Westminster Hall Debate: 28th Jan - SME participation in defence procurement

Defence as a Growth Sector:

The UK’s industrial strategy, outlined in the Invest 2035 green paper, identifies defence as a “growth-driving sector,” supporting 434,000 jobs and driving innovation through R&D. However, it highlights a lack of government strategy in recent years, prompting the Defence Secretary to commission a defence industrial strategy as part of the broader industrial strategy. The final version will be published in spring 2025.

Defence Industrial Strategy Priorities:

The Defence Secretary’s statement of intent focuses on six priorities: prioritising UK businesses, fostering partnerships, ensuring investment certainty, accelerating innovation, spreading prosperity, and enhancing NATO commitments. The strategy seeks to make the defence sector more innovative, resilient, and better integrated. Extensive consultation with industry is ongoing, with publication planned for late spring 2025.

Support for SMEs:

The MOD aims to foster a diverse supplier base and simplify access to defence contracts for SMEs, recognising their role in innovation and economic growth. A refreshed SME Action Plan is being developed to address barriers to participation and improve access to opportunities. The previous SME plan targeted 25% of procurement spend to SMEs, with progress shown in recent reporting.

Procurement Reform:

The Procurement Act 2023, effective February 2025, will replace existing defence procurement regulations with a more flexible and streamlined system. The act is designed to accelerate SME participation and enhance access to defence contracts by addressing participation barriers. It builds on the MOD’s efforts to reduce waste and improve procurement processes.

This evolving strategy presents opportunities for defence companies, particularly those aligned with the MOD’s priorities, SMEs aiming to enter the market, and innovative firms positioned to address emerging threats and technology needs. On Tuesday 28th January these important topics will be discussed in a Westminster Hall debate. We would like to thank Alan Strickland MP for leading the debate.