The UK Ministry of Defence has launched a new organisation designed to simplify defence procurement and increase the participation of British small and medium-sized enterprises (SMEs) as part of a wider push to strengthen the UK’s defence industrial base.
Announced by Defence Readiness and Industry Minister Luke Pollard MP during a visit to the National Manufacturing Institute Scotland, the Defence Office for Small Business Growth (OfSBG) will act as a central hub to help SMEs bid for and win defence contracts more effectively.
The initiative responds directly to concerns raised by industry that defence procurement is slow, complex and difficult for smaller firms to navigate, contributing to a decline in MOD spending with SMEs in recent years.
Removing barriers to defence procurement
The OfSBG will be staffed by policy and commercial specialists tasked with simplifying processes, improving cash flow for SMEs under contract, and providing clearer long-term visibility of MOD procurement pipelines. The ambition is to reverse the decline in SME participation identified in the Defence Industrial Strategy and support the government’s pledge to increase defence spending with SMEs by 50 percent by 2028.
Speaking during the launch, Luke Pollard MP said: “Small businesses told us defence procurement was too slow, too complex and too hard to navigate. We listened, and now we’re acting.
“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 government currently spends £1.2 billion a year directly with SMEs, but has set a target to increase this by a further £2.5 billion by May 2028, taking total MOD SME spending to £7.5 billion.
Pathfinder SMEs and early support
Initially, 30 pathfinder SMEs from across the UK have been selected to trial the new service. These companies represent a cross section of sectors, including cyber, aeronautical engineering and advanced manufacturing, and range from established MOD suppliers to businesses entering the defence market for the first time.
Support will be delivered through a public-facing web portal and contact centre, offering structured guidance on tendering, contracting and working within the defence supply chain. Additional services include mentoring, networking with prime contractors, links to regional defence clusters and a confidential channel for raising concerns.
The OfSBG will also encourage private investment by providing greater clarity around future defence requirements and procurement timelines.
Strengthening regional and national capability
Scottish Secretary Douglas Alexander highlighted the regional impact of the initiative, stating: “The creation of the Defence Office for Small Business Growth is great news for Scottish businesses, workers and the economy.”
He added that defence already supports nearly 12,000 jobs in Scotland, with more than £2 billion spent annually, and that increased SME investment would further strengthen the sector as defence spending rises
National Armaments Director Rupert Pearce said SMEs were critical to future capability delivery. “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.
Supporting readiness and growth
The OfSBG will work alongside the newly introduced SME Commercial Pathway, which provides guidance to MOD teams on reserving suitable contracts for SMEs, segmenting large procurements, improving market engagement and strengthening supplier resilience.
The initiative forms part of the government’s wider commitment to increase defence spending to 2.6% of GDP from 2027, investing £270 billion over the current Parliament. Increased SME participation is positioned as a key enabler of both national security and economic growth across all regions of the UK.
Pic: Harland QuarringtonMOD
