The Ministry of Defence has launched a new policy for small and medium-sized enterprises, cutting red tape to make it easier for smaller businesses to work with defence. The changes will help the MOD drive towards its target of 25% of all procurement spending – both direct and indirect – going to SMEs by 2020.

The final set of published figures for the last parliament showed the MOD as achieving a total of 19.4%, or £3.8 billion, with SMEs in 2014/15. In order to achieve the spend target of 25% by 2019/20 this figure will need to increase to around £4.9 billion, and the refreshed SME policy is designed to help achieve this. The revised policy has been developed in partnership with SMEs, trade associations and other government departments.

It will see a new Supply Chain Champion, and a supply chain advocate network, to provide single points of contact for suppliers; and a fresh assault on red tape with unnecessary bureaucracy amended or scrapped by the middle of 2016. The Department is exploring ways of simplifying its procurement processes, for example by investigating the use of purchase order templates for the simplest low-value and low-volume contracts.

Minister of State for Defence Procurement Philip Dunne MP said: “We spend £4 billion a year with small firms, and this new policy is a signal of our intent to do more to tap into the innovation of SMEs in our supply chain. This new approach will harness UK brainpower so that our Armed Forces get the best possible equipment, deliver better value for money, and boost exciting new companies.”