The Ministry of Defence has launched a new unit aimed at increasing the role of British small businesses in defence procurement, as part of a wider push to raise spending with SMEs by £2.5 billion by 2028.
The Defence Office for Small Business Growth has been established to help small and medium-sized firms bid for and win defence contracts, addressing long-standing concerns that procurement processes are too slow, complex and difficult to navigate.
The new office was announced by Defence Readiness and Industry Minister Luke Pollard during a visit to the National Manufacturing Institute Scotland, where he also met with defence suppliers including Aberdour-based firm Viper::Blast. According to the MOD, the new team will be staffed by policy and commercial specialists and will focus on reversing the decline in SME spending highlighted in the Defence Industrial Strategy. Officials say the aim is to remove structural barriers while improving access to investment and increasing transparency across defence procurement.
The department said the office would oversee a broad programme of reform, including simplifying commercial processes, improving cash flow for firms under contract and providing clearer long-term visibility of upcoming procurements to encourage private sector investment. Pollard said small businesses had repeatedly raised concerns about how defence contracts are awarded.
“Small businesses told us defence procurement was too slow, too complex and too hard to navigate. We listened, and now we’re acting,” he said. “We’re breaking down barriers and opening new avenues for innovation. We are ensuring that our SMEs can play a vital role in strengthening our defence capabilities.”
The new office will initially support 30 pathfinder SMEs drawn from across the UK, representing a range of regions and sectors including cyber, engineering and aeronautics. These firms will help test and refine the service before it is expanded to the wider business community in the coming months. A public-facing web portal and contact centre will also be introduced, intended to provide structured guidance on tendering, contracting and working within the defence supply chain. The MOD said the office would also offer mentoring schemes, networking with prime contractors and a confidential channel for businesses to raise concerns.
Scottish Secretary Douglas Alexander said the initiative would strengthen Scotland’s defence economy, where MOD spending already exceeds £2 billion annually.
“The creation of the Defence Office for Small Business Growth is great news for Scottish businesses, workers and the economy,” he said. “Defence is already a key driver for renewal in Scotland, supporting nearly 12,000 industry jobs.”
The MOD confirmed that SMEs received £1.2 billion in direct defence investment during the 2024–25 financial year. Under current plans, total SME spending is expected to rise to £7.5 billion by May 2028.
National Armaments Director Rupert Pearce said smaller firms were central to maintaining military advantage.
“SMEs are the backbone of UK defence, bringing the innovation, agility and fresh thinking that our Armed Forces need to stay ahead of evolving threats,” he said.
The new office will be supported by a revised SME Commercial Pathway, designed to encourage defence teams to reserve lower-value contracts for small businesses, break large procurements into smaller segments and improve payment terms during delivery. The MOD said the reforms are intended to support warfighting readiness and industrial resilience, as defence spending rises to 2.6 percent of GDP from 2027 under the government’s long-term investment plans.
I would hope these SME’s will be protected from the Big Players ?
So many of our smaller Inovators get swallowed up In the Corporate game of Financial gain, only to dissapear without trace.
Excellent. Another talking shop. Nothing like it for boosting the forces!!!
Anyone who has contracted with the MOD can tell you stories of their bureaucracy. A client of mine was the sole UK distributor for hundreds of vehicle parts. They lost the new tender on a technicality, because one part of the form was slightly wrong.
The winning bid then had to buy those parts from my client with an added mark up, costing the MOD more for the same parts from the same warehouse.
They need contract managers with the ability to be flexible and work with SMEs, not adopt this “computer says no mentality” all the time.
And is this office ring fenced from ‘purchasing freezes’ or ‘year end savings’ or any of the other multitude of things that SMEs can’t deal with?
Are the desk officers still rotated?
Thought not – so it won’t work.