Last Friday's appointment of Margot McCarthy as Julia Gillard's National Security Adviser pits a small group of senior Australian bureaucrats against possible international contenders for two lucrative new associate secretaryships in the Defence Department.
The successful candidates for the $370,500-a-year positions will be named before the end of March, former National Security Adviser and now Defence Department secretary Duncan Lewis said in an exclusive interview with The Canberra Times.
''We're saying [expect an announcement] in the first quarter of this year,'' he said.
At least one of the associate secretary candidates had been a strong contender for the National Security Adviser role.
Major-General Angus Campbell, a former Deputy National Security Adviser, who has just returned to Australia after 12 months as the ADF commander in the Middle East, had also been discussed as a strong possibility sources said.
Regarded by many as the outstanding candidate for the NSA role, he will instead become the new Deputy Chief of Army in March.
Mr Lewis has also expressed in-principle support for the reinstatement of suspended ADFA commandant, Commodore Bruce Kafer, if the officer is cleared by the Kirkham Inquiry.
''The Australian Defence Force Disciplinary Act has a provision where, if you haven't done anything wrong, you're reinstated,'' he said.
The Kirkham Inquiry report, which was signed off on in early December, was still ''under consideration''.
''As soon as that consideration is complete then everybody will be advised,'' he said.
Sources have said the report exonerates Commodore Kafer of any wrongdoing in relation to the Skype scandal last March.
A handful of senior Australian Public Service candidates are fiercely jockeying for the associate secretary positions.
The Canberra Times has been told they include Customs and Border Protection Service Chief Operating Officer Mike Pezzullo, Defence's Deputy Secretary strategic reform and governance Brendan Sergeant, a former Defence deputy secretary for intelligence and security, Stephen Merchant, and counter-terrorism ambassador Bill Paterson.
At least one, Mr Pezzullo, had been considered a strong contender for National Security Adviser.
Another possible, former Defence deputy secretary for strategy, Peter Jennings, ruled himself out of contention last December by accepting the executive director's position at the Australian Strategic Policy Institute left vacant by the retirement of Major-General (retired) Peter Abigail.
Defence Minister Stephen Smith belatedly confirmed Mr Jenning's appointment, which had been an open secret in Defence and security circles for months, last week.
Ms McCarthy, a former Defence deputy secretary, has been acting in the NSA role since last August.
Her appointment makes her Australia's first female NSA.
While Mr Lewis would not be drawn on who the most likely candidates for the Defence associate secretary positions were, he said the search had been international.
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