019 President’s Budge, Defence Advanced Research Projects. https://www.darpa.mil/attachments/DARPAFY19PresidentsBudgetRequest.pdf