Downer wins A$3.05bn Defence base-services contract; six-year term with options

Key highlights

• New A$3.05bn Property and Asset Services (PAS) contract with the Australian Department of Defence, initial six-year term starting February 2026, with options that could extend total tenure to 10 years. 
• Scope spans two of Defence’s largest regions—NSW/ACT and Queensland—and lifts Downer’s footprint beyond the current EMOS arrangement. 
• Services include facilities maintenance, aerodrome operations, land management, training area and range management, and integration services across 30-plus major bases. 
• CEO Peter Tompkins highlights an 80-year partnership with Defence and a 900+ SME supply chain to “drive efficiencies and improve environmental outcomes.” 
  
   

Downer EDI (ASX: DOW) has secured a A$3.05 billion contract to deliver base and estate services to the Australian Defence Force under Defence’s Base Services Transformation program. Labeled PAS (Property and Asset Services), the contract will begin in February 2026 and run for an initial six years to 2032, with two extension options of between one to three years each—potentially stretching the relationship to a 10-year horizon. For investors, it adds multi-year visibility to a book that is already skewed to government, critical infrastructure and essential services. 

What’s in the contract—and why it matters

Downer’s PAS mandate is broad. The company will provide facilities maintenance, aerodrome operations, land management, training area and range management, and integration services across NSW/ACT and Queensland—two of the largest Defence regions. That scope represents a step-up from the company’s current Estate Maintenance and Operation Services (EMOS) footprint, bringing more sites, more functions and a wider geography under a single framework. In practical terms, the award deepens Downer’s role as a one-stop operator for complex Defence estates, where continuity, compliance and uptime matter as much as cost. 

The contract value implies an average annualised run-rate of ~A$500–510m over the initial term (simple pro-rata), although actual recognition will depend on volume, milestones, indexation and performance. That scale can support operating leverage across shared services (procurement, scheduling, digital asset management) and local supply chains, especially given the dispersed nature of Defence sites. The presence of 30-plus major bases in the scope also provides platform depth—less reliance on a handful of flagship assets. 

Management’s view—full remarks

Downer’s CEO, Peter Tompkins, underlined the company’s long relationship with Defence and the role of its partners:

“Downer is a long-standing Defence partner, and has been providing sustainment, infrastructure, and estate services for more than 80 years,” the Chief Executive Officer of Downer Group, Peter Tompkins, said.

“We are proud of the role we play as the custodian of Defence estates, supporting the working environments that enable an agile and capable Defence force.

“We look forward to working closely with Defence to deliver these vital services, leveraging our significant supply chain of 900-plus small and medium enterprises to drive efficiencies and improve environmental outcomes across the 30-plus major Defence bases that Downer will be responsible for.” 

The SME network is a notable part of Downer’s pitch. A 900+ supplier base not only helps cover a wide footprint efficiently; it also aligns with local content expectations and embeds regional employment in the delivery model. For Defence, it means resilience—multiple suppliers and contingencies rather than single points of failure. 

How the PAS award fits Downer’s mix

Downer positions itself as a provider of essential services across roads, rail, utilities, social infrastructure and government, with a workforce of ~26,000 across Australia and New Zealand. Defence sits within that government-facing portfolio and benefits from similar capability stacks: asset maintenance, capital works integration, and digital tools for asset lifecycle management. The PAS award is therefore adjacent to Downer’s core, not a leap into a new domain. That adjacency typically supports margin stability—teams, systems and processes already tuned to regulated environments can often be deployed with minimal re-invention. 

What to watch from here (execution and disclosure)

• Mobilisation plan (2025–early 2026): Expect updates around workforce transition, sub-contractor onboarding (especially SMEs), and systems integration ahead of the February 2026 commencement. Mobilisation quality is a leading indicator for Year-1 performance. 
• Performance metrics: Defence contracts often include KPIs for uptime, response times and safety. Investors should look for commentary on service-level adherence, variations, and any early cost pressures.
• Digital & sustainability levers: Tompkins flagged efficiency and environmental outcomes. That points to energy management, water use, waste reduction, and predictive maintenance—areas where Downer has a track record across other public-sector contracts. 
• Pipeline read-through: Success under PAS can bolster Downer’s positioning for adjacent Defence scopes and renewals as the Base Services Transformation program matures. 
  
   

Investor lens: today’s tape and the drawdown risk model

At 12:53pm AEST, Downer traded around A$7.06, up ~2% on the day, with a 12-month gain of ~27%, dividend yield ~5% and PE ~34.6x on a ~A$4.74bn market capitalisation (~671.6m shares). For long-only holders, a multi-year, government-backed revenue stream reduces earnings volatility and can support dividend capacity—but the counterpoint is execution risk during the first 12–18 months of a large mobilisation. That’s the window where slippages (labour availability, subcontractor performance, systems cutover) most often show up. 

From a “drawdown risk” perspective, the macro backdrop remains fluid—rates, public-spend priorities and input costs can move. However, Defence sustainment is typically less cyclical than discretionary infrastructure, and contracts with defined scopes and escalators can buffer cost swings. The market will price that defensive tilt against the valuation multiple and the quality of early delivery.

Bottom line

The PAS contract is a material, multi-year win that expands Downer’s Defence footprint and locks in visibility through at least 2032, with an option runway to 2036. The scope is aligned to the company’s core strengths, and management is signalling an execution approach grounded in SME partnerships, efficiency, and environmental performance. For shareholders, the next phase is about how smoothly Downer mobilises and how early KPIs track. On those points, the updates between now and February 2026 will matter most.