The UK Ministry of Defence has launched a new unit, Defence Office for Small Business Growth (OfSBG), to assist small and medium-sized British businesses in securing more defence contracts.
The Defence Readiness and Industry Minister, Luke Pollard, announced the creation of the unit during a visit to the National Manufacturing Institute Scotland.
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The OfSBG will consist of policy and commercial experts who will support UK small and medium enterprises (SMEs) in navigating the defence procurement process, with the aim of increasing MoD spending with small businesses.
This initiative follows the government’s commitment to boost defence spending with SMEs by 50% by 2028, a move that targets around 12,000 companies nationwide.
The OfSBG team intends to address the challenges small businesses face when bidding for defence contracts, including complex procedures and slow processes.
It will also provide guidance to SMEs, offer mentoring schemes, facilitate networking with prime contractors, and direct businesses to regional defence clusters and trade associations.
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By GlobalDataA web portal and contact centre will initially support 30 SMEs from sectors such as cyber security and aeronautical engineering across all parts of the UK.
Pollard said: “Small businesses told us defence procurement was too slow, too complex and too hard to navigate.”
The OfSBG’s responsibilities will include overseeing policy reform, simplifying commercial processes such as improving cash flow under contract, enhancing transparency, sharing knowledge within the sector, and encouraging private investment by clarifying long-term procurement plans.
The work will be supported by the new SME Commercial Pathway, which aims to increase opportunities for SMEs by reserving smaller procurements for them and segmenting contracts for wider participation.
In 2024/25, UK SMEs received £1.2bn ($1.6bn) in direct investment from the MoD.
The UK government has set a target of an additional £2.5bn through to May 2028, bringing total MoD SME spending to £7.5bn.
The government has also highlighted increased overall defence spending, set to reach 2.6% of GDP from 2027, with £270bn invested across this Parliament.
This increased investment in SMEs is aimed at supporting economic growth in regions throughout the UK.
Recently, the UK announced plans to open a defence business hub in Kyiv this year, supported by three years of government funding to help British SMEs access the Ukrainian market.
However, a rumoured £28bn funding black hole in defence finances and a weak UK economy could hamper defence investment plans.
Analysis conducted by Airforce Technology‘s sister site, Army Technology, in 2025 revealed some of the announced increases in UK spending is a trick of accounting, rather than actual new funding.
