Defence Office for Small Business Growth launched

Homeland January 28, 2026

The Ministry of Defence has formally established the Defence Office for Small Business Growth (OfSBG), a dedicated unit designed to streamline the involvement of small and medium-sized enterprises (SMEs) in the UK defence supply chain.

Launched by Luke Pollard MP, Minister for Defence Readiness and Industry, during a visit to the National Manufacturing Institute Scotland, the initiative represents a central pillar of the government’s strategy to increase defence spending with SMEs by 50% by 2028. This policy shift aims to reverse a historical decline in direct MOD spend on smaller firms, with the government committing to an additional £2.5 billion in SME contracts through May 2028. This target is expected to bring total MOD expenditure with SMEs to approximately £7.5 billion over the period.

The OfSBG will be staffed by policy and commercial experts focused on removing systemic barriers that have previously hindered smaller contractors. Key priorities include simplifying complex procurement processes and improving cash flow for sub-contractors operating under larger prime contracts. Furthermore, the office will work to provide the long-term clarity required to attract private sector investment into the UK’s 12,000-strong SME defence base. This effort aligns with the broader national security objective of hitting a defence spending target of 2.6% of GDP by 2027, representing a £270 billion investment over the current Parliament.

A critical component of this rollout is the introduction of the SME Commercial Pathway. This framework provides specific guidance for MOD procurement teams to reserve below-threshold contracts for SMEs and to segment larger requirements to enable greater participation from non-traditional suppliers. It also emphasizes enhanced market engagement and stronger oversight of how prime contractors manage SMEs within their own supply chains. Initially, the OfSBG will support 30 pathfinder SMEs across sectors ranging from cyber security to aeronautical engineering. These firms, which include companies such as Viper::Blast, will test and refine the service before it is expanded to the wider business community in the coming months.

National Armaments Director Rupert Pearce has stated that a more resilient SME supply chain is essential for maintaining a technological edge and enhancing industrial capacity. By acting as a central hub for advice on tendering, mentoring, and networking with prime contractors, the OfSBG aims to foster a dynamic ecosystem of well-capitalised firms. This initiative is positioned to support the objectives of the upcoming Strategic Defence Review, ensuring that innovative British capabilities are rapidly integrated into the UK’s warfighting readiness and contributing to regional economic growth.