26 January - 1 February 2026
Government launches SME support office and £20M fund
The MOD made two significant moves last week to open the defence market to smaller companies. On Monday, Defence Readiness and Industry Minister Luke Pollard launched the Defence Office for Small Business Growth (OfSBG) — a new team dedicated to helping SMEs bid for and win defence contracts. Thirty pathfinder SMEs have been selected for initial support.
That evening at the ADS Annual Dinner, Pollard announced a £20 million fund to accelerate "the next defence unicorns" — British-owned companies solving global defence problems. The fund will include Dragon's Den-style seed funding events, and businesses must be fully or part UK-owned to access it.
Both announcements sit within a broader target to increase direct MOD spending on SMEs by £2.5 billion. The OfSBG is pitched as a single front door for firms outside the defence supply chain; the unicorn fund offers an accelerated route to initial contracts for those already in the space.
Source: GOV.UK · Wired-Gov · Forces News
POLICY & GOVERNMENT
Ajax programme faces "back it or scrap it" decision
Defence Secretary John Healey told the Defence Committee last Monday that the government "must back it or scrap it" on Ajax — the clearest signal yet that cancellation is a live option. The MOD has withdrawn initial operating capability status, declared just last November, after personnel reported noise and vibration symptoms during Exercise Titan Storm. The programme has been handed from the Army to the National Armaments Director and has been on hold since 26 November.
Of the 23 vehicles involved, 13 have undergone additional inspections with 10 still to be tested. For industry, a cancellation would trigger a new vehicle selection process — CV90, Lynx and Boxer variants would all be in the conversation — while continuing delays compound the hold-up on the Defence Investment Plan.
Source: The Register · Defence Committee oral evidence, 27 Jan 2026
NAO report: MOD recovers just 48p for every £1 spent on counter-fraud work
A National Audit Office report published Thursday found the MOD recouped an average of just 48p per £1 spent on counter-fraud activity between 2021-22 and 2024-25 — against a government expectation of £3. The MOD estimates fraud exposure of up to £1.5 billion a year, mostly from procurement. As defence spending rises towards 2.5% of GDP, the NAO warned that exposure will only grow. For suppliers, expect tightening procurement controls and audit requirements.
Source: NAO · Forces News
Minister launches review into Single Living Accommodation for 80,000 personnel
Minister for Veterans and People Louise Sandher-Jones announced a full independent review of Single Living Accommodation on Thursday, describing it as a "once in a generation" opportunity to fix conditions affecting around 80,000 single and unaccompanied personnel. The review will be chaired by Natalie Elphicke Ross OBE and will report in two phases: UK accommodation by summer 2026, overseas by year-end.
For defence contractors and FM providers, the review is an early signal of future investment. It complements the Armed Forces Bill's planned Defence Housing Service and sits alongside £9.2 billion already committed to upgrade service family homes.
Source: GOV.UK · Forces News · LBC
CONTRACTS & AWARDS
Palantir awarded £240.6M data analytics contract
The MOD directly awarded a £240.6 million, three-year contract to Palantir Technologies UK for data analytics capabilities, using a defence and security exemption to bypass competition. The deal, signed 30 December and published 23 January, covers analytics across all classifications and is described as interoperable with NATO systems. It runs from 1 April 2026.
The award drew scrutiny on data sovereignty — Palantir being US-owned and Peter Thiel-chaired — and the revolving door: The Register reported five former MOD officials joined Palantir in 2025, including a former policy director now subject to business appointment restrictions.
Source: Find a Tender · The Register
INDUSTRY MOVES
RAF Halton House declared surplus to requirements
Halton House — the Grade II* listed officers' mess at RAF Halton, purchased in 1918 — is now "surplus to operational requirements" and will be disposed of. Personnel were given 30 minutes' notice to vacate in January 2025 after a structural defect was identified. The disposal forms part of the phased closure of RAF Halton, with final vacation no earlier than 2030. The wider defence estate rationalisation continues to create both disruption and opportunity for contractors in construction and FM.
Source: Forces News
PROCUREMENT PIPELINE
Royal Navy studies Aster 30 integration with Mk41 launchers
The Royal Navy asked MBDA last week to study integrating the Aster 30 air defence missile with the US Mk41 vertical launch system. Type 26 frigates are being built with Mk41 cells, while Type 45 destroyers use the French Sylver launcher. Integration would offer a future upgrade path for the Type 45 fleet and align with the SDR's "NATO First" approach — signalling growing demand for missile integration work and supply chain opportunities around both programmes.
Source: UK Defence Journal · Navy Lookout
First military drone degree as autonomous skills pipeline takes shape
The Army invested £240,000 in a new Master of Engineering degree at NMITE in Hereford, opening September 2026. The three-year accelerated course will train up to 15 civilian students and five soldiers per year as drone specialists — the first UK degree placing military and civilian students side by side on uncrewed systems.
Armed Forces Minister Al Carns said the degree draws directly on Ukraine, where drones now cause more casualties than artillery. The government plans to buy 8,000 drones this year (up from 5,400 in 2024) and double investment in autonomous systems during this Parliament. For industry, the course is designed around dual-use technologies and anchors Hereford as a growing cluster for military technology — relevant for SMEs in autonomy, sensors, electronic warfare and counter-UAS.
Source: GOV.UK · British Army · Forces News
INTERNATIONAL
Pollard sets industry challenge amid escalating threat picture
Also at the ADS dinner, Pollard framed the week's announcements against an urgent threat environment — 20 cyber attacks against UK defence during the evening alone, 50,000 new cyber threats identified daily, and the Ukraine war entering its fifth year. His direct challenge to the 1,000 industry leaders present: improve supply chain manufacturing, hit timelines, control costs, and "if things aren't working, be honest about it." The MOD expects greater accountability as spending increases.
COMING UP
Singapore Airshow 2026 — 3–8 Feb, Changi Exhibition Centre. Asia's largest aerospace and defence exhibition, 10th edition. Major defence procurement and B2B opportunities with high-level conferences on autonomy, cyber and airline leadership. One to watch for UK companies targeting Indo-Pacific export markets.
Cyber Security & Resilience Bill — Public Bill Committee begins Tues 3 Feb. Oral evidence and line-by-line scrutiny of the Bill, which expands cyber regulation to cover managed service providers, data centres and digital supply chains. Defence suppliers with digital or critical infrastructure touchpoints should monitor closely — the Bill will shape compliance requirements. Written evidence submissions are open via Parliament's website.
World Defense Show 2026 — 8–12 Feb, Riyadh. Third edition, with a UK Pavilion organised by ADS. Major B2B opportunities for exporters targeting the Gulf market.