SMEs Chasing Defence's £2.5bn Will Be Judged on Performance and Compliance

The Ministry of Defence plans to spend an extra £2.5 billion with small and medium-sized businesses by summer 2028, but most of that money will only reach suppliers that can pass a prime contractor's quality audit. The MOD's SME Action Plan, published in July 2026, commits to raising SME spend by around 50% on top of a £5 billion baseline. It also shows how the money travels: 75% of defence spending with SMEs flows through the supply chain rather than direct contracts.

For a Midlands subcontractor, that means the buyer is usually a prime or a Tier 1, and the first thing they assess is the management system behind the parts.

Where the money goes

The figures in the MOD SME Action Plan are worth reading closely:

• £2.5bn of extra SME spend by summer 2028, on top of a £5bn baseline.
• 25% of SME spend is direct contract award; 75% flows through the supply chain.
• Indirect SME spend is targeted at £4.5bn in 2026/27 and £5.5bn in 2027/28.

The plan commits to cutting paperwork and simplifying entry points for SMEs. What it does not change is what primes require of their own suppliers.

"The opportunities for SMEs in the defence sector are starting to open up, but SMEs need to understand they are judged on performance and compliance. The majority of these new opportunities reach small firms through primes and Tier 1s, and they won't place an order with a supplier whose management systems can't stand up to scrutiny."

"There are good engineering businesses across the Midlands that make excellent components and assemblies, but aerospace and defence customers expect a provable process approach. The gap between their current practices and aerospace and defence-level practices may be small, but it can take a lot of time and effort to prove it, so the faster these companies prepare, the more chance they have of success when the enquiry arrives."

Why ISO 9001 is often not enough

Anna Lavender-Moore, Partner at Brigham Consultants, explains where the step up lies:

"Generic quality systems such as ISO 9001 can fall short of the requirements for aerospace and defence work, and standards like AS9100 can seem onerous to those new to the industry. The length of the audit shows how much more scrutiny is involved. Where an ISO 9001 certification audit may take a single day, the same company will likely need a three-day audit to be certified to AS9100. They will be asked for demonstrable evidence of risk management in planning, configuration control, verified first articles and satisfaction of a host of customer requirements, from strategic to tactical, as well as how they manage review and improvement."

If you want the detail, our guides on ISO 9001 vs AS9100, the AS9100 certification process and preparing for an AS9100 audit set out what auditors look for.

Close the gap without rebuilding the business

"We have spent many years developing our industry experience into systems that help companies fit their existing practice into frameworks the industry understands and close the gaps, rather than forcing huge new frameworks onto companies and disrupting their day-to-day operations."

Our QMS package takes a business from no system, or ISO 9001, to certification. We embed the system, train your team, host the certification audit and fix any findings, for a fixed price.

If defence or aerospace work is on your list for the next year, get in touch and we will tell you honestly how big your gap is.