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Defence minister Michael Fallon promises increased MOD spending with SMEs

Opening up the Ministry of Defence (MOD) supply chain to access SME innovation is vital to meet its technology needs, says secretary for defence Michael Fallon

Defence minister Michael Fallon has hailed small and medium-sized enterprises (SMEs) as the “secret to success” and announced the Ministry of Defence (MOD) will increase its spending with smaller companies.

Speaking at the DSEI 2015, secretary of state for defence Fallon said the MOD spent 20% of its budget last year with SMEs last year, but that the figure will continue to increase. He said harnessing emerging technologies and innovation from SMEs is key to meeting defence needs.

“The real secret to success and innovation lies in opening up our supply chains to the talent of the SMEs,” he said.

“Last year we spent 20% of our defence budget directly or indirectly with SMEs. The latest figure found MOD did business with 5,400 SMEs, worth over £800m. In this parliament, I want us to do more than that.”

The minister also re-iterated his support for the joint MOD and techUK innovation challenge, which was launched in July 2015. The innovation challenge aims to help industry understand what the MOD needs, and introduce the department directly to systems that could meet those needs.

Every quarter, the MOD will set out a challenge in a “specific area of digital innovation” and ask industry to come up with systems, Fallon said.

Industry will engage with the MOD through a techUK-owned web portal, where companies can respond to the challenge.

Fallon said the MOD will review its Defence Science and Technology Laboratory (DSTL) priorities, to “ensure this is what meets emerging defence and security requirements”.

“We want to sustain the DSTL's ability to encourage innovation throughout the delivery of science and technology,” he said.  

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