On Friday 29th March the Ministry of Defence (MoD) released the Defence SME Action Plan 2019 – 2022. This is the MoD’s contribution to a Government-wide initiative for every HMG Department to state how it will increase its spending with Small and Medium-Sized Enterprises (SME).

The MoD has a target of 25% of all departmental spend with industry to go to SMEs; this is a reduced target taken down from the 33% across the rest of Government. This 25% target is for spend by value and counts for direct and in-direct spend going to SMEs. This is a target originally set to be achieved by 2020, now revised to 2022.

The Action Plan sets out a number of goals that the MoD is currently working to achieve; below are a list of some of the commitments made by the MoD to further improve SME spend.

Supplier Engagement

  • Work with SME Champions to improve access to opportunities for SMEs. Championing prompt payment, opening supply chains to a wider range of suppliers, and advertising sub-contracting and market engagement opportunities through the Defence Contracts Online supplier portal.
  • Promote good practice and support acquisition teams to engage with the market at an early stage in the procurement process, including through Industry Days and innovation events.
  • Benchmark with industry and other government departments, via the SME Champions network, to identify and adopt examples of good practice which have enabled SMEs to enter the supply chain

Procurement Policy and Process

Develop policy to:

  • make it easier to do business with defence; for example to address whether the flowdown of contractual terms to smaller suppliers is appropriate.
  • take a more balanced approach in our procurement choices, to ensure that wider economic factors are taken into account, following the example of other government departments.
  • take account of suppliers’ approach to payment in procurement of contracts over £5 million per annum, which may exclude suppliers which cannot demonstrate a fair, effective and responsible approach to supply chain payment
  • improve Early Market Engagement, which will provide advance notice of procurement opportunities to enable development of supply chains
  • strengthen the commercial assurance process, to ensure that investment decisions remove barriers and enable more effective engagement with SMEs

Doing Business with Defence

  • Provide guidance to prospective suppliers seeking to do business with defence via a help desk facility – (email: dbscs-ecfinanceteam@mod.uk)
  • Extend the range of webinars, promoting aspects of the procurement pipeline to provide early visibility of opportunities to do business with defence.

Innovation

  • Pursue the vision of establishing a defence enterprise that is innovative by instinct.
  • Develop the defence innovation enterprise so that the MOD is recognised as an organisation where innovation is commonplace.
  • Publish refreshed Procurement Innovation Guidance to facilitate more agile sourcing and actively encourage the submission of creative solutions to the MOD
  • Invest in supply chain development activity, including two SME pilots to improve access to expertise and resources to bring good ideas to market.
  • Work with Invest Northern Ireland, who will fund an SME focussed, defence supply chain pilot with an expected resulting research and development investment of approximately £1.2 million.
  • Committing £500k from the Defence Innovation Fund to run a pilot to look at how to drive innovation and productivity in the defence sector, which we anticipate will help SMEs with their competitiveness

The Action Plan includes a number of practical measures that could help increase SME engagement and contracting. Many of these are aimed at increasing both the visibility of opportunities for SMEs, as well as the policy and processes that would allow for them to bid for more work.

The Action Plan also puts a lot of focus on the supply chain and improving the information that can be gathered on activities within it. This is an important part of the wider MOD prosperity agenda and is most likely to be role that the new Supply Chain Champions will fulfil.

ADS will be tracking these commitments over the coming years and will work alongside MOD to deliver on many of these commitments and supporting SMEs when and where they look to engage with Defence.