Recommendation 65

The UK defence sector, and the shipbuilding industry in particular, is dominated by a relatively small number of major companies. This is partly as a result of significant rationalisation and consolidation over the years, the highly specialised nature of its work and its limited customer base. In 2021/22, 42 per cent of total MOD procurement expenditure was with top ten suppliers.102 The MOD acknowledges this and has a Defence SME Action Plan, with a target that 25 per cent of the department’s procurement spend will go directly and indirectly to SMEs in 2022.103 Vice Admiral Paul Marshall, Director General for Ships at Defence Equipment & Support, told us that at present the proportion stood at 23 per cent, but that MOD was “on track to get there by the end of the financial year.”104