Public servants spending $12.5 billion a year on military equipment and weapons are being labelled by a multinational company as time wasters often patently ill-equipped.
The Defence Materiel Organisation's tough report card comes from BAE Systems contracted to help maintain fighter aircraft Australia has in Iraq and to upgrade Seahawk and Black Hawk helicopters along with millions of dollars of other work.
BAE Systems' submission to Defence's first principles review complained about the expensive cost of bidding for military contracts because bureaucrats were taking too long labouring over narrow specifications and vague goals.
"Time seems to be treated as a free good by the DMO but the cost to industry is always substantial," the submission said.
The submission noted the cost of employing teams of people to win contracts and the lengthy wait until the work was handed out.
It suggested contracts should only be re-tendered because of a failure by a private company and "not to demonstrate some artificial competition construct".
"Because the costs associated with this are eventually borne by the Commonwealth," the submission said.
BAE Systems said DMO was over supervising because it was both project director and prime systems integrator - the bringing together of all the smaller parts of a project together for the final build for which it was "patently ill-equipped".
BAE, believed to be Australia's largest defence contractor, also said Defence was unwilling to engage better with industry to better understand the costs, benefits and risks which could substantially reduce purchase and maintenance expenses.
Public servants have been dreading the first principles review and DMO, a part of the Defence Department, has long been criticised by private defence contractors.
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Critics of the first principles review feared it was a way to push for more outsourcing to the private sector particularly after the Commission of Audit suggested slashing Defence numbers in Canberra.
Australian Industry Group claim DMO had ballooned by several thousand staff was debunked by Defence Materiel chief executive Warren King in April who said his organisation had 6500 workers, the same number it had in 2005, and did "17 per cent more business these days".
The Australian Academy of Technological Sciences and Engineering's submission said the Commission of Audit's suggestion to look at outsourcing the Defence Science and Technology Organisation would be counterproductive.
DSTO, the government's in-house weapons researcher, had an invaluably close relationship with soldiers serving in places such as the Middle East which made it much easier to solve problems, the academy said.
DSTO scientists were able to help DMO make smart buying decisions when it came to complex weapons and could deal directly with United States government agencies, such as the US Naval Research Laboratory and US Air Force Research Laboratory.
"Although Australia is a participant in the five eyes partnership and the technical co-operation program, the US is typically only willing to provide sensitive information and technology on a government to government basis," the academy said.
A total of 84 public submissions were received by the review. Fifteen met the review team's guidelines for publication and have been published.