Although the United Kingdom has a seemingly mature supply chain, in recent years, macroeconomic challenges and geopolitical tension proved to bring new obstacles for both government and commercial entities within the nation’s biggest public procurement organisations.
Despite the geopolitical landscape experiencing rising tension, and European countries witnessing overstressed energy supplies since the invasion of Ukraine by Russia, the United Kingdom continues to position itself as a world-class leader in defence production, providing national and international aid to its foreign allies through an adequate procurement act.
Although the pressure of rising costs caused by eye-watering inflation and a shortage of skilled workers, the UK defence industry turnover totalled roughly £22 billion ($29 billion), with approximately £11 billion ($15 billion) being exported.
As we begin to look towards the year ahead and various opportunities that will arise within the UK defence procurement regime, understanding new trends will be vital for business success and overcoming any potential challenges.
Top 5 Defence Procurement Trends In 2024
With new technology coming onto the market, the Ministry of Defence (MOD) will continue to seek alternative solutions to existing protocols. Investment in technological systems, and the onboarding of advanced software, in this case, Artificial Intelligence (AI) would see continued public support from the government and the MOD.
New defence procurement trends will continue to align with the government’s national security interests, both domestically and internationally. This would however require businesses and commercial procurement agencies to build procurement strategies that are parallel with the defence sector’s interest, allowing them to tap into new business opportunities.
Global Defense Procurement Dynamics
International defence procurement remains a winning recipe for many businesses in the defence sector. As the global power dynamics begin to shift, UK defence procurement would potentially look towards more sophisticated solutions within foreign markets.
With a limited supply of materials and a shortage of defence talent, procurement solutions would see a shift towards international support from advanced economies. However, this could also provide domestic businesses with an alternative solution to strategise and focus on providing first-class solutions within the defence and procurement ecosystem.
Attracting and retaining talent is perhaps one of the most important aspects. Businesses will need to invest in adequate training and onboarding programs that would see employees advance faster through the appropriate avenues. On top of this, strong collaboration between small and medium enterprises (SMEs) and larger commercial organisations could further help relieve the shortage of talent and skills management for businesses.
Building a Global Britain requires not only the government but also the broader defence sector to ensure effective partnerships among trusted foreign partners. This is especially important in the realm of defence procurement, allowing for the effective supply of critical resources, including adequate human talent and the cross-sharing of advanced equipment, technology and strengthening of defence supply chain.
Ministry of Defence Procurement Procedures
Changing regulatory frameworks, both domestic and foreign, will help reshape acquisition pipeline solutions for suppliers in the coming years.
Policy introductions such as the Veterans’ Strategy Action Plan (2022-2024) will see wider, and more component investment to oversee retention of new and retired veterans. Improving the social well-being of retired personnel, through the enhancement of veteran employability will play as a key focal point in this strategy, which in turn could see private entities benefiting from onboarding veterans or those previously employed within the defence sector.
At a similar level, ongoing support for the improvement of peacekeeping with foreign allies will play a critical role in the defence sector’s international interests. The Minister for the Armed Forces has pledged the UK’s support for United Nations peacekeeping efforts in allied nations.
Not only at home but abroad, new policy changes would perhaps present new opportunities for local organisations. For example, Indian defence procurement would now allow foreign partners to bid in the country’s £395 billion ($500 billion) defence procurement sector. Talks have already began between India, the UK, the European Union and Australia to introduce Indian defence procurement to the global supply chain, allowing for a more competitive international playing field.
Strategic Shifts in Procurement Policies
Aside from a focus on domestic affairs, defence procurement policies are rapidly adapting to emerging geopolitical challenges.
Changes to the UK’s Defence Procurement Procedure 2006 in recent years now see the advancement, and more critical focus on institutional failures, allowing for innovation intermediaries, including entrepreneurs to address any past or existing failures. More than this, intermediaries would further help advance and advocate design changes, and build capacity for innovation procurement.
In a similar vein, the UK’s Defence Procurement Procedure 2011 received similar improvements. Some of the new changes introduced in recent years will see the Defence and Security Public Contracts Regulation 2011 being revoked, bringing defence procurement under one umbrella. A new set of rules will be developed for the provisions regarding national security and national interest for the UK defence sector. A Single-source contract regulatory framework would further enhance the partnership between the MOD and private sector suppliers to deliver contracts through well-detailed specific proposals.
In the international ecosystem, India’s New Defence Procurement Procedure would further focus on a more institutional procurement structure, an initiative that would promote indigenous design, development and manufacturing of various domestic defence equipment and systems.
Although countries, including the United Kingdom, are moving towards a single-source defence sourcing portal framework, which would enhance the development of security and defence equipment within the specific country, this could bring a new set of challenges for some suppliers working on international procurement contracts once they’re concluded.
International Collaborations and Agencies:
Despite the UK’s exit from the European Union both the UK defence sector and the European Defence Agency (EDA) continue to hold strong ties, further enhancing a new pathway towards delivering sophisticated policies that consider the national interest of the UK and EU Member States.
Earlier in 2023, the EDA embarked on an ambitious mission to improve procurement policies within the continent, allowing for several EU-27 Member States, including Norway to sign the approval of new procurement policies that would allow the acquisition of critical defence supplies and replenish stockpiles.
Although the UK is still in talks with furthering this initiative, these changes only further prove that international collaboration between government and private sector agencies will help strengthen supply chains and build towards a more streamlined development and manufacturing value chain for all stakeholders.
Other international collaborations with Norway, through the Norwegian Defence Procurement Division (NDPD), will ensure that both the UK and Norway will continue their partnership in the supply and demand of defence equipment to responsibly support and preserve the security of the Arctic Region, which spans the North Sea and North Atlantic.
This would further enhance business and acquisition potential between both nations’ defence sectors, allowing it to align with both countries’ national interests to create a secure and equitable trade route, and exploitation of the region’s forward-looking potential.
Technological Innovations and Challenges
Finally, as already mentioned, technologically advanced requirements remain at the forefront of the defence sector’s national interests. Through the Defence Procurement Analysis, the MOD and wider defence sector can realise the potential of technological abilities, and further develop more inclusive value chains that allow private suppliers to provide the latest developments in technological equipment and systems.
Issues within the Defence Procurement framework presented to Parliament highlight how the government can alleviate future problems through adequate funding and improving supply chains. More than this, new changes would allow for the improvement of the defence procurement acquisition pipeline, allowing for shorter waiting periods, and overall streamlined delivery of equipment and systems purchased through the procurement framework.
Although there is still a lot of groundwork that needs to be covered before this plan can be put into action, the current examination of the role of innovation, and the importance thereof will help reshape procurement strategies for all private organisations within the procurement and acquisition ecosystem.
Concluding Thoughts
Whether you are a defence industry professional, policymaker, or enthusiast keen on understanding the dynamics of defence procurement, our page provides valuable insights into the trends that will define the landscape in 2024.
At the intersection of geopolitics, technology, and policy, this guide offers a comprehensive view of the evolving world of defence acquisitions, ensuring you are well-informed about the critical factors shaping the future of global security.
