The Ministry of Defence has published a new action plan designed to make it easier for smaller companies to win work in the UK defence supply chain. For SMEs with relevant technology, manufacturing or professional capabilities, the headline opportunity is substantial: the MOD wants to increase its spending with SMEs by £2.5 billion by summer 2028, on top of a current £5 billion baseline.
What the MOD has announced
The plan sets four broad objectives: simplify the journey from an initial idea to a contract; increase total SME spending by 50% by summer 2028; improve the diversity and resilience of the defence supply chain; and deliver support through regional clusters, universities, local government and partner organisations.
A newly established Defence Office for Small Business Growth is intended to be the main entry point. Its contact centre, anonymous helpline and website are already live, while an SME Commercial Pathway brings together procurement tools that can benefit smaller suppliers. The MOD says it currently works with around 12,000 SMEs through its supply chain.
The wider spending environment is also expanding. In a speech at the Farnborough International Airshow, defence industry minister Luke Pollard said the government had set aside £400 million a year for defence innovation and planned to spend at least 10% of the annual equipment budget on novel technologies. He also announced a £20 million contract involving Lockheed Martin UK and SME collaborators to rebuild a sovereign hypersonic target capability, with £2 million expected to reach several UK SMEs.
Why this matters beyond traditional defence firms
The opportunity is not limited to companies that already describe themselves as defence suppliers. Modern defence programmes rely on cyber security, artificial intelligence, sensors, robotics, advanced materials, electronics, data services, logistics, training and specialist engineering. Smaller firms working in those areas may have capabilities that can transfer into defence, even if they have never bid for an MOD contract.
Regional businesses could benefit too. The action plan explicitly links defence procurement with local networks and clusters across all four UK nations. That creates potential openings for manufacturers and technology companies outside the established large-prime supply chains.
However, an ambition is not the same as a purchase order. Defence procurement has long been criticised for complex processes, lengthy contracting times and difficult routes into major suppliers. The MOD itself acknowledges those problems. SMEs should therefore treat the plan as a clearer market signal, while still testing the commercial reality of each opportunity carefully.
What interested SMEs can do now
Start by mapping your existing capability to a specific defence need. A clear explanation of the problem your product solves, its readiness level, evidence from other regulated markets and the resources needed to deliver will be more useful than a general claim that a technology is innovative.
Next, review the MOD’s procurement page, the Defence Sourcing Portal and the new Office for Small Business Growth resources. Some SMEs will enter through a direct competition, but many will find a more realistic first route as a subcontractor to a major supplier. Supplier events and regional defence and security clusters can help businesses understand upcoming requirements before investing heavily in a bid.
Businesses should also prepare for the practical demands of the market. Depending on the contract, these may include security requirements, export controls, cyber standards, quality assurance, resilient production and detailed financial checks. Building that evidence early can reduce delays later.
Finally, watch how the plan is measured. The MOD says it will publish its direct SME spending as a percentage of total procurement spend at least annually. Useful signs of progress will include shorter contracting times, more accessible opportunities, improved payment performance and evidence that smaller suppliers are gaining meaningful work rather than simply appearing deeper in supply chains.
The practical takeaway
For capable UK SMEs, the new plan makes defence worth a closer look. The £2.5 billion growth target, dedicated small-business office and wider innovation budget provide a stronger invitation than a generic procurement pledge. The sensible next move is not to reshape a business around defence overnight, but to identify one credible use case, learn the entry requirements and pursue a tightly matched opportunity.
