Defence Minister Senator David Johnston in his office at Parliament House in Canberra.

Defence Minister Senator David Johnston in his office at Parliament House in Canberra. Photo: Alex Ellinghausen

Private weapons companies are already trying to poach specialists from the Defence Materiel Organisation in Canberra amid fears that much of the agency will be privatised with the loss of up 3000 public service jobs.

DMO managers are complaining about companies "sniffing around" their staff in anticipation that the "British model" of privatisation of military purchasing will be introduced in Australia.

Defence Minister David Johnston fuelled the speculation on Friday when he was reported as saying the DMO had "shortcomings" and that he wanted to see "excellence and cost-effectiveness".

But DMO management says it has reassured its staff that no decisions have been made about their futures.

Reports have been circulating for several months that the government's Commission of Audit will recommend sweeping changes to the Defence Department's procurement arm in a bid to reduce the cost over-runs and delays that have plagued the nation's big weapons purchases.

The audit is also expected to urge the government to reconsider a sale of the taxpayer-owned Australian Submarine Corporation.

DMO has about 6500 employees, about 2000 of them uniformed ADF personnel who have been quarantined from job losses by the Coalition government.

If the anticipated cuts go ahead the organisation could be left with as few as 1500 public servants, and private operators are already jockeying to fill the vacuum.

But Professionals Australia, the union that represents many of the DMO's specialists, says it is very worried about the prospects of privatisation.

"We are extremely concerned about any form of cuts at the DMO," Professionals Australia spokesman David Smith said.

"This is an organisation that has seen no growth in the last seven years despite a significant increase in defence acquisitions and maintenance requirements.

"The reality is that experience and expertise are already stretched in some areas of the DMO.

"The Australian National Audit Office report revealed the impacts of this: cost blowouts and delays, with taxpayers footing the bill. "

The union official said that DMO workers were already stretched to capacity trying to do their jobs in the face of the public service hiring freeze.

"Any cuts to the DMO, as the government defence materials purchaser, would render it an uninformed purchaser," Mr Smith said.

"It would be unable to do its job of ensuring the Commonwealth gets the right materials at the right price.

"Any cuts to DMO would be penny-wise, pound-stupid.

"We believe that it would foolhardy to outsource or privatise the Commonwealth's defence project agency.

"This was tried and failed in the UK."

A DMO spokesman said the agency's chief executive Warren King was issuing regular updates to his workers.

"Recent key messages to staff include that the CEO does not have a preconceived outcome for the future of the organisation and assurance that time will be taken to plan and staff will be consulted on any future change," the spokesman said.

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