Model26 forecasts up to $150 million in annual Defence services savings

A new not-for-profit Defence delivery model could reduce the cost of professional and technical services to government by 15 per cent, representing potential savings of (AU) $150 million annually, according to modelling by Model26. The modelling applies Model26’s proposed commercial structure to an estimated addressable Defence consulting and professional services spend of around (AU) $1 billion per year. Unlike traditional cost-reduction approaches, the forecast savings are not predicated on reducing supplier rates. Model26 is designed to remove layers of commercial overhead and margin accretion, improve utilisation of specialist capability and create a more direct relationship between Defence and the organisations delivering the work. Trevor Dove, Future Business Director at BMT Asia Pacific, which helped establish Model26, said the potential savings highlighted the need to take a closer look at the commercial structures underpinning Defence services delivery. “When Government is investing at this scale, the commercial structure matters. If a different model can give Defence access to the same exceptional capability while potentially retaining $150 million more each year for Defence priorities, we believe it deserves serious consideration. This isn’t about asking Australian businesses or specialist SMEs to do more for less. The opportunity is to take unnecessary structural cost out of the system so more of every Defence dollar is directed towards capability. That value can be realised through lower delivery costs or invested back into workforce capability, innovation and sovereign industrial capability. Either way, the beneficiary should be Defence and the Australian taxpayer.” Model26 launched in June as an independent, not-for-profit Defence delivery organisation designed to operate within Australia’s existing Major Service Provider (MSP) framework. Built around the principle that industry should augment government capability, not replace it, Model26 will assemble and manage integrated delivery teams drawn from established advisory firms, specialist SMEs and sovereign capability providers, providing Defence with a single point of accountability for delivery and performance. Its not-for-profit structure removes the requirement to generate returns for external shareholders, with commercial efficiencies intended to reduce delivery costs for Defence. Dove said the response from industry had reinforced the appetite for a different approach. “The message we’ve heard from industry has been remarkably consistent. There is strong appetite for a model that delivers greater value and flexibility for Defence while creating genuine pathways for Australia’s specialist capability to participate. Australia has extraordinary capability, much of it sitting within SMEs that have built deep Defence expertise over many years. Model26 aims to bring that expertise into integrated delivery teams, with clear accountability for performance and outcomes.” For Editorial Inquiries Contact: Editor Kym Bergmann at [email protected] For Advertising Inquiries Contact: Group Sales Director Simon Hadfield at [email protected]