The UK government has announced increased investment in small and medium enterprises (SMEs) within the defence sector, opening up significant opportunities for businesses looking to enter the MOD supply chain. However, winning defence contracts can be a complex process that requires an understanding of procurement rules, compliance requirements, and strategic partnerships.
In this guide, we’ll outline how SMEs can successfully secure defence contracts, meet key requirements, and build a skilled workforce to deliver on these projects.
Why SMEs Should Enter the Defence Supply Chain
The UK government has committed to increasing defence spending to 2.5% of GDP by 2027, with a focus on ensuring SMEs benefit from this investment.
Key reasons SMEs should explore defence contracts include:
✅ Access to high-value contracts – The MOD spends billions annually with UK businesses.
✅ Growth opportunities – Defence contracts can provide long-term stability and expansion potential.
✅ Government backing – New SME spending targets are being introduced to help smaller firms enter the supply chain.
✅ Innovation demand – SMEs bring agility and technological advancements to defence projects.
With the right strategy, SMEs can successfully compete for contracts and become valuable contributors to the UK defence industry.
Understanding MOD Procurement Processes
To win a defence contract, SMEs must first understand how procurement works. The Ministry of Defence (MOD) and major defence primes operate structured bidding and tendering processes.
Steps to Access MOD Contracts:
1️⃣ Register with Defence Suppliers Portal – Sign up on Defence Sourcing Portal (DSP) to access tender opportunities.
2️⃣ Identify Suitable Contracts – Review upcoming defence projects and select tenders that align with your expertise.
3️⃣ Pre-Qualification Questionnaire (PQQ) – Complete this stage to demonstrate your capabilities, compliance, and financial stability.
4️⃣ Tender Submission – Submit a detailed proposal, pricing, and evidence of past work.
5️⃣ Evaluation & Award – The MOD assesses bids based on quality, cost-effectiveness, security, and technical capability.
🔎 Pro Tip: Understanding framework agreements, such as CCS (Crown Commercial Service) and DSP, can increase contract opportunities.
Meeting Compliance & Security Requirements
Defence contracts require strict compliance with regulations and security clearances to protect national security. SMEs must be prepared to meet these standards.
Key Compliance & Security Requirements:
✔ Cyber Essentials Certification – A must-have for handling MOD-related projects.
✔ ISO 9001 & AS9100 Certifications – Quality management standards for aerospace and defence.
✔ Security Clearance – Personnel working on defence projects may need SC (Security Check) or DV (Developed Vetting) clearance.
✔ Supply Chain Transparency – Ensuring your suppliers and partners also comply with defence standards.
📢 SMEs should work with compliance specialists to meet MOD requirements and enhance contract-winning potential.
Building Strategic Partnerships
Many SMEs struggle to secure direct contracts with the MOD but can successfully enter the defence supply chain by partnering with larger companies.
How to Build Strong Partnerships:
🔹 Work with Defence Primes – Companies like BAE Systems, Rolls-Royce, and Babcock subcontract work to SMEs.
🔹 Join Industry Networks – Engage with organisations like ADS Group, Make UK Defence, and local supply chain hubs.
🔹 Leverage Innovation Funding – Government grants, R&D tax credits, and innovation challenges can help SMEs develop defence solutions.
🔹 Attend Defence Events – Networking at DSEI, Farnborough Airshow, and Defence Procurement events can open new opportunities.
🤝 Collaboration with established defence firms can provide credibility, experience, and access to larger contracts.
How Recruitment Supports SME Success in Defence
Winning a defence contract is only the first step – having the right talent in place is critical to delivering projects successfully.
Key Roles SMEs Need to Fill for Defence Contracts:
👷 Engineering & Manufacturing: Mechanical, Electrical, Systems Engineers
📡 Cybersecurity & Technology: AI, Software Engineers, Data Analysts
🔗 Project & Supply Chain Management: Procurement, Logistics, Contract Managers
📋 Compliance & Security: Security-Cleared Specialists, Risk Analysts
💡 Recruiting specialists with defence experience ensures SMEs can meet contract requirements efficiently.
Need help with defence recruitment click here or call 01952 987033
Position Your SME for Success
With increased government support for SMEs, now is the time to explore defence contracts. Understanding procurement, compliance, partnerships, and talent acquisition is key to securing and delivering successful projects.
📩 Need help finding skilled professionals for your defence contracts? Jonathan Lee Recruitment has decades of experience in defence industry hiring and can connect you with the talent you need – Discover more here.
🚀 Get in touch today → Contact Our Team on tel: 01952 987033
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