The government has launched the Defence Office for Small Business Growth (OfSBG) to support small and medium businesses to bid for and win more defence contracts.
The new office is part of the government’s efforts to increase defence spending with SMEs. Ministers say it’s relevant to around 12,000 SMEs.
UK SMEs saw £1.2 billion of direct investment from the Ministry of Defence (MOD) in 2024/25. The government has set an SME spend target of an additional £2.5 billion through to May 2028, taking total MOD spending with SMEs to £7.5 billion.
The new team will focus on simplifying and speeding up cumbersome processes, providing advice to SMEs, and encouraging private sector investment.
A website and contact centre will initially support 30 SMEs covering sectors including cyber and aeronautical engineering. These companies will help to test, trial, and refine the service before it is expanded to more businesses.
The OfSBG will be reinforced by the newly introduced SME Commercial Pathway which provides guidance to ensure MOD teams are “actively reducing barriers and increasing opportunities for SMEs to bid for and win MOD work”.
The Pathway covers “improved market engagement, reserving below-threshold procurements for SMEs, segmenting contracts to enable greater participation, engaging with prime contractors to manage SMEs within their supply chains, and strengthening SME resilience through improved cash flow when under contract”.
Luke Pollard MP, minister for defence readiness and industry, 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.
“Defence is an engine for growth, and small businesses are the backbone of UK defence. This is a collective endeavour, and we are committed to supporting British businesses, enhancing our security, and driving prosperity for working people across the country.”
Scottish secretary Douglas Alexander said:
“The creation of the Defence Office for Small Business Growth is great news for Scottish businesses, workers and the economy as it will help boost opportunities and access to investment, supported by our pledge to increase spending with SMEs by £2.5 billion by May 2028.
“Defence is already a key driver for renewal in Scotland, with the Ministry of Defence spending more than £2 billion a year with the sector in Scotland, supporting nearly 12,000 industry jobs. Now with our historic uplift in spending to protect our own and European security and this new support for small and medium enterprises we will further transform the sector.
“As we up our game on defence, Scotland’s world class industry and supply chain and global demand for Scottish expertise will play a big role in ensuring Britain’s security, deterring our adversaries and driving economic growth for years to come.”