The Ministry of Defence (MoD) has reaffirmed its commitment to prompt supplier payments and procurement efficiency as part of the Defence Industrial Strategy, according to recent parliamentary responses.
James Cartlidge, Conservative MP for South Suffolk, raised multiple questions in Parliament regarding the MoD’s invoice processing times, supply chain efficiency, and SME procurement spend.
In response, Minister of State for Defence Maria Eagle stated that the MoD aims to pay 90% of undisputed and valid invoices from small and medium-sized enterprises (SMEs) within five days, with a 100% target for payments within 30 days.
“We are exceeding this target. In the last quarter of this financial year, over 95% of invoices have been paid within this timescale,” Eagle confirmed.
She also directed those seeking further details to the MoD’s supplier payment performance reports on the government website.
When asked about steps to improve procurement efficiency, Eagle outlined that the Defence Industrial Strategy includes sweeping reforms to the MoD’s acquisition processes to ensure that capabilities are delivered efficiently, waste is reduced, and international trade agreements are upheld.
In parallel, the Defence Supply Chain Capability Programme is working towards a stronger, more resilient, and innovative defence industrial sector, supporting both UK national security and economic growth.
SME Procurement Spending Declines
Cartlidge also questioned the proportion of MoD procurement spending allocated to SMEs over recent financial years.
Eagle provided the following figures:
- 2022-23: 5% (£1.4 billion) of the MoD’s procurement spend went to SMEs.
- 2023-24: 4% (£1.3 billion), showing a decline in SME participation.
- 2024-25: Figures will be published in November 2025.
Despite the dip in SME spending, the MoD maintains that its procurement strategy prioritises engagement with smaller businesses, particularly in high-value defence contracts.
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The problem is the solvency and balance sheet requirements for SME and just the paperwork to become an approved supplier.
Then, in some cases, you add in security and vetting costs and it becomes too much admin for an SME.
No doubt, however, that for some larger SME’s that MoD work can be a handy earner particularly if they are good payers as the margins will be reasonable great and work long term.
Major issue these days is access for SMEs to provide the work. Since the inception of DIPS / PDP / EDP, access to work is highly restrictive, add into the mix major multi-billion pound companies heading up the number 1 slot on the frameworks and SMEs can hardly get a look in at any work with respectable margin. They just feed down the low level requirements. Gone are the days of fair and open competition, where capability and price went hand in hand, its now just a game of trying to catch the dregs which fall through the net.