A highly vaunted push to "rapidly" develop disruptive military technologies into the Australian Defence Force is facing uncertainty, with local companies saying an initial project has been "cancelled" while others are close to collapsing.

The Advanced Strategic Capabilities Accelerator (ASCA) was established in early 2023 as an "independently branded entity" within Defence to "develop and deliver technology solutions into the hands of the military personnel at speed".

Under ASCA's "Mission 1", firms were last year invited to develop options to "penetrate and degrade advanced integrated air defence systems to enable long-range strike" and "improve the processing and synthesis of large amounts of intelligence data".

Since April this year defence has been examining a range of Mission 1 solutions that have included products such as loitering munitions (also known as kamikaze drones) and various prototypes of autonomous vehicles as well as payloads, or weapons.

The ABC can reveal that last week ASCA wrote to Australian businesses involved in Mission 1, advising that the rapid "co-design phase" which was supposed to end in July had finally been completed and their involvement would now end.

Numerous industry sources, speaking on the condition of anonymity because defence has enforced strict confidentially rules, claimed some local companies had been "strung along for months" and the costly exercise would result in bankruptcies.

"There will be companies that go into administration because of this — it is mismanagement of the highest order and ASCA head Emily Hilder and chief defence scientist Tanya Monro should be sacked," one furious industry figure said.

"ASCA was supposed to deliver 'accelerated, innovative and value for money' solutions for the military but it's turned out to be worse than the defence innovation hub it replaced".

Another industry figure who is not directly linked to the ASCA project described the "co-design" process as a "disaster" and predicted that "multiple Australian SMEs (small and medium-sized enterprises) would be put into administration" because of the lack of investment and lack of certainty.

"The government has admitted the specifications for Mission 1 did not meet 'value for money' requirements and has indicated defence will instead be forced to buy something else," they said on condition of anonymity.

"One of the problems with Mission 1 is that it was an idea without a capability manager. It was part of the ill-conceived nature of the mission that no-one appears to have wanted to own it."

After the ABC contacted Defence last week about concerns over the process, ASCA contacted companies involved on Friday reminding them not to speak to the media or share details of the cancellation letters they received.

In a statement, the Defence Department denied that any ASCA missions had been cancelled and insisted: "Mission 1 has recently completed industry co-design and remains ongoing, with at least three ASCA missions on track to launch in 2025."

"Defence is prototyping three uncrewed maritime warfare systems: the Bluebottle (Ocius Technology), Ghost Shark (Anduril Australia), and Speartooth (C2 Robotics)," a Defence spokesperson said while noting the prototyping phase was ongoing.

Several industry sources claim Ghost Shark, which is also ASCA's Mission 0, was struggling to meet the navy's requirements for range, speed or stealth, but Defence insists "all programs continue to meet their milestones and capability outcomes".

On Monday the Defence Department also confirmed a $7 billion program to create an Australian military-grade satellite communications system would be cancelled because it no longer met "strategic priorities".

Ahead of the formal announcement to axe the largest Australian defence space program in history, Prime Minister Anthony Albanese told the ABC the government would continue to "make decisions based upon advice and in the national interest".

"We're busy prioritising all of our purchases when it comes to defence assets, we've got a considerable increase in our defence budget and we'll make sure all of the decisions that we make are in our national interest," he said.

"We are not only seeing advances with the AUKUS arrangements being on track and on time and on budget, we're seeing our capabilities increased with increased asset purchases. We are also very much interested in this being part of our 'future made in Australia' agenda," Mr Albanese added.