Estate, bunkers and long-term services: where Defence’s $15 billion alternative-financing push may land

By Darian Macey, July 15 2026

Pat Conroy’s latest comments have moved Defence alternative financing from a broad policy ambition towards a practical market signal. The Defence estate, capability-linked infrastructure and services traditionally purchased upfront are now the three categories industry should be watching. But private capital will only work where Defence can define a secure, measurable and bankable service.

Alternative financing has spent years as one of the Defence infrastructure market’s most frequently used—and least clearly defined—phrases.

It can describe a conventional public-private partnership, private capital supported by government availability payments, equity investment through a Commonwealth entity, a government business enterprise, leasing, long-term service contracts or a hybrid of several models.

That breadth has made alternative financing easy to announce but difficult for industry to act on.

On 1 July 2026, Minister for Defence Industry Pat Conroy gave the clearest indication yet of where the Government expects it to be used.

Speaking at the Defence and Industry Conference in Canberra, Conroy said the 2026 Integrated Investment Program contained approximately $425 billion of investment over the decade, with around $15 billion expected to be tested through alternative financing.

He then nominated three main categories:

1. the Defence estate;
2. infrastructure tied directly to capability delivery, including facilities such as storage bunkers; and
3. requirements Defence has traditionally paid for upfront that could instead be purchased as long-term services. [1]

That does not amount to a $15 billion PPP procurement program.

The Government’s formal position is that it has identified around $5 billion over the forward estimates and $15 billion over the decade in projects for which Defence will prioritise developing alternative-financing options. The nominated fields include the Defence estate, the Henderson Defence Precinct and the Guided Weapons and Explosive Ordnance enterprise. [2]

The distinction matters.

These are projects to be assessed, structured and tested—not committed private-finance transactions. Some will prove suitable. Others will not survive the bankability, security, value-for-money or market-capacity tests.

Nevertheless, Conroy’s comments materially narrow the field. The discussion is no longer simply whether Defence is interested in private capital. It is where Defence expects industry to help develop workable commercial models.

Alternative financing is broader than a PPP

The 2026 National Defence Strategy budget material makes clear that alternative financing is not limited to private-sector debt and equity.

It can include equity-based financing through Commonwealth bodies, special direct-investment vehicles and government business enterprises, as well as private finance. [3]

That opens several possible delivery pathways.

A project might be delivered through a traditional design, build, finance, operate and maintain PPP. A Commonwealth-owned entity might raise or receive capital to develop a strategic precinct. Defence might lease an asset or buy guaranteed capacity over a long term. An operator might provide infrastructure as part of an availability-based service. Public and private capital could also be blended where the Commonwealth needs to retain greater control.

Henderson illustrates why this broader definition matters.

The Government has made a $12 billion initial commitment to early works and infrastructure at the Henderson Defence Precinct, while Defence says the total infrastructure requirement may be around $25 billion over the decade. The precinct will need naval construction and sustainment facilities, nuclear-powered submarine docking and maintenance infrastructure, transport, utilities, housing, services and an expanded workforce ecosystem. [4]

That does not mean Henderson will become a conventional PPP.

It does mean its scale, staging, existing commercial users, common-user infrastructure, state involvement and potential for multiple operating models make it a logical place to examine equity structures, Commonwealth vehicles, long-term operating arrangements and targeted private participation.

Private finance is not free money

The most important point for industry is also the least glamorous: financing is not the same as funding.

Private finance changes when capital is provided, who raises it, how risk is allocated and how repayment occurs. It does not remove the need for Defence, another government body or an end user to fund the infrastructure or service over time.

Conroy explicitly rejected the idea that alternative finance is only about moving investment from the Commonwealth balance sheet to the private sector. He also invited industry to identify alternative revenue streams that could complement Defence demand and help support a project’s commercial model. [1]

That could be significant for dual-use infrastructure.

A port, warehouse, fuel facility, maintenance precinct, energy system, accommodation development or logistics hub may serve Defence while also supporting civilian, allied, emergency-management or commercial users.

Additional demand could improve asset utilisation and reduce the amount Defence must pay for reserved capacity.

But dual use cannot be assumed.

Defence may require priority access, surge rights, security controls, assured availability and the ability to take operational control during a crisis. Those requirements can displace commercial users and reduce the revenue that makes a project attractive to investors.

The commercial model therefore has to answer a harder question than whether an asset has potential peacetime customers:

Can Defence define the service clearly enough for an investor, lender and operator to price it—and clearly enough for Defence to activate it under pressure?

If the answer is no, the project is not ready for private finance.

The three most likely opportunity areas

1. Defence estate and support infrastructure

The estate is the most obvious testing ground because Defence already has experience with long-term privately financed infrastructure.

Conroy pointed to Headquarters Joint Operations Command near Bungendore as an example of successful “patient capital”. The complex was developed through a public-private partnership with Praeco, opened in 2009 and is subject to a long-term sustainment arrangement running to 2036. Ongoing facilities operation and maintenance has been subcontracted to Downer Defence. [5]

The model worked because Defence could define a long-lived facility requirement and measurable availability and maintenance obligations.

Future estate candidates are likely to share some of those characteristics:

• accommodation with predictable demand;
• warehouses and logistics facilities;
• utilities and energy infrastructure;
• maintenance and sustainment facilities;
• common-use training or support infrastructure;
• standardised facilities that can be bundled across several bases;
• selected leased or availability-based office and support facilities; and
• precinct services with long operating lives.

Projects with repeatable designs and clearly measurable performance requirements are more likely to support alternative financing than bespoke facilities with continually changing user requirements.

This aligns with the Defence Estate Audit, which calls for alternative finance and delivery models to be embedded in estate planning alongside whole-of-lifecycle cost provision. [6]

2. Capability-linked infrastructure

Conroy’s reference to storage bunkers is commercially important.

It places capability infrastructure—not merely general property—inside the alternative-financing discussion.

The most obvious field is the Guided Weapons and Explosive Ordnance enterprise, where Defence needs manufacturing, storage, distribution, testing, maintenance, utilities, security and supporting logistics infrastructure.

Similar questions could arise around fuel resilience, deployable infrastructure, secure warehousing, fleet sustainment, airfield support and specialised maintenance facilities.

These assets may be strategically valuable but difficult to finance privately.

A highly classified or single-purpose facility may have no alternative customer. Changing weapons, safety or security requirements can create major modification risk. Government may need extensive step-in rights, and foreign ownership or financing arrangements may require close control.

The opportunity is therefore unlikely to be a simple transfer of whole facilities to private ownership.

More practical models may separate the asset into components:

• government ownership with privately financed enabling infrastructure;
• public funding for sensitive operational elements and private delivery of support systems;
• long-term operation and maintenance contracts;
• availability payments for guaranteed storage or logistics capacity;
• Commonwealth equity in a dedicated delivery vehicle; or
• privately financed utilities, energy, access and non-sensitive precinct infrastructure.

The market opportunity will sit in the packaging.

3. Long-term service provision

The third category may ultimately produce the widest range of transactions.

Defence has traditionally paid upfront for many physical assets and then separately procured their operation, maintenance, renewal and support. Conroy’s comments suggest some of those requirements could instead be defined as long-term services.

That could include:

• guaranteed deployable camp capacity;
• warehousing and inventory-management services;
• fuel storage and distribution;
• microgrids and resilient energy supplied against performance standards;
• maintenance and repair capacity;
• vehicle, equipment or materiel storage;
• accommodation availability;
• secure data or communications infrastructure; and
• logistics and precinct services.

This changes the procurement question.

Instead of specifying a building and asking industry to construct it, Defence would define the outcome it needs: a quantity of secure storage, a level of deployable capacity, a required energy availability, a mobilisation timeframe or a maintenance output.

The provider would then determine the assets, financing, operating systems and lifecycle investment required to deliver that service.

For industry, this is both an opportunity and a major shift in risk.

A contractor accustomed to handing over a completed asset would need to think like an operator. Design choices would affect maintenance, financing and service deductions for decades. Consortium members would need to price demand risk, change risk, lifecycle renewal, security, workforce, insurance and residual-value exposure.

What will not be easy to finance

The Government’s $15 billion ambition should not be read as evidence that every delayed or unfunded Defence project has suddenly become investable.

The strongest alternative-financing candidates will usually have:

• a clear and stable service requirement;
• sufficient scale or the ability to bundle several similar assets;
• a predictable government payment or credible third-party revenue;
• measurable availability and performance standards;
• manageable construction and approval risk;
• defined security and sovereignty controls;
• a long operating life;
• lifecycle maintenance that can be priced;
• a competitive market of investors, operators and contractors; and
• enough contractual flexibility to accommodate future Defence change.

The weakest candidates will be highly bespoke, classified, single-user assets with uncertain scope, rapidly changing technical requirements and no credible use outside Defence.

Private capital is also generally more expensive than Commonwealth borrowing. The additional cost only represents value if it is offset by better risk allocation, stronger whole-of-life performance, earlier delivery, innovation or improved asset utilisation.

Commonwealth procurement rules still require value for money, including consideration of lifecycle costs, maintenance, transition, flexibility, decommissioning and disposal. National PPP guidance is equally clear that value for money—not capital scarcity or accounting treatment—must drive the decision. [7]

A private-finance structure that merely delays payment while retaining most delivery and performance risk in government hands will not solve the underlying problem.

What the market should watch next

The most valuable signals may appear well before a construction tender.

Industry should monitor for:

• commercial and financial adviser appointments;
• requests for information and market-sounding notices;
• project-finance, transaction and procurement-options studies;
• Commonwealth equity injections or new delivery vehicles;
• government business enterprise involvement;
• bundled project portfolios;
• output-based rather than asset-based specifications;
• long-term facilities, logistics or availability-service requirements;
• explicit third-party or dual-use revenue assumptions;
• security, step-in and priority-access provisions;
• lifecycle maintenance and performance regimes; and
• changes to how Henderson and GWEO infrastructure are packaged.

The first wave of work is likely to favour commercial advisers, transaction specialists, cost and risk advisers, lawyers, operators, facilities managers and investors alongside designers and contractors.

For SMEs, the opportunity will generally be further down the chain.

Large transactions will create long-term packages in construction, maintenance, security, energy, environmental services, logistics, trades and regional supply. But they may also concentrate access through a small number of consortia and operators.

SMEs should therefore follow consortium formation and adviser appointments, not wait for a conventional AusTender construction notice.

The industry invitation is now explicit

The most important part of Conroy’s comments was not the $15 billion figure.

It was the invitation for industry to engage early and identify where alternative financing makes sense.

That is a challenge to the market.

Defence does not need generic proposals offering access to capital. It needs credible models that translate an operational requirement into a secure, measurable and affordable service.

A serious proposal must explain:

• what Defence is buying;
• who ultimately pays;
• which risks can genuinely be transferred;
• how security and sovereign control will be protected;
• how performance will be tested;
• how the asset will respond to changing capability requirements;
• what happens during crisis activation;
• whether third-party revenue is realistic;
• how lifecycle maintenance will be funded; and
• why the model offers better value than conventional procurement.

The policy signal is no longer that Defence may consider private finance.

It is that Defence wants industry to show where it can work.

The next contest will begin before any PPP tender is released—in business cases, market soundings, commercial models and the definition of the service itself.

The firms that can translate capability need into a bankable, secure and operationally credible model will help shape the pipeline.

Everyone else will arrive after the procurement strategy has already been set.

Related DECNET analysis: Funding National Support Base Resilience: Private Finance Pathways for Defence Support and Logistics Infrastructure.

Notes:

[1] Conroy identified approximately $15 billion for alternative financing and named Defence estate, capability-linked infrastructure such as storage bunkers, and long-term service provision as three main categories. He also stressed early industry engagement and possible complementary revenue streams.

[2] The Government’s formal commitment is approximately $5 billion over the forward estimates and $15 billion over the decade in projects for which alternative-financing options will be prioritised, including estate, Henderson and GWEO.

[3] The 2026 NDS budget factsheet says alternative financing may include Commonwealth special investment vehicles, government business enterprises and private finance.

[4] Defence identifies an initial $12 billion Henderson commitment and an indicative total infrastructure requirement of around $25 billion, including naval construction and sustainment infrastructure and wider transport, utilities and services needs.

[5] Defence says the Bungendore complex was constructed under a PPP with Praeco, which is contracted to sustain the site until 2036; facilities operation and maintenance is subcontracted to Downer Defence.

[6] The Defence Estate Audit embeds consideration of alternative finance and delivery models and calls for whole-of-lifecycle costs to be provisioned in project budgets.

[7] Finance requires value-for-money assessment to include whole-of-life costs, flexibility, risk and transition considerations. National PPP guidance distinguishes financing from funding and states that value for money—not capital scarcity or balance-sheet treatment—must drive PPP selection.