What does the Infrastructure Survey Report reveal about the future of defence procurement?

As market leaders in sourcing defence procurement contracts, at DCI we recognise the crossover between the defence and infrastructure sectors is substantial in both extent and value. Earlier this year our parent company BiP Solutions published a richly detailed report on the latest trends in infrastructure procurement. The report discusses the challenges facing the industry in the run-up to Brexit on 31 October. It also addresses the impact Brexit has already made on UK business investments across construction projects.

In 2018, industry analysts Barbour ABI announced that the value of construction contracts awarded in the UK had fallen; with looming Brexit uncertainty, mainstream predictions were that this situation would only get worse. However, many subsectors continued to successfully buck this trend.

The 2019 Survey Report from BiP, ‘Infrastructure in the UK: Challenges and Opportunities’, is based on survey results returned by 140 public sector organisations and professional bodies. The report’s in-depth analysis and breadth of knowledge of UK infrastructure procurement makes it an essential read for any organisation looking to win defence estates contracts with the Ministry of Defence and grow their business in the wider field of defence procurement – precisely where DCI’s 35 years of experience lies.

The UK defence market is big, and getting bigger

The big challenge with defence procurement is size – we all know that the defence procurement marketplace is highly diverse, yet it is worth mentioning that many people do not realise how vast and valuable the market actually is.

The UK is currently the second largest exporter of defence solutions in the world, capturing 19% of the global market and selling £14bn worth of goods and services overseas in 2018. The UK’s internal defence market alone is worth more than £20bn per year, and recently the Ministry of Defence committed to spending around £193bn over the next ten years on large-scale defence procurement projects, with the ambition that 25% of all third-party spend goes to SMEs from 2020.

The Defence Infrastructure Organisation (DIO), a dedicated operating arm of the Ministry of Defence responsible for the Department’s built and rural estate, spends £3bn annually on construction works and infrastructure services across the UK and overseas.

Achieving sustainable infrastructure for the UK

With great size comes great opportunity to achieve greater sustainability in construction. A growing focus on adopting the latest digital techniques and more modern methods of construction is seen as crucial to improving productivity.

Results from BiP’s 2019 Survey Report suggest that construction infrastructure projects going forward across the industry will be focused on housing and greenbelt planning, with 55% of survey participants believing workloads will increase post-Brexit.

The survey found more than 50% strongly support modern methods of construction as a key driver of productivity. For the defence market, modern innovative techniques are enabling naval yards such as BAE Systems’ Govan works in Glasgow to build the MOD’s new £8bn Type 26 frigate fleet more quickly and efficiently. Other projects driven by emerging technologies include developing enhanced cutting-edge GPS receivers with anti-spoof and anti-jam features to stop satellite signals being disrupted.

The impact of Brexit on infrastructure projects

Brexit is currently a key focus for the construction industry, with opinion divided as to whether leaving the EU will have an adverse effect on infrastructure investment. Two-thirds of survey respondents are confident that strong public investment will continue post-Brexit. One-third, however, anticipate a decline in such investment.

Across the board, some 50% cite political uncertainty itself as the biggest barrier to investment.

Beyond all else, our survey results show a confidence in the skills and ability of the construction industry and its subsectors post-Brexit. The MOD and the defence supply chain are delivering many of the UK’s most valuable and important infrastructure projects, securing thousands of highly skilled jobs across the country and growing business opportunities for the nation’s SMEs.

The goal of DCI is, as ever, to make both defence and civil procurement contracts accessible to businesses of all sizes and shapes.

The full Infrastructure Report is available for free here.

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