The Department of Defence continues to dominate Australia's procurement landscape, with spending reaching unprecedented levels as the nation's military modernisation program accelerates. With $86.9B in contracts already awarded in just the first half of FY26, Defence is on track for its largest procurement year on record.
Record-Breaking Procurement Growth
Defence's procurement activity has shown remarkable growth over recent years, with spending increasing dramatically from $9.0B in FY22 to $66.0B in FY25. The current trajectory suggests FY26 could exceed $170B in total contract value, representing more than a 150% increase from the previous year.
This surge reflects Australia's commitment to strengthening its defence capabilities in an increasingly complex strategic environment, with major investments in advanced military systems, infrastructure, and support services.
US Foreign Military Sales Drive Major Contracts
The agency's largest supplier relationship tells a compelling story about Australia's defence strategy. FMS Account Reserve Bank of Australia, which facilitates US Foreign Military Sales, accounts for $44.2B in contracts across 252 agreements. This represents over 20% of Defence's total historical procurement value.
The three largest individual contracts exemplify this US partnership:
- CN3995544: $6.9B for aerospace systems and components
- CN3836859: $6.7B for conventional weapons systems
- CN3874635: $4.0B for military rotary wing aircraft
These contracts demonstrate Australia's strategic alignment with US defence technology and capabilities, ensuring interoperability with allied forces while accessing cutting-edge military systems.
Diversified Supplier Base Supports Local Industry
Beyond US partnerships, Defence maintains strong relationships with Australian and international defence contractors. Key suppliers include:
- Hanwha Defense Australia: $6.4B including a massive $4.7B contract (CN4023307) for war vehicles, highlighting Australia's investment in next-generation armoured capabilities
- Thales Australia: $6.2B across 3,934 contracts, demonstrating sustained partnership in electronics and systems integration
- Ventia Australia: $5.8B including a $4.0B base services contract (CN4095604) covering Defence sites nationwide
- BAE Systems Australia: $4.6B across 1,083 contracts for naval and aerospace systems
- Boeing Defence Australia: $4.4B in aerospace and defence systems
Operational Excellence and Infrastructure Focus
Defence's procurement strategy extends well beyond weapons systems. The $4.0B Ventia contract for base services across Australia represents one of the largest facilities management arrangements in the country, ensuring Defence personnel have world-class support infrastructure.
Defence Housing Australia's $4.4B in contracts (across just 5 agreements) highlights the scale of investment required to support military families, with these high-value, low-volume contracts indicating major housing development projects.
Supplier Engagement at Scale
With over 4,200 suppliers engaged in the first half of FY26 alone, Defence demonstrates remarkable breadth in its procurement approach. This extensive supplier base, while smaller than the 5,400+ suppliers engaged in FY25, reflects the shift toward larger, more strategic contracts rather than numerous smaller procurements.
The agency's ability to work with such a diverse supplier ecosystem—from global defence primes to local service providers—showcases sophisticated procurement capabilities and commitment to supporting Australian industry where possible.
Strategic Procurement Leadership
As Australia's largest procurement agency with $215.0B in total contract value across 134,798 contracts, Defence sets the standard for government procurement at scale. The current spending trajectory reflects not just immediate capability needs but long-term strategic planning for Australia's defence future.
The combination of major platform acquisitions, advanced weapons systems, comprehensive support services, and infrastructure investments positions Defence to meet evolving security challenges while supporting thousands of jobs across the Australian defence industry.