UK defence ministry unveils £2.5bn SME contract boost by 2028
The Ministry of Defence (MOD) is preparing a new annual plan to boost opportunities for small and medium-sized enterprises (SMEs) in defence contracts. Defence Minister Luke Pollard has reaffirmed the government's commitment to increasing spending with SMEs by £2.5 billion by May 2028. The plan aims to reform procurement processes and widen participation among smaller firms. The forthcoming plan is being developed by the Defence Office for Small Business Growth (OSBG). Officials are working closely with SMEs to ensure the strategy reflects real-world challenges faced by smaller suppliers. A £20 million fund has already been launched to fast-track contracts for innovative UK startups with limited prior MOD involvement.
The plan will outline key priorities in procurement policy and industrial strategy. These will align with the broader Strategic Defence Review and the Defence Industrial Strategy. However, publication depends on the completion of the Defence Investment Plan, which remains underway.
A core focus of the new strategy is procurement reform. The MOD wants to simplify processes so more SMEs can compete for contracts. The goal is to improve support compared to previous years and make defence procurement more accessible to smaller businesses. Once finalised, the plan will set clear targets for SME engagement in defence contracts. The £2.5 billion spending increase by 2028 will be backed by policy changes and dedicated funding. The MOD expects these measures to create more opportunities for smaller suppliers in the defence sector.
