The Defence SME Action Plan: Industry reaction

Land March 16, 2022

The Ministry of Defence (MOD) recently published the Defence SME Action Plan outlining its ambitions to improve relationships with small and medium-sized enterprises (SMEs).

The MOD is committed to supporting SMEs seeking to work in defence, whether contracting directly with the MOD or through larger prime contractors and has set an ambitious target that 25% of its procurement spend will go to SMEs in 2022, either directly or indirectly.

For all full breakdown of the plan, you can read Defence Online’s feature here.

So, what has been the reaction to the plan from those well placed in the industry to comment?

Defence Online has spoken to a number of organisations to gauge what the reaction to the plan has been.

Praise for the SME Working Group

The ambitions of the plan have been broadly welcomed – especially the introduction of the SME Working Group.

The MOD envisage the group will help give SMEs a voice alongside its ongoing engagement with its established major suppliers and provide an opportunity to be involved from the outset in identifying priorities, helping develop solutions and for checking the MOD’s progress on delivering against its commitments.

Gillian Askew, co-founder of Go4Growth, a fully funded service for SMEs, told Defence Online: “It is really encouraging to see the continued work that the Ministry of Defence are doing to engage SMEs. Providing a voice for smaller organisations through the SME Working Group is a solid approach to ensuring that there is both focus and understanding of what the small business sector needs in order to be better equipped to take part.”

Gillian Askew, co-founder of Go4Growth

Scott Verney, CEO of Subsea Craft – a UK-based Advanced Research, Design and Development Lab for future naval technology and engineering, was also positive about the increased levels of engagement between the MOD and SMEs through the SME Working Group.

He said: “This promises to be a good initiative that I hope will give SMEs like Subsea Craft a greater voice in the sector, and in turn foster a stronger, more collaborative approach that will be vital in quickly identifying key challenges facing the industry – and developing solutions to those challenges.”

Progress in harnessing innovation and technology from SMEs

One of the MOD’s commitments within plan is the establishment of a UK-wide Defence Technology Exploitation Programme (DTEP) that will look to support SMEs across the Defence sector in developing innovative technologies and winning new business, through working collaboratively with higher tier companies.

Nick Garland, Head of Defence and Secure Government, CDW UK, said this was a recognition of the significance of SMEs in creating the new technologies driving the MOD’s search for battlefield advantage.

“The challenge for the SME Defence community is routinely to break through the regulatory and necessary boundaries of dealing with scaled Primes and the wider Defence community.

“This paper goes some way to better acknowledge the vital importance of the UK’s prosperous SME organisations that are increasingly producing data driven, battle winning technologies.

“Leveraging the agile and innovative presence of the SME fraternity, the Defence SME Action Plan will better enable the UK to innovate at scale as part of the international prosperity agenda.”

Helping to deliver the Government’s levelling up policy

The plan will see the MOD pilot a network of new Regional Defence and Security Clusters (RDSCs) to encourage industry and government to share ideas, promote collaboration and commercialisation.

The creation of these RDSCs is intended to develop innovative regional industrial capabilities to contribute to UK military capability by creating collaborative pathways for SMEs as a route into the defence supply chain.

Cameron Tonkin, Sector Director for Defence at construction and engineering specialists Costain, told Defence Online he thought that the plan was good news for supply chain innovation and collaboration across the UK.

He said: “The MOD SME Action Plan is a positive step for regional socioeconomic prosperity and the governments levelling up agenda. Through the 13 commitments, it is clear to see the implications and outcomes expected for SMEs as well as the part all of us in the supply chain can play.

“The creation of more entry points, the simplification of the procurement process and the guidance on agile delivery are vital for innovation and collaboration in the supply chain.”

Room for improvement…

Whilst many of the intentions of the plan have been received positively, there are understandably calls for more details on some of the commitments made within the plan.

Gillian Askew from Go4Growth called for greater clarity on what the MOD defines as an SME to get a clearer picture of the types of companies they are doing business with.

She commented:“The very definition of SME is broad and can often exclude micro-organisations. It would be great to see more detailed demographics on the kinds of businesses MOD are engaging with in terms of micro, small, local and diverse businesses.”

Long lead-times and procurement duration challenging for SMEs

Traditionally, Defence equipment can take a long time to develop and introduce into service.

Inflated costs, extended project times and additional unplanned expenditure to support and maintain aging equipment in-service can be much harder to overcome for SMEs.

Cameron Tonkin from Costain, said: “The pace of Defence procurement could present a challenge that is not directly addressed by the paper and will therefore remain a cause for concern for the fast paced, innovative SME sector.

“Secondly, the often-long lead time and delays which occur in the Defence community combined with the fiscal scale of large Defence programmes will always remain a concern for SMEs. Delivering innovation at pace, comes with agility, low overheads and high risk.”

These concerns were echoed by Go4Growth’s Gillian Askew, who feels that the regulations themselves, whilst positive, won’t be enough on their own to speed up and simplify the procurement process.

“The regulations themselves in our view, won’t solve the complexity or time-consuming nature of procurements and it will remain with contracting authorities to think about how they apply the regulations in way that make them more accessible and inclusive to a broad and diverse supply base.

“It is good to see therefore that Commitment #8 focuses on MOD commercial staff approaching and engaging the market creatively and earlier. It would be good however to know more detail about how this is being applied.”

A positive step in the right direction for SMEs

There is a clear intent from the MOD to improve engagement with SMEs in the defence supply chain and this is evidenced in the document.

The reaction gathered from industry by Defence Online shows that this ambition is welcome, and that SMEs are keen to have their voices heard in shaping the integral part they have to play in the defence supply chain.

If the MOD can deliver on these pledges, it should help ensure it achieves its ambitions on procurement spends and provide economic benefits to SMEs across the UK who engage with the defence marketplace.

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