Your tech, their tanks: Defence gets flexible in the 2026 IS&T Strategy

On 4 August 2026, the Australian Government released the 2026 Defence Innovation, Science and Technology Strategy (Strategy), setting out a 10-year vision for an integrated Defence Innovation, Science and Technology (IS&T) Ecosystem.

The Strategy identifies six IS&T priorities: autonomous systems, quantum technologies, artificial intelligence, long-range fires, high-energy lasers and undersea warfare. Each has dual-use potential, rapid commercial development cycles and a need for collaboration between the Commonwealth, industry, universities and international partners.

For technology driven businesses, whether primes, small and medium enterprises (SMEs), university spin-outs or cross-border firms, the Strategy presents significant opportunities. The emphasis on acceleration, novel commercial arrangements and private capital signals a shift in how the Commonwealth intends to engage with the innovation ecosystem.

This article examines key themes through the lens of IP licensing and commercial contracting, and offers practical guidance for entities engaging with the Defence IS&T Ecosystem.

Protecting sensitive IP

The Strategy places significant emphasis on protecting IP generated through IS&T activities. Entities seeking to participate need robust IP strategies. The Commonwealth expects partners to demonstrate they can protect sensitive IP, satisfy reporting obligations, manage security risks across governance, personnel, physical and cyber security domains, and maintain those protections throughout collaborative activities.

For technology providers, this means IP frameworks should be built from the ground up. You should be ready to address onshoring IP, explain how you secure rights from subcontractors so the Commonwealth receives enduring licences, and show how you intend to protect sensitive information.

Poorly negotiated IP terms will constrain participation. This is particularly true for terms that vest all foreground IP in the Commonwealth without adequate licensing back, or that impose blanket restrictions on commercial exploitation.

Dual-use commercialisation

The Strategy also prioritises technologies with “potential dual-use application.” The six IS&T priority areas have substantial commercial potential across healthcare, logistics, agriculture, mining and telecommunications. The Strategy expressly contemplates “commercialisation pathways that extend beyond Defence applications,” including “allowing new capabilities to be marketed to domestic and international customers.”

The Silentium Defence MAVERICK passive radar illustrates this. It serves both sovereign defence needs and commercial markets because the IP and licensing framework was built from the ground up to support both.

Key considerations for licensing include:

• Field-of-use licensing: structure licences that permit commercialisation outside defence while meeting the Commonwealth’s requirements for exclusivity or priority access in its field of use.
• Retained IP rights: ensure core background IP and improvements remain with the developer, with the Commonwealth receiving fit-for-purpose licence rights rather than outright ownership.
• Export control awareness: understand how dual-use technologies may be captured by the Defence Trade Controls Act 2012 (Cth) and AUKUS-related export control reforms, and how these interact with licensing strategies.
• Publication and disclosure controls: balance the Commonwealth’s security requirements with the academic and commercial need to publish, patent and demonstrate capability.

These considerations become more important in an AUKUS Pillar II context, where suppliers can develop, license and commercialise technology across Australia, the UK and the US. Contracts need clear rules for IP ownership, permitted use, data sharing and export control approvals across multiple jurisdictions.

Contracts that actually move

Robust IP frameworks matter less if contracts take years to negotiate. One of the Strategy’s most significant themes is acceleration, described as "delivering capabilities faster, through having a shared understanding of Defence's problems, committing to deliver minimum viable capability in the short to medium-term and having a partnered approach where risk is genuinely shared."

Whether that ambition translates into practice remains to be seen. Traditional Commonwealth procurement has been characterised by lengthy acquisition timelines, prescriptive specifications and contractual risk allocation that places the burden on suppliers. This can be particularly difficult for smaller suppliers without the resources to prepare Contract Data Requirements Lists in the prescribed Data Item Description format or manage the complex administrative obligations of lengthy capability acquisition contracts. The Strategy signals genuine intent to change, but suppliers should expect some legacy friction as institutions adapt.

Several concrete indicators suggest a shift towards more flexible engagement:

• DSP3.0: it provides "a more efficient, equitable, and flexible approach to partnering," moving away from rigid, transactional procurement towards partnership-based arrangements.
• Advanced Strategic Capabilities Accelerator Mission Talon-Strike: this demonstrates the Commonwealth’s willingness to adopt commercial-speed contracting. An 18-month, $20.8 million contract with Innovaero involved "streamlined procurement, compressed timelines, and rapid testing and delivery."
• Technology Readiness Level (TRL) acceleration: the Strategy contemplates non-sequential progression through TRLs, with fast-track pathways to deployment.
• Novel commercial arrangements: the Commonwealth commits to "leveraging novel commercial arrangements to support secure and iterative collaboration," including special investment vehicles to attract private capital.

What does this mean in practice? Suppliers should shape terms that support speed while managing the constraints that remain. For example:

• Build in iterative development cycles with clear review points and a process for changing scope as testing produces new information.
• Set minimum viable capability milestones that support early deployment and user feedback.
• Propose accelerated evaluation and approval paths, but map the security gates and dependencies that can delay delivery.
• Protect data and IP as products evolve, covering improvements, training data, security updates and commercial use rights.

That said, not every engagement will match the Strategy’s case studies. Legacy procurement rules, security requirements and institutional processes will still create friction.

From prototype to production

Even with faster contracting, a persistent challenge remains: the ‘valley of death’ between prototype development and production-ready capability. The Strategy directly acknowledges this gap and sets out mechanisms to address it. The Commonwealth is explicit that "bridging funding, transition frameworks, and integrated product teams must be active and well resourced" to prevent earlier TRL work from being "stranded”.

Perhaps the most consequential development is the Strategy's emphasis on private capital:

This is not just rhetoric. In February 2026, Defence released a Request for Expressions of Interest to co-invest up to $500 million into funds financing companies developing defence and dual-use advanced capabilities. The Advanced Capabilities Investment Fund is the most tangible signal yet that the Commonwealth is serious about crowding in private capital.

For suppliers and investors, this is a substantial opportunity, but the structure must work for both sides. Co-investment documents need clear IP ownership, licensing rights, commercialisation pathways and Commonwealth priority access provisions. Key structuring considerations include:

• Investment vehicle design: special investment vehicles must satisfy both institutional investor expectations (returns, governance, exit mechanisms) and the Commonwealth's requirements for security, IP protection and strategic oversight.
• IP as an asset class: defence-related IP portfolios, particularly in dual-use technology areas, may become increasingly attractive to private capital. This depends on licensing and ownership structures being clear and commercially viable.
• SME challenges: the Strategy acknowledges that "SMEs face barriers to engagement with the Defence IS&T Enterprise, constrained by access to secure R&D and testing facilities and the resource burden of participating in major experimentation activities."

Suppliers that can articulate a clear investment thesis and commercial pathway will be well placed to attract this capital.

This is new territory for the Commonwealth and will attract attention from private equity and venture capital firms, superannuation funds and sovereign wealth funds. The structuring work will be substantial: fund formation documents, co-investment agreements, IP holding structures and licensing frameworks that work across the public-private divide.

Suppliers negotiating into these vehicles need terms that protect their IP, preserve commercialisation rights and manage priority access obligations. Investors need governance structures that balance commercial returns with Commonwealth oversight, and exit mechanisms that work within security constraints.

Getting in the room

Money and contracts only matter if you can get to the table. The Strategy introduces mechanisms that materially affect how suppliers engage with the Defence IS&T Ecosystem. A key structural change is relationship tiering. The Commonwealth intends to "reshape Defence's approach to partnering with the IS&T Ecosystem to increase consistency and clarity, enabled by designated relationship managers and relationship tiering." Tier status will be informed by alignment to National Defence Strategy priorities, ability to partner, demonstrated outcomes and security accreditation.

The evolution of the Australian Defence Science Universities Network into the broader Defence Research Network extends beyond universities to include industry partners. This is an important development for SMEs and mid-tier suppliers that have traditionally struggled to access the Commonwealth's research and development ecosystem.

Suppliers should consider:

• DISP: its accreditation increasingly sets the threshold for sustained engagement and informs relationship tiering. Ongoing security uplift creates real compliance costs. For SMEs, those costs can be a barrier. Price them into bids and negotiate cost-sharing or support.
• Classified briefing access: the Strategy contemplates targeted classified briefings for strategic partners. Suppliers with appropriate security clearances and tiered relationship status will have access to problem statements and capability gaps not visible to the broader market.
• Experimentation infrastructure: the Commonwealth intends to expand access to testing ranges, simulation environments and operational testbeds for trusted partners. Review existing agreements to ensure necessary rights and protections are in place.
• DSP3.0 alignment: suppliers under earlier partnering frameworks should assess how existing arrangements map to DSP3.0 requirements and whether renegotiation is needed.
• Co-investment readiness: for suppliers in dual-use technology areas, the ability to demonstrate private capital alignment and investment readiness will be an increasingly important differentiator.

The common thread across all of these access points is proactive engagement. Suppliers that wait for the Commonwealth to come to them, rather than actively positioning their terms, accreditation and capabilities, risk being left behind.

So what?

The Strategy signals that the Commonwealth wants to move faster, bring in private capital, reward proactive partners and commercialise dual-use technologies at scale. For technology-driven businesses, the opportunities are significant, but so are the requirements. Firms that invest in robust IP strategies, negotiate commercially sensible terms and achieve appropriate security accreditation will be best placed to benefit.

If you would like to discuss how the Strategy may affect your business, please get in touch with our IP licensing and commercial contracting team.

This article is intended as general commentary and does not constitute legal advice. You should seek specific advice tailored to your circumstances.