Empowering SMEs to access UK defence sector opportunities

The UK government has announced new measures to help small and medium-sized enterprises (SMEs) better access the defence supply chain and to benefit from the increase in defence spending, with the government also committing to raise defence spending to 2.5% of GDP by 2027, and to raise it further to 3% by the next parliament.

In addition to new direct SME spending targets set to be announced in June, the government intends to launch a new support hub, with the goal of providing support to small businesses to access the defence supply chain in order to stimulate economic growth and create jobs nationwide.

The announcement marks a significant step in boosting the role of SMEs in the national defence framework. By establishing a dedicated support hub, the initiative aims to provide guidance and resources for SMEs seeking opportunities within the defence sector.

This move is expected to create jobs and stimulate economic growth, particularly in small towns and suburbs.

Rebecca Kirk, Head of Defence, Infrastructure and National Security at HCR Law highlighted the economic benefits of increased defence spending with SMEs, stating:

“I very much welcome the government’s announcement to increase defence spending and in particular the commitment to introduce new SME spending targets for defence in June, coupled with the introduction of support hubs for SME’s. SMEs in the UK are world leaders when it comes to innovation, with cutting edge technology, unrivalled technical expertise and the ability to move quickly and be flexible in order to deliver – all of which is essential if we are to enhance the UK defence capability and bolster our national security in an increasingly volatile geopolitical climate”.

HCR Law offer specialised legal advice tailored to the needs of SMEs in the defence sector, helping to ensure your organisation is well-equipped to thrive in a competitive and highly-regulated industry.

Practical steps for SMEs looking to access UK defence sector opportunities:

Understand defence procurement processes: Familiarise yourself with how the Ministry of Defence (MOD) and other agencies procure goods and services. The UK Government Defence and Security Procurement website outlines policies and provides resources for suppliers. Our lawyers can guide you through MOD procurement rules and ensure compliance with sector-specific legal requirements. Read more in our latest article Changes in the Procurement Act 2023 for SMEs in the defence sector.

Register on defence contract platforms: Defence opportunities are listed on government platforms such as Contracts Finder and the Defence Sourcing Portal (DSP). Registration on these platforms is free and registering ensures your company receives notifications about relevant tenders and contracts. You can also register as a supplier through the Supplier Registration Service for Government, now know as Find a Tender, and join the Helios SME Portal to increase your organisations visibility in the defence ecosystem.

Develop relationships with prime contractors: Larger defence contractors regularly subcontract work to SMEs. Building relationships with these primes can help you gain access to defence supply chain opportunities. Engage in networking events, supplier days, and defence sector conferences to meet potential partners.

Understand security and compliance requirements: The defence sector is highly-regulated and all organisations, including SMEs must adhere to strict security protocols and meet certain standards with regard to issues such as cyber security, corporate governance and ESG.

Obtain relevant security clearances: SMEs – and indeed all contractors – wishing to access defence contracts often need to meet specific security and clearance standards. This includes ensuring that certain key personnel undergo the National Security Vetting process and not only obtain but maintain the relevant level of security clearance in order to have access to sensitive information, assets and equipment. The team at HCR Law can advise on the requirements for UK Security Vetting and other compliance protocols, helping businesses meet necessary thresholds.

Leverage support initiatives, industry associations and networks: Collaboration has never been more important. Larger defence contractors may be looking for smaller suppliers to collaborate with, particularly in niche or specialised areas. SMEs can explore partnerships and subcontracting opportunities and build networks within the defence ecosystem by joining industry bodies such as ADS Group, Tech UK and the UK Defence Solutions Centre (UKDSC). These organisations offer resources, networking opportunities, and access to a community of businesses in the defence sector, as do networking events such as those hosted by HCR’s Defence, Infrastructure and National Security Sector.

Prepare your business for defence contracts: Develop a robust capability statement that outlines your expertise, certifications, and past performance. Also have case studies and testimonials at the ready. The defence sector values suppliers with a proven track record of reliability, innovation, and delivery.

Be export-compliant and ready for international expansion: For SMEs looking to engage with international defence markets, our specialist lawyers can provide advice on international trade regulations, export agreements, and compliance requirements with defence export regulations in foreign countries.

Protect your IP: For any business, but particularly SMEs involved in innovation, the protection of intellectual property rights is crucial. When contracting with defence, intellectual property rights often vest in the MOD in accordance with the contractual conditions issued by the MOD (“DEFCONS”). As such, SMEs must adequately protect their inventions, patents, and proprietary technologies.

Seek funding and grants: Funding in the defence sector is a thorny issue, with the sourcing of funding, particularly from traditional lenders, often posing a significant challenge. That being said, there are funding schemes available to SMEs looking to enter the defence sector. Look for government grants and funding programmes, such as those provided through the Defence and Security Accelerator (DASA), Innovate UK, the Department for Science, Innovation and Technology (DSTL) and UK Research and Innovation (UKRI), which all support defence-related innovation.

Be persistent: Securing contracts in the defence sector can take time. Keep a proactive approach by consistently monitoring opportunities, submitting proposals, and nurturing relationships.

By following these steps, SMEs can position themselves to successfully tap into the growing defence sector in the UK and take advantage of new opportunities.

If your business needs help in navigating the complexities of the UK defence supply chain, including expert legal advice on procurement processes, compliance, contract negotiations, IP protection, funding, employment and dispute resolution please contact Rebecca Kirk, Partner and Head of the Defence, Infrastructure and National Security team, which can help you manage the legal risks involved while seizing opportunities in this highly-regulated and competitive sector.