The Defence Department is expected to cut up to 111 jobs across multiple divisions, including intelligence and weapons, according to the public sector union.
Professionals Australia ACT and Australian Government Group director Dale Beasley said the cuts would decimate STEM jobs within Defence and undercut the government's investment in defence industry.
"These job losses reduce the number of scientific and engineering specialists employed by government to support the growing investment into the defence sector and will further increase Defence's reliance on consultants, at a much higher cost to taxpayers," Mr Beasley said.
Mr Beasley said without adequate STEM knowledge within the department, the government would not be able to determine whether it was receiving value for money from the private sector.
This would prove to be "a costly mistake" when the defence budget amounted to billions of dollars, he said.
Professionals Australia, the union for engineers, scientists and IT professionals in the federal government and the CPSU called on the federal government to halt the cuts.
The CPSU said the cuts would affect the aerospace, intelligence and surveillance and maritime and weapons divisions.
The majority of staff cuts are expected to come from South Australia, losing 60 jobs, and Victoria, losing 44. But NSW and the ACT would see some jobs lost, the union advised.
The decision to cut jobs would seem to be at odds with recent announcements of massive boosts to Australia's defence spending, including $1 billion for Army reservists and defence industry announced on Tuesday.
The CPSU said the cuts were a direct result of the federal government's Average Staffing Level Cap policy and advised that since 2013 more than 4000 Defence jobs had been lost due to the policy.
CPSU deputy national president Brooke Muscat said now was not the time to be cutting public sector jobs and implored the government to abandon the staffing cap policy.
"The government needs to be investing in public sector jobs, not cutting them," Ms Muscat said.
"The Department of Defence and Australia's defence capabilities should not be paying the price for political decisions.
"If the past six months have shown us anything, it's that the public sector is integral to Australia's success and response to the pandemic."
Mr Beasley said the staffing cap was a "blunt tool" which did not achieve the best outcomes for the public sector.
"Defence needs the ability to attract, recruit and retain the right STEM professionals with the right skills to deliver on defence policy. Imposing an arbitrary staffing cap on that process is mad," he said.
Opposition defence spokesman Richard Marles criticised the decision, especially after recent "hollow" announcements spruiking defence spending.
He questioned why cuts to the Defence Science and Technology Group were made at a time when science and technology were more heavily relied upon than at any point in the past.
Labor said the 111 job losses would affect just as many families during the pandemic and leaves the Defence Department without critical resources.
A Defence Department spokesperson said its Defence Science and Technology Group was reshaping its workforce in line with its new strategy, and the 2020 Defence Strategic Update released last month.
"DST has reviewed their structures and capabilities, and relationships with clients and stakeholders," the spokesperson said.
"Reducing staffing in lower priority areas will allow targeted growth in higher priority areas, including to meet technology and other research requirements."
The department spokesperson said reshaping the workforce would assist the Defence Science and Technology Group to build its capability in priority areas for the future needs of the department and the broader Australian community.
The announcement comes after the Defence Strategic Update released in July showed the government intended to grow the defence budget.
Defence think tank the Australian Strategic Policy Institute found government defence spending would grow from $39.3 billion last year to $73.7 billion in 2029-30.
The growth, coupled with the impact of the economic downturn, would likely bring Australia's defence spending to more than 2 per cent of GDP.
The Defence Department previously confirmed these funding increases would initially grow its public service staffing by 250, and its Australian Defence Force personnel by 800.