May 23, 2024
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Going big by going small

At this time of geopolitical tumult, Sandy Boxall welcomes the fact that that Defence spending will be increasingly underpinned by SMEs

“We the United Kingdom have upped our Defence spending, but we need to see NATO allies do that as well.”
Liz Truss, February 27, 2022

I must admit, this blog hasn’t flowed as quickly as usual. Under normal circumstances I take pride in bashing out my latest thoughts fairly rapidly – at least by the standards of someone who is not a professional writer. Today, though, has been different.

Across from my desk is a television set to one of the 24 hour rolling news channels. Now this is not a channel I tune into that often but since the Russian invasion of Ukraine just a few days ago (I’m writing this on February 27th by the way) I’ve watched little else. The horror and sheer incomprehension at a war, in Europe, is something that will never leave me. And I’m certain that I’m not alone.

There are, of course, myriad consequences flowing from this seismic event – some we know about already, some are still to occur. One example, just from today, is Germany’s decision to surge its Defence spending to more than 2% of its economic output – a policy it had previously long resisted. This increase will no doubt be mirrored by other countries across Europe – a shift that has implications for Defence manufacturers large and small.

And the UK is no exception.

Action stations

Earlier this year, the UK government published its Defence Small and Medium-sized Enterprise (SME) Action Plan – a document that is the latest in a series of significant Defence-related policy papers, such as last year’s Integrated Review and the Defence and Security Industrial Strategy – both of which came hot on the heels of a big increase in the military budget.

While the majority of UK Defence spending goes to larger organisations, SMEs still receive a notable amount. For example, in 2019-20 SMEs received £4.5bn, or roughly 21% of total Ministry of Defence spending with industry. Although this figure has been rising over the past few years – it was from 13.1% in Financial Year 2016/17 to 19.3 per cent in 2018/19 – the target was and is 25% of spend – so in order to get to that target more is needed to be done.

That’s why the new Defence Action Plan is so important – and it’s something that the team at Contract Finder Pro overwhelmingly support.

Fuelling faster progress

The Action Plan – which is actually an update of the SME Plan which came out in March 2019 – aims to ensure the UK Defence continues to draw on the skills and capabilities of SMEs, not only to enhance the UK’s security but also to deliver the best value for money for the taxpayer.

This latest iteration describes industry as a strategic asset and this is vital – treating it in a completely transactional way will lead to a transactional level of investment and poor results. Industry needs to be nurtured, while not being entirely immune from competition. At the very least the route to a return for good ideas needs to be clear.

The good news is that there are a total of 13 Commitments in the Action Plan which will help fuel faster progress. The good news is the first two are points that CFP is already working to support. The first commits government to “seek evidence from strategic suppliers that they have or are developing effective ways of engaging SMEs”, while the second targets the UK’s Industrial Participation Policy and involves the launch of “a programme to develop an approach asking suppliers to set voluntary targets for UK content and articulate their plans for opening up opportunities for the UK supply chain”.

At CFP, we are working hard to create tech to make opportunities and frameworks more visible for SMEs, as well as their larger counterparts – while the challenge is particularly acute for SMEs, it’s hard for everyone. CFP customers, though, simply have to use our Tender Search page to hunt for specific opportunities or contract notices. And if they want to see information on historical awards then this is available on our Awards Search page. All they have to do is enter the search terms that they are looking for, click search and all the opportunities that meet those key words will be returned below.

Of the other eleven commitments, there are a couple more which caught my eye. Number five, for example, pledges to create a digital supplier portal with “a single uniform set of rules supplemented with specific features to give greater flexibility to better suit the characteristics of defence and security procurements and those markets”. At CFP we would go so far as to suggest that this idea should be applied to all work for the public sector, with one central record that can be drawn from for any work to any part of the public sector – endlessly filling in forms creates no value for either the government or the supplier.

And the sixth commitment concerns simplifying single source regulations: “Simplification and speeding up of procurement processes and incentivising major suppliers to access innovation and support wider objectives, including support to UK SMEs, will open up new opportunities for smaller suppliers.” The current rules create considerable fear in the supply base that tendering could cause them to give up their intellectual property rights, or that single source tendering might lead to a huge admin overhead – and enforced low margins. Removing unlimited liability will help everyone…

Always more to do

Now these are all good steps, but I can’t help thinking more needs to be done to force standardisation and consistency across the commercial space. The paperwork load on the Ministry of Defence has been rising recently and that makes innovation and change increasingly difficult.

Although the current situation in Ukraine, not to mention other issues such as the cost of living crisis, will inevitably dominate the immediate ministerial horizon, at CFP we believe that a central pan-government initiative to reduce red tape would be a major driver to improve procurement across the UK public sector.

This particular government has long made much of its determination to remove unnecessary regulations – here would be a chance to set its compass on a far more streamlined system. Watch this space.