Celebrating Australian sovereign capability – Procurement, Fuel and the NRF by Shane West

@AuManufacturing’s editorial series, Celebrating Australian sovereign capability, continues today with the vexed issue of our dependency on imported oil. Here, in part one of a two-part feature, Shane West looks at procurement policies, fuels and the National Reconstruction Fund.

Having initiated and developed the Strategic Procurement MBA at the University of Canberra in conjunction with the then Defence Materiel Organisation (DMO) in 2009, I witnessed at that time the perplexing Australian Public Service’s ‘value for money’ criteria being applied to projects – they positively discriminated against local manufacturing.

The value for money procurement model was approved of by the then Minister for Defence Senator Johnston, who investigated the $15 million defence footwear contract that was awarded by a very slender margin against Rossi boots, a local manufacturer.

The playing field was far from level for local manufacturing with the then procurement criteria basically being won on lowest price (value).

The lowest price tender winner did not take into consideration at that stage, Australian based businesses having to pay payroll tax, superannuation, workers compensation, Australian insurances etc, let alone local employment, local supply chain self-sufficiency or sovereign defence capability.

A senior public servant, when questioned about procurement of this case, in justification of the decision said that in Rossi’s case only 70 percent was manufactured locally, highlighting the APS’s, basic procurement policy settings, disregard for local industry and complete lack understanding of self-sufficiency and supply chain dependency.

The work of then independent Senator Nick Xenophon did set about getting some wider scope into government procurement guidelines.

But the rise of China in the South China Sea and the Pacific, supply chain issues laid bare during Covid and the recent $20 Billion sanctions imposed on Australian wine, beef, barley, coal, seafood and cotton have since made the case for sovereign manufacturing capability obvious.

There is now an urgent need to embrace a change of procurement practices, and to implant the benefits of strategic and sustainable procurement within the APS before the implementation of the National Reconstruction Fund.

One example of sovereignty and strategic procurement that can be supported by the National Reconstruction fund is security of fuel refining and supply.

Fuel security – diesel, gas, pharma, bitumen, plastics etc – is important and not to be discarded simply because they are fossil fuel based.

One of the wake-up calls highlighted in the fiasco of our lack of 90 day fuel security was the Boosting Australia’s Diesel Storage Program (BADSP) – a 780ML tank storage project is to be built and completed by June 30, 2024.

According to the Department of Climate Change, Energy, the Environment and Water: “Australia uses more energy from diesel alone than from electricity. Diesel is our most important and versatile fuel and is needed for emergency services, enabling the transport of food, equipment and medicines and is a backup fuel for electricity generation for critical services like hospitals, water and sanitation and electricity generation in remote communities. Increasing our storage of diesel onshore through an industry stockholding obligation will help protect consumers and the economy from supply disruptions of this critical fuel.”

Clearly more needs to be done.

Part 2 tomorrow: Bass Strait gas.

Shane West has been a director and consultant with Environmental Sciences Australia Pty Ltd for 30 years. Shane has been a local manufacturer of technology, and published research ranging from the heat treatment of cooling towers to the manufacture and commercialisation of sustainable daylighting and natural ventilation products such as the SkyVent. Shane has a PhD in Sustainable Technologies and Methodologies from UTS. Shane has held various Professorial positions such as Head of the Unitec NZ Applied Technology Institute and the ACT Government Professorial Chair of Building and Construction Management.

Picture: exxonmobil.com.au/Altona refinery

@AuManufacturing’s editorial series – Celebrating Australian sovereign capability – is brought to you with the support of Nova Systems and Titomic.