£34.1bn spent with UK industry; direct SME share remains at 4%

Commercial significance: The MOD spent a record £34.1 billion with UK industry in 2025/26, but small firms' share of direct spend stayed at 4 per cent. Relevant to: SMEs, and primes whose supply chains will carry the SME target

Space is the first new buying portfolio

Commercial significance: The National Armaments Director said space is among the first capability portfolios in the new procurement structure, and told industry to expect more problem statements. Relevant to: satellite communications, navigation and timing, surveillance and space control

Twelve UK seats on Ukraine's AI dataset

Commercial significance: The MOD will give up to 12 UK-registered companies three months on Ukraine's battlefield AI platform, with proposals due 22 October. Relevant to: autonomy, computer vision and counter-drone developers

On 24 September the MOD published its regional expenditure statistics for 2025/26. Direct spending with UK industry reached £34.1 billion, up 3.2 per cent in real terms and the highest since the series began in 2013/14. Weapons and ammunition grew fastest, up 18 per cent to £2.4 billion, driven by Boxer and Ajax payments. Technical, financial and other business services, the largest group at 31 per cent of spend, added the most in cash: £473 million across a wide range of management and logistics contracts.

The small-firm figure moved least. Direct spend with small and medium-sized enterprises (SMEs) was £1.3 billion, or 4 per cent of the total, the same share as the year before. That is direct spend only. The MOD's SME Action Plan puts total SME spend at about £5 billion a year, around 25 per cent direct and 75 per cent through the supply chain. Two regional headlines also need care. Northern Ireland's 63 per cent rise is, in the statisticians' words, "primarily due to a reallocation of location data" for the Fleet Solid Support contracts. London's 20 per cent fall mainly reflects better mapping of work away from company headquarters.

Business Winning Angle: The target of a 50 per cent rise in SME spend by summer 2028, about £2.5 billion more, is measured against that £5 billion total, not against the 4 per cent direct share. The Action Plan's 2027/28 targets are £2 billion direct and £5.5 billion through the supply chain, so most of the growth is planned to flow through primes and their suppliers. The fastest-growing areas show where to look first: armoured vehicles and munitions, and the management and logistics services that added most in cash. Before building a regional growth case on these figures, check the data tables, because some of this year's movement reflects better location data rather than new work.

At the UK Space Power Conference on 23 September, National Armaments Director Rupert Pearce said space is one of the first capability portfolios in the National Armaments Director Group he leads. The space portfolio is led by Rear Admiral Tony Williams, and the portfolio model gives the group more authority over the design of what Defence buys. According to UK Defence Journal, Pearce put Defence Investment Plan spending on space at nearly £13 billion over the decade and told industry to expect "a lot more problem statements". At the same conference the Defence Secretary put the first four years at more than £3 billion and announced No. 3 Space Effects Squadron, the RAF's first unit dedicated to the control of space.

Business Winning Angle: Read together, the two figures suggest most of the money arrives after 2030. The choices that decide where it goes, including architecture, standards and the balance between buying off the shelf and funding development, are being made now inside one portfolio team. Space firms should map that team and answer the first problem statements well, because they will show what the portfolio values before any competition does.

Thermal camouflage sheets - £9.9m estimated framework value, ex VAT | participation questionnaire closes Oct 20 Published 25 September. Babcock Land Defence is acting as the MOD's agent on this requirement: a single-supplier framework of about eight years for 46 items with NATO Stock Numbers. The participation questionnaire closes 20 October, 16:00; shortlisted suppliers will then be invited to tender. The notice states that no business is guaranteed under the framework. A closely related notice in February listed 46 items at the same value.

Close Quarter Combat training systems - value not published | engagement deadline Oct 8 Preliminary market engagement, not an invitation to tender, published 22 September by the MOD for two modular close quarter combat training systems, to be installed within existing training infrastructure. The detail sits in an attached document.

Business Winning Angle: Requirements placed by an agent on the MOD's behalf are easy to miss if a supplier watches only for MOD and DE&S buyer names. The camouflage framework takes a single supplier for up to eight years, weighted 60 per cent on price, so the participation questionnaire is the moment that decides who can compete. Firms that saw the February notice should check what has changed before the October deadline. The training requirement is still at the stage where the specification can move, so the useful response is evidence of what works in a live training estate.

On 25 September the MOD's Rapid AI Delivery Taskforce launched a competition for access to Avengers Labs, Ukraine's AI training platform built on more than five million frames of battlefield footage. Proposals must improve drone swarming in at least one of four areas: target recognition, distributed decision-making, adaptive mission execution, or collaborative sensing. Only UK-registered companies may apply, and proposals are capped at four pages.

Registration for the 7 October briefing call closes 5 October at 12:00. Proposals are due 22 October at 23:59 BST. Up to 12 companies will be notified by 6 November and given three months of free access under a non-financial contract. Up to five may then win funded MOD contracts in early 2027.

Business Winning Angle: Read the terms before the technology. Ukraine will own the trained model weights, with a licence to the MOD and a sublicence to the company through the MOD, although firms keep ownership of their existing technology. Phase 1 is a competitive qualification stage: companies bear their own costs and there is no guarantee of a follow-on contract. The commercial prize is the Phase 2 funding and the evidence of performance on real battlefield data. Firms should decide now whether that justifies licensing back a model they built.

The MOD's Director of Cyber Defence and Risk has asked all industry partners to achieve Level 0 of Defence Cyber Certification (DCC) by 31 December 2026. That includes obtaining Cyber Essentials, the UK government-backed baseline scheme, for all applicable business-critical systems within scope. Where higher DCC levels are required lower in the supply chain, the MOD says these should be scheduled after 31 December. On 24 September the MOD's digital blog featured a certifying body, which warned that scoping is the most common cause of delay and that late starters may struggle to find assessment capacity.

Business Winning Angle: For international suppliers this is a UK-specific gate, and the scope covers business-critical systems generally, not only those handling MOD work. Firms relying on certifications held elsewhere should check early that they meet it. With three months left and assessors in demand, starting now avoids a gap at bid time. Ask each prime you supply which DCC level it will require of you, and by when, because that answer sets your real deadline beyond Level 0.