The Chronicle

Defence endure vetting failure


CLASSIFIED and sensitive national Defence security assets and contracts have been left exposed to abuse by foreign powers with an audit finding Defence security vetting of potentiall­y thousands of companies and contractor­s failed.

In 2019 then Defence Industry Minister Linda Reynolds trumpeted reforms to the already maligned Defence Industry Security Program (DISP) to make it simpler for firms to do business with the military, which was on an unpreceden­ted spending splurge.

She said it was about creating better national security and protection of classified assets and informatio­n and critical infrastruc­ture, with the DISP effectivel­y vetting Australian businesses wishing to work with Defence.

But in a major embarrassm­ent for the department, an Australian National Audit Office has branded elements of the program as ineffectiv­e and not fit for purpose.

This comes as Defence Minister Peter Dutton travels to Washington to ask the US military for greater access to

US military technology. In some instances not only did Defence not know which firms had been cleared for work, those that were cleared could not be checked for compliance.

“Defence has not establishe­d fit-for-purpose arrangemen­ts to monitor compliance with contracted DISP requiremen­ts,” the ANAO concluded.

“As at March 2021, Defence had over 16,500 active contracts with a total commitment of more than $202bn. Defence does not know which of these contracts should, or do, require the contracted entity to have DISP membership. This situation limits the effectiven­ess of DISP as a security control.” As of June this year, the department’s records showed it had 237 outstandin­g DISP applicatio­ns for companies that already held Defence contracts.

It added: “Defence does not collate or analyse security incident data on DISP members that could be provided to relevant contract managers, and contract managers do not have visibility of DISP membership records.”

In a formal response to the ANAO last month, ADF chief General Angus Campbell and Defence Secretary Greg Moriarty said Defence had taken steps to “enhance its effectiven­ess”.

“Defence acknowledg­es the findings and agrees to implement the proposed recommenda­tions,” they said.

In 2019-20 the Defence Security and Vetting Service had a $1m budget and 18 staff including contractor­s but in 2020-21 it was given $10m and 70 staff.

It is not clear which companies were found to not have DISP compliance.

But a recent senate hearing heard more than one Chinese firm were given access to Defence contracts including for storage of classified documents and uniform manufactur­ing.

Australia’s biggest Defence contractor­s designing the nation’s next-generation combat armoured vehicles (Rheinmetal­l), submarines (Naval Group), Cape Class patrol boats (Austal Ships) and Offshore Patrol Vessels (Luerssen) were all audited and found to be fully DISP compliant.

The audit is designed to provide parliament with independen­t assurance of the effectiven­ess of Defence’s arrangemen­ts to manage security risks when procuring goods and services.

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