A boost for SME defence contracts and international partnerships in 2018
A boost for SME defence contracts and international partnerships in 2018 The MOD has released a report, ‘Industry for Defence and a Prosperous Britain: Refreshing Defence Industrial Policy’, which outlines a three-pronged approach to refreshing this key policy.
The new policy will be beneficial for SMEs as not only is the MOD commitment to direct spend with small businesses set to continue but the revised policy also sets out a commitment to make it easier for SMEs to do business with defence by making supply chain planning part of the requirement for large-scale procurements.
International defence contracts are also given a high priority in the new strategy, which emphasises the importance of defence exports and inward investment to growth and resilience in both UK industry and the wider economy.
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Refresh for defence’s industrial strategy
Gavin Williamson plans to refresh the current strategy which is being used by the MOD. On 20 December 2018 at the UK Defence Solutions Centre, he announced that the Government aims to keep the market “internationally competitive, innovative and secure”.
Defence is the UK industry’s single largest customer, spending £18.7bn of the rising defence procurement budget with British companies in 2017. The Defence Secretary is keen to continue this partnership as it is beneficial to both the industry and UK security levels. In December, he emphasised its importance, stating that “British businesses play a vital role in equipping our troops with the tools they need to keep us safe”.
The refreshed approach has three main focuses:
- An improvement in how the defence sector approaches wider economic and international value, as well as national security objectives. A new Government pilot will focus on strengthening supply chains; boosting both exports and inward investment on a sustainable basis; reviewing options for international capability cooperation; and operational advantage and freedom of action.
- Making it easier for SMEs and non-traditional defence suppliers to do business with defence through a focus on engaging potential suppliers, exploring new innovation models and requiring supply chain planning for larger contracts.
- Finally, international relationships are also high on the MOD agenda, after a boost in international defence contracts. The MOD will continue to look for partnerships with countries overseas, will help UK industry to be internationally competitive, and will continue to support defence exports.
Download the policy document here.
International Defence Contracts
Overseas defence contracts are extremely valuable to the UK economy. In his foreword to the refreshed Defence Industrial Policy, Defence Secretary Gavin Williamson stressed defence’s role in the Government’s vision of ‘Global Britain’ and says that the Government wants to encourage “a thriving and globally competitive UK defence sector as an important part of our wider industrial base.”
Most recently, Mr Williamson settled the biggest export deal for the Typhoon project in a decade.
This multibillion-pound jet contract signed with Qatar opened a huge procurement opportunity in the UK. The Government has announced that “the aircraft will be assembled in the UK by BAE Systems, supporting thousands of jobs.”
The Defence Secretary Gavin Williamson and his Qatari counterpart, Khalid bin Mohammed al Attiyah, oversaw the signing of the deal for 24 Typhoons, building on the Statement of Intent signed in September. In addition, the agreement signed today by the Qatar and British Governments also includes a clear intention to proceed with the purchase of Hawk aircraft.
What’s next for the MOD? The department is leading the offer to replace Belgium’s F-16s with Typhoon jets. Talks are also being held with Saudi Arabia about a second batch of Typhoon sales.
Growing direct spend with SMES
MOD contracts are not just awarded to large global defence suppliers. In fact, the Government’s aspiration is to place 25% of direct and indirect defence business with SMEs by 2020. Already, this has meant that supply chains are opening up with sub-contracting opportunities being advertised on supplier portals.
Defence contracts can be can provide lucrative and secure work for small and medium-sized enterprises. There are many benefits of working with the MOD, including the requirement that sub-contractors must be paid within 30 days.
The Government is keen to work with innovative SMEs that can help to drive UK science and technology and its industrial applications forward, in defence as much as in any other sector.
Opportunities in the defence sector
As the MOD procures everything from military fighting vehicles to education services, the defence sector is a cornerstone of the UK economy, making it important that defence industrial policy is regularly updated.
Defence business across the UK will benefit from the MOD’s latest commitment to SMEs and by working together the government hopes to maximise defence exports
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