May 4, 2023

Series: Defence Strategic Review

On 24 April 2023, the Department of Defence released the Defence Strategic Review. This will have profound implications for the strategic and capability landscape within Australia for decades. Across this DSR series, we explore the outcomes and practical issues to be addressed through the implementation of the DSR.

The DSR:  A changing strategic and capability landscape


  • On Monday, 24 April 2023, the Australian Government publicly released the highly anticipated Defence Strategic Review (the DSR).
  • The DSR, independently prepared by former Defence Minister, the Honourable Professor Stephen Smith, and former Chief of the Australian Defence Force, Air Chief Marshal Sir Angus Houston AK, AFC (Ret’d), represents a blueprint for Australia’s adaptation to our current strategic circumstances.
  • The DSR contains a number of significant recommendations and observations regarding Defence’s current strategic approach, force structure and posture, capability investment priorities and acquisition processes.

Over the coming week, our team will release a series of insights describing the domain-by-domain implications and practical considerations resulting from the DSR.  In particular, the commercial, legal, contractual, and procurement related considerations for projects across all stages of delivery.  In this Part 1 of our series, we provide an overview of the key strategic and capability priorities set out in the DSR, and set the scene for the more detailed analysis to follow.

Key changes to Defence’s strategic and capability priorities

Defence’s strategic priorities

At its core, the DSR sets out three key strategic priorities that will have effects across the entire Defence procurement, geopolitical, and operational landscape.  Those are:

  • the adoption of a military strategy of denial.  This is a signficant change from Defence’s previous strategy of access and influence;
  • prioritisation of the defence of Australia’s northern approaches; and
  • the transition of the ADF from a balanced joint force to a focused integrated force.

Capability and investment priorities

The DSR also made a number of significant capability investment recommendations, such as:

  • the reform of Defence’s capability acquisition process to streamline and fast-track procurement of capabilities;
  • placing greater emphasis on ‘speed to capability’ rather than Australian industry content and domestic production opportunities;
  • more frequent use of sole-source and limited tender approaches to market where capability is readily available;
  • transitioning to a ‘minimum viable capability’ model of delivery;
  • cancelling, accelerating, and/or reducing the scope of certain land domain projects;
  • reallocating funding to long-range strike and littoral manoeuvre vessel projects; and
  • conducting an independent review of Navy’s surface combatant fleet, to be released in Q3 2023.

Strategic recommendations

A military strategy of ‘denial’

The DSR’s most consequential strategic recommendation is the adoption of a military strategy of denial.  This is a significant geopolitical and strategic change from Defence’s previous strategy of access and influence.  This change in strategy gives rise to lasting changes in the operational, force structure, and capability requirements of Defence.

Since the 2020 Defence Strategic Update, the Australian Defence Force (ADF) has implemented a strategy of building access to our immediate region, and exercising influence within the Indo-Pacific in support of shared security interests.  A strategy of denial is described by the DSR as:

“… a defensive approach designed to stop an adversary from succeeding in its goal to coerce states through force, or the threatened use of force, to achieve dominance” (paragraph 7.1, page 49).

This transition to a strategy of denial represents a hardening of Defence’s approach to countering coercion, in particular through greater emphasis being placed on the acquisition of Anti-Access Area Denial (A2AD) capabilities such as long-range strike missiles, undersea warfare equipment, and surface-to-air missiles.  As part of this strategy of denial, the DSR emphasises the importance of defending Australia’s northern approaches, formally recommending major upgrades to ports, bases, and barracks in the north of Australia.  

Force structure - balanced joint force vs. focused integrated force

Flowing from the adoption of a targeted strategy of denial is the recommendation for the ADF to transition from a balanced joint force to a focused integrated force.  The recommendation for the ADF to also transition its force structure from a joint force to an integrated force further demonstrates the significance of the strategic recommendations made by the DSR.

The current ADF force structure is a balanced force, meaning the ADF is designed to respond to a varied range of threats that are specific to each of the three traditional military domains, being land, air and maritime.  The DSR notes that, as a result of the major changes to Australia’s strategic environment, the assumption that a joint force structure can achieve military deterrence is no longer valid.  This is because the current joint force structure of the ADF assumes that the combined (but separate) effects of the land, air, and maritime domains will result in the mitigation of all conventional military risks to the defence of Australia.

Under a focused force, the ADF will instead be structured across all three services to respond to the nation’s most significant threats (including in the cyber and space domains), in a complementary and integrated way.  For example, the impact that this transition to a focused force will have on the ADF is the redirection of the Australian Army’s mission to provide greater ground-based support to the air and sea domains via long-range strike and air and missile defence capabilities.  In practice, this means that each service within the ADF will seek to strengthen the defensive capabilities of the others against identified military threats focused on cross-domain support, rather than focusing on domain-specific threats that may not carry the greatest risk to the defence of the nation.  

Ultimately, the DSR recommends that the ADF transition to an integrated force structure that harnesses effects across all five domains of warfare, being land, air, maritime, space, and cyber.  This new focused integrated force structure will require the ADF to acquire and deploy cross-domain capabilities in order to ensure that all three services can successfully implement a coordinated strategy of denial.

Capability and investment priorities

The changes to Defence’s strategic approach, as set out in the DSR, necessitate a number of consequential changes to Defence’s capability acquisition processes and investment priorities.  The DSR recommends a number of capability and investment priority changes, which have now been agreed by the Government.

In the diagram below, we set out the links between the changing strategic priorities and their effect on capability outcomes and procurement priorities.

Image: The relationship between the strategic, force structure and posture, and domain capability priorities and recommendations made by the DSR.

The most significant of these new capability investment priorities and changes to Defence’s capability acquisition requirements are:

  • the streamlining of Defence’s procurement processes to deliver capability faster (paragraph 12.7, page 92);
  • greater balancing of Australian industry content and domestic production considerations against timely delivery in capability acquisition processes (paragraph 12.8, page 92);
  • using sole source and off-the-shelf procurement methods to deliver low-complexity capabilities faster, and accelerating the delivery of high-complexity and strategically urgent capabilities (paragraph 12.7, page 92);
  • transitioning to a ‘minimum viable capability’ delivery model that emphasises compliance with minimum requirements within the shortest possible timeframe over technical perfection (paragraph 12.4, page 91);
  • the cancellation of LAND 8116 Phase 2 – Protected Mobile Fires and reduction in scope of LAND 400 Phase 3 – Land Combat Vehicle System from 450 to 129 vehicles (paragraphs 8.37 and 8.35, page 59);
  • the acceleration and expansion of LAND 8710 Phases 1 and 2 – Army Littoral Manoeuvre Vessels, LAND 8113 Phases 2-4 – Long Range Fires (HIMARS), and LAND 4100 Phase 2 – Land-Based Maritime Strike (paragraphs 8.33 and 8.34); and
  • conducting an independent analysis of Navy’s surface combatant fleet to ensure its size, structure and composition complement the capabilities provided by the forthcoming conventionally-armed, nuclear-powered submarines by the end of Q3 2023 (paragraphs 8.26 and 8.27, page 57).

Domain-by-domain analysis of the DSR

Practical implications across the legal, procurement, and contractual context for Defence

Over the coming week, Aldermane will be publishing a series of articles analysing the major capability recommendations made by the DSR across all domains.  As part of this series, our team of defence specialists will assess what impacts each of the new capability priorities and recommendations made under the DSR will have on Defence from a legal, procurement, and contractual perspective.

We will take a domain-by-domain approach to our analysis of the recommendations made by the DSR, and their potential commercial and legal implications for Defence as follows:

  • Part 2 - Air and Space Domain: contracting mechanisms to upgrade air platforms to enhance lethality, delivering complex strategic programs at speed, and mitigating the risks of conducting rapid acquisitions of off-the-shelf capabilities.
  • Part 3 – Maritime Domain: the commercial implications of transitioning Navy’s fleet to a greater quantity of smaller, more lethal vessels, mitigating risks in the integration of long-range strike capabilities onto surface combatant platforms, and managing risks associated with scope changes under extant contracts.
  • Part 4 – Land Domain: managing the cancellation of procurement processes, key risks to consider when adjusting the scope of live tenders and extant contracts, and setting up accelerated acquisition processes for success.
  • Part 5 – Cyber and Command, Control, Communications and Computers (C4) Domain: contractual models to achieve open architecture software and hardware solutions, managing intellectual property risk within open architecture software environments, and contracting for cyber-secure capabilities.

If you have any questions, or would like specific advice on the Defence Strategic Review, please feel free to contact us.

For more information about the DSR’s capability investment priorities and recommendations, stay tuned for the upcoming entries in Aldermane’s DSR in Detail series.


Rory Alexander, Principal

Nick Faulks, Senior Associate

Brenton Lam, Associate

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