How much is spent on defence procurement?
The Ministry of Defence currently spends over £19 billion each year on defence procurement, procuring third-party goods, products and services from a wide range of suppliers. Over the next decade, the MOD plans to spend a total of £178 billion on new equipment and support to “ensure the UK can respond to diverse threats”, which will result in thousands of new defence contract opportunities for suppliers.
The MOD needs to purchase an incredibly broad range of goods, and they spend a lot of money doing it. This is why it’s an incredibly attractive category for suppliers to get involved in.
But what is the MOD’s total budget, what is it spent on, who is it spent with, and what are the upcoming opportunities to get involved?
What is the MOD’s total defence budget?
In 2016, defence spending grew for the first time in six years, and ‘total defence spending’ for the year was £35.3 billion.
This covers all defence-related spending and includes everything from civilian and military staff costs to infrastructure costs, equipment support costs and capital expenditure.
This figure is set to increase even more over the next decade with the Defence Equipment Plan coming into effect, which will see a total of £178 billion spent between 2016 and 2026.
Additionally, the UK Government is committed to increasing defence spending by 0.5% above inflation every year until 2022 and will continue to meet NATO’s target of spending 2% of GDP on defence.
What does the MOD spend its money on?
The objective of the MOD’s spending is to support the Armed Forces and provide world-class solutions to deliver national defence and security for the UK. Because of its diverse remit, the MOD’s budget is broken down into several different areas.
In terms of its procurement activity, the MOD spends over £19 billion purchasing products and solutions every year, with this figure accounting for over 40% of the UK Government’s total annual spending on procurement.
This procurement spend covers a wide range of goods, works and services, including:
- Technology – cloud and digital, network services, software, technology products and services
- Equipment and support – ships, submarines, aircraft, vehicles, weapons, missiles, commodities and support (maintenance and repair)
- Infrastructure – construction, hard and soft facilities management, property consultancy
The Defence Equipment Plan will also be important over the next five years as the Government spends an increased proportion of its budget on major defence projects, with a projected £82 billion set aside to purchase new ships, submarines, vehicles and complex weapon systems.
Who does the MOD spend its money with?
Because of this diverse set of requirements, the MOD works with suppliers of all sizes and there are opportunities for organisations both small and large to get involved in the procurement process.
This can happen either directly or indirectly through sub-contracting opportunities with prime contractors – such as BAE Systems, Boeing, Lockheed Martin and Rolls-Royce, among others.
MOD spending plans/upcoming projects
In the coming years, the MOD’s programme of work is set to be dominated by a few high-cost projects.
The most notable of these commitments are to the nuclear submarine fleet, Carrier Strike and the Royal Navy’s warship programme. Additionally, £1.2 billion will be invested over ten years on the Queen Elizabeth Class carriers, and a further £2 billion will be invested in UK Special Forces.
All of these projects are very complex and will present plenty of sub-contracting opportunities for suppliers.
Find opportunities with DCI
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