Stay informed with free updates
Simply sign up to the Aerospace & Defence myFT Digest — delivered directly to your inbox.
The UK defence secretary has launched a £20mn fund to offer accelerated government contracts to British military technology start-ups as part of efforts to diversify procurement away from big defence companies.
John Healey said the contracts, although modest compared to overall defence spending, would help encourage the development of new weapons technologies.
“It’s a signal of something bigger that as a country we need. We need to reward risk takers, we need to reward innovators,” he said.
The money will go towards AI, robotics and enhanced precision weapons technologies, with start-ups going through an expedited procurement process to win the contracts, the Ministry of Defence said.
The fund is only one element of a framework aimed at “finding new people for a system that, with SMEs alone, we’re set to spend £2.5bn a year directly from defence”, he added.
It is being launched alongside a new MoD team of policy and commercial experts, dubbed the Defence Office for Small Business Growth, that will support SMEs to bid for and win departmental contracts.
The government has promised to overhaul how it buys military equipment as it seeks to fix a system that has come under fire for wasting billions of taxpayers’ money on weapons delivered late and over budget.
High-profile examples in recent years have included the troubled £5.5bn Ajax armoured vehicle programme.
Among the changes promised is a move away from a model whereby military planners have tended to “gold-plate” requirements, leading to a process that was beset by cost overruns and lengthy delays.
Instead, the MoD aims to work more closely with industry to use “spiral development”, through which new technologies will be deployed before they are fully ready and then adapted and modernised in the field.
Smaller businesses, which lack the large balance sheets of established defence contractors, have often complained of being held back by lengthy, complex procurement processes.
Governments across Nato are taking similar steps to encourage small and mid-sized defence companies, efforts that have accelerated since Russia’s full-scale invasion of Ukraine.
The announcement comes as the UK government has come under fire for failing to increase spending on its conventional armed forces more quickly since Donald Trump returned to office last year, the FT reported this month.
Sir Keir Starmer’s government is yet to deliver its defence investment plan (DIP), which will set out MoD spending plans for the next 10 years. It was initially due to be published last autumn.
Healey said the government was “working flat out to complete” the DIP.
