27 Jan 2022

Why the Defence Sector Continues to Attract the Biggest Businesses

The defence sector is being put forward as a route to success when it comes to maximising opportunity and growth within the UK economy.

In autumn 2021, the government was being pressed by Make UK (the Manufacturers’ Organisation) to channel the innovation that is a hallmark of the defence sector and leverage the benefits and opportunities it offers to benefit the rest of the economy.

A report, published by Make UK and titled Defence: Opportunity, resilience, and prosperity, highlighted the significant contribution the defence sector makes to the UK economy each year – an incredible £12 billion GVA each year. Both directly and indirectly, the sector also employs more than 200,000 highly skilled individuals – offering an explanation of why businesses of the highest profile work with, or want to work with, defence.

This is an arena of opportunity – and in this article we take a look at why it continues to attract the biggest businesses, year on year.

Why businesses choose defence

Make UK Director Andrew Kinniburgh commented: “The UK Defence Sector is one of the most dynamic in the world and is unrivalled in its ability to adopt and invest in cutting-edge technologies.”

Businesses working in such an environment as suppliers have an increased opportunity to leverage said technologies and access this innovation. Conversely, the defence sector offers highly niche and innovative businesses an opportunity not only to sell their product to a prestige public sector buyer but to enhance the research and development support offered by the MOD and the wider defence sector.

The average salary within the defence sector is £45k, one of the highest in the economy – emphasising just how lucrative winning defence contracts can be, not only for the supplier organisation but also for its employees. This is another reason why companies are keen to work with the MOD and the wider defence sector, as it enhances their ability to attract top tier talent.

This is further enhanced by the sector’s commitment to social responsibility with “three-quarters of companies taking measures to ensure a diverse and inclusive workforce, two-thirds increasing investment in apprenticeships, and 90% investing in wider training programmes.”

All of the above point to the conclusion that defence is determined not only to continually improve but to grow in a forward-thinking fashion too.

Awash with investment

Over the course of the next ten years the government has committed to spending £190bn on equipment and support across thousands of defence contracts.

The sheer size of the operation is itself truly impressive and certainly one of the biggest draws to the sector – the MOD accounts for 20% of all of government spend within industry and exists as one of the biggest public procurement organisations in Europe.

Opportunities range from facilities management to education services, cyber security, supply of equipment to frontline operation, and much, much more.

While we’ve detailed a number of reasons why big businesses are attracted to the defence sector and the opportunities it has, that is not to suggest these similar chances aren’t available to smaller organisations such as SMEs – the MOD vies to encourage competition wherever possible, setting objective tender selection criteria and acting with accountability and transparency throughout the award process. Extensive opportunities exist for SMEs both in winning contracts and in the supply chain with the MOD committed to 33% of its procurement spend by value going to SMEs both directly and as part of the wider supply chain.

Undoubtedly, one of the most exciting aspects of working with a sector like defence, regardless of whether you are new to it, or are currently fulfilling a contract, is that there are always additional opportunities to be seized.

Success stories in defence

Capita has partnered with the UK MOD for ten years now. Their contract includes “delivery of recruitment to the British Army, mobilising operations to deliver a fire and rescue capability for the MOD, providing E-learning & support services to the UK Defence Centre for Languages & Culture, and technical support to the astute class submarine build programme.”

The partnership between Capita and the British Army has “successfully transformed the Recruitment Partnership into a globally recognised military recruitment.”

What Capita, as an organisation, learns from its defence contract offers inspiration to other aspects of their business and assists in the fulfilment of other contracts.

As we navigate the coming years, sectors such as defence, which carry major government investment, will undoubtedly thrive with opportunity. We fully anticipate that businesses of all sizes and from a variety of industries will recognise the benefits and opportunities involved in working with the defence sector thanks to the sheer volume of contracts across a wide range of areas. In addition, companies such as Capita, BAE, Boeing, and Rolls Royce, which all have lucrative relationships with the Ministry of Defence and the wider defence sector, surely must act as nodes of attraction for any other business considering tendering to win some of these MOD contracts or to become part of the supply chain.