Service Stream Faces Mobilisation Risks in $1.6 Billion Defence Contract
Service Stream Limited has landed a major long-term contract with the Australian Department of Defence to manage property and asset services across South Australia and the Northern Territory, marking a significant expansion into defence infrastructure support.
- Long-term Base Services Contract awarded by Australian Department of Defence
- Contract covers 113 Defence sites including 8 major bases in South Australia and Northern Territory
- Initial 6-year term valued at approximately $1.6 billion with options to extend up to 10 years
- Operations to commence February 2026 with around 350 new employees and specialist contractors
- Minimal earnings impact expected in FY2026 due to mobilisation phase
A Strategic Win for Service Stream
Service Stream Limited (ASX, SSM), a leading provider of essential network services, has announced a landmark contract win with the Australian Department of Defence. The company will deliver Property and Asset Services across South Australia and the Northern Territory, managing a vast portfolio of 113 Defence sites, including eight major bases. This contract represents a significant strategic expansion for Service Stream into the defence support services sector.
The Base Services Contract is designed to be flexible, adapting to Australia's evolving strategic environment and operational needs. It includes responsibilities such as estate upkeep, land management, aerodrome operations, and training area and range management. This breadth of services underscores the critical role Service Stream will play in supporting Defence’s operational readiness and infrastructure maintenance.
Contract Details and Operational Impact
The contract will run for an initial six years, with Defence holding the option to extend it by up to four additional years, potentially stretching the agreement to a decade. The total value of the contract over the initial term is approximately $1.6 billion, reflecting the scale and importance of the work involved.
Operations are set to commence on 1 February 2026. Service Stream plans to onboard around 350 new employees alongside specialist contractors to meet the contract’s demands. However, the company cautions that earnings contribution in the 2026 financial year will be minimal due to the mobilisation phase, which involves ramping up resources and transitioning responsibilities.
Leadership Perspective and Future Outlook
Managing Director Leigh Mackender expressed pride in securing the contract, highlighting the alignment with Service Stream’s strategy to expand service offerings and enter new markets. He emphasized the company’s commitment to working collaboratively with Defence and industry partners in a ‘team of teams’ approach to deliver high-quality services.
This contract not only enhances Service Stream’s footprint in the infrastructure services sector but also positions the company as a trusted partner in supporting Australia’s critical defence infrastructure. The long-term nature of the contract provides a stable revenue stream and growth opportunities, although the company will need to carefully manage mobilisation and execution to realise its full potential.
Bottom Line?
Service Stream’s new Defence contract sets the stage for long-term growth, but successful mobilisation will be key to unlocking its full value.
Questions in the middle?
- How will Service Stream manage the operational challenges of mobilising 350 new staff and contractors?
- What are the specific performance metrics Defence will use to evaluate Service Stream’s delivery?
- Could this contract pave the way for Service Stream to secure additional Defence or government infrastructure contracts?
