Conroy targets 'rot' in Defence after $15.6m bungle unmasked

In short:

Defence files have unmasked more than $15.6 million in unauthorised contractor payments within Australia's flagship missile program.

The government has conceded the errors and is using the compliance failures to justify greater oversight of spending.

What's next?

The program, known as Guided Weapons and Explosive Ordnance (GWEO) Group, will be folded into the new Defence Delivery Agency starting July 2027.

Defence officials behind Australia's flagship missile program racked up at least $15.6 million in financial and procurement blunders, a freedom of information document shows, including paying out $13.3 million before securing basic legal sign-off.

The defence file exposes a pattern of basic accounting and administrative failures within the Guided Weapons and Explosive Ordnance Group (GWEO), the $36 billion initiative designed to manufacture and stockpile advanced weapons and ammunition on Australian soil.

The federal government acknowledged the errors exposed in the document, with Defence Industry Minister Pat Conroy telling the ABC: "We agree the rot has to stop."

The defence document shows the administrative errors included two payments of $8.1 million and $5.2 million, which were made in June 2023.

Officials paid out the money to cover contract price hikes before getting the mandatory legal approval required to increase the contract's value.

A further four transactions broke basic rules when staff went out to market to get quotes before getting required sign-off from their managers.

In another instance, officials broke spending rules on a $631,365 order by approving a bill that was higher than the allowed spending limit, then mistakenly filing the paperwork in Australian dollars instead of the foreign currency, distorting the exchange rate used.

The money represents a tiny fraction of the multi-billion-dollar defence procurement budget but it raises concerns about how the funds are handled.

There is no suggestion any of the money was lost, but Defence records make it clear the funds were spent "contrary to Defence procurement policy".

More breaches redacted from document

An unknown number of additional breaches and their costs were redacted from the document.

However, "yes" boxes confirm corrective action was required on at least eight additional occasions.

The paperwork also highlights broader procedural lapses across the program, including an August 2025 breach where staff relied on outdated spending rules, missing a policy change that dropped the manager sign-off threshold from $200,000 to $80,000.

The errors were only identified when a new contract management team conducted a review of previous transactions.

"The personnel involved in processing the escalation payment are no longer within the Contract Management Team," the Defence document says, explaining the current team reviewed the arrangement, identified the non-compliance, and formally reported it.

Officials ultimately granted retrospective approval to the $13.3 million in payments on July 10, 2025, roughly two years after the cash went out the door.

Mr Conroy used the ABC's revelations to justify the Albanese government's creation of the newly minted Defence Delivery Group to improve oversight, enforce tighter controls on contracts and get "more bang for the buck for taxpayers".

He also laid blame at the feet of the former Liberal government.

"The management of this contract, a legacy of the former government that outsourced important work to a legion of consultants and contractors, was just not good enough," he said.

"We agree the rot has to stop. That's why since coming to office, we have acted to ensure that the management of this contract is now done by Defence public servants."

"That's why we have ramped up investment in GWEO and made it a priority, which includes greater oversight of management of this contract."

The FOI document shows the unauthorised price-hike payments occurred in June 2023 — more than a year after the Albanese government first took office.

Greens want accountability

Greens leader David Shoebridge, who is also the party's spokesperson on defence, said the issue highlighted deep issues with defence procurement.

"GWEO is one of the government's big-ticket items on defence spending. Questions need to be asked about who was held to account here," he said.

"The documents only say the 'personnel involved' have been moved on.

"In most cases in Defence, 'moved on' is code for promoted away from a problem.

"What is 100 per cent clear is that no one in a leadership position has even been held to account."

A Defence spokesperson told the ABC the department took issues of non-compliance and transparency seriously.

"[It has] demonstrated this through proactive referrals, stronger controls, and increased oversight," they said.

Audit office looks into domestic munitions

The internal disclosures come amid an extensive, two-part investigation by the Australian National Audit Office (ANAO) into Defence's domestic munitions contracts.

The national audit body first exposed severe probity gaps and sole-sourcing failures in June 2024, before handing down a damning second report in July 2026 that criticised the GWEO enterprise for delivering "limited assurance" on value-for-money.

The government has committed between $26 billion and $36 billion over the next decade under the Integrated Investment Program (IIP) to accelerate the GWEO enterprise.

GWEO is among the divisions set to be consolidated into the new Defence Delivery Agency, which will manage Australia's $56 billion annual defence spending from July 2027.

The initiative aims to curb costly project blowouts on major military assets.