Source · Select Committees · Scottish Affairs Committee
Recommendation 65
65
Accepted
The UK defence sector, and the shipbuilding industry in particular, is dominated by a relatively...
Conclusion
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
Government Response Summary
The MOD published the SME Action Plan in 2022, outlining commitments to increasing opportunities for SMEs and supporting the defence supply chain through initiatives such as the Defence Suppliers Portal and digital outreach.
Government Response
Accepted
HM Government
Accepted
The MOD published the SME Action Plan in 2022 which outlines the commitments being made to increasing and supporting opportunities for Small and Medium Enterprises (SMEs). It recognises that SMEs are at the heart of the vibrant and flexible UK defence industry, supporting a wide variety of high-quality jobs across the UK. The SME Action Plan, sets out how the MOD will further improve the engagement the MOD have with SMEs, focusing on procurement models that are easier to navigate, a recognition of the role the MOD and its major suppliers play in supporting the whole of the defence supply chain, and understanding how best to support innovation and exports for UK suppliers. The MOD also supports the Defence Suppliers Portal which offers SMEs access to view contracting opportunities as both prime contractors and sub-contractors. With the Defence Suppliers Forum SME forum, a number of SMEs and trade bodies collaborate to best inform the MOD how to support SMEs within this area. Through this forum, SME champions have been established within the range of Strategic Suppliers to encourage contracting with SMEs. As part of the overall engagement strategy, the MOD have found digital outreach (including targeted webinars) an effective platform to reach smaller business. Recent outreach activity includes presentations delivered for the Scottish Supplier Development Programme (SDP) at their virtual “Meet the buyer” events. SDP are also part of our trade association network who receive our industry communications for wider dissemination to their membership. With these initiatives, alongside the target to achieve 25% of Defence spend with SMEs to be met this year, the MOD are making in-roads into making it easier for SMEs to do business with Defence. The Department for Transport is the lead Government Department for the Regional Maritime Cluster Development Programme, including the Scottish Maritime Cluster, and they are committed to working together to delivering their shared ambitions.