MOD SME Defence Support Office £20m Fund

Defence Readiness and Industry Minister Luke Pollard unveiled the Defence Office for Small Business Growth (OfSBG), a new team supporting SMEs in securing defence contracts. Thirty pathfinder companies were chosen for initial assistance.

At the ADS Annual Dinner, Pollard announced a £20 million fund to support "the next defence unicorns"—British-owned firms addressing global defence challenges. The initiative includes Dragon's Den-style seed funding events, with UK ownership requirements for access.

These moves align with a broader objective to boost direct MOD spending on SMEs by £2.5 billion. The OfSBG functions as a single entry point for non-defence supply chain firms, while the unicorn fund accelerates pathways to initial contracts for established players.

Ajax programme faces "back it or scrap it" decision — Defence Secretary John Healey signaled cancellation remains viable, marking the strongest indication yet of potential termination. The MOD withdrew initial operating capability status following personnel complaints about noise and vibration during Exercise Titan Storm. The programme moved to the National Armaments Director and paused since 26 November.

Of 23 vehicles, 13 underwent additional inspections with 10 remaining. Cancellation would trigger fresh vehicle procurement processes involving CV90, Lynx, and Boxer options, further delaying Defence Investment Plan adjustments.

NAO report: MOD recovers just 48p for every £1 spent on counter-fraud work — The National Audit Office found the MOD recovered approximately 48 pence per pound invested in counter-fraud activities between 2021-22 and 2024-25—falling short of the government's £3 expectation. Fraud exposure reaches an estimated £1.5 billion annually, predominantly from procurement. As defence expenditure approaches 2.5% of GDP, exposure risks escalation. Suppliers should anticipate stricter procurement oversight and auditing demands.

Minister launches review into Single Living Accommodation for 80,000 personnel — Minister Louise Sandher-Jones announced a comprehensive independent review of Single Living Accommodation, framing it as a watershed opportunity affecting approximately 80,000 single and unaccompanied personnel. Natalie Elphicke Ross OBE will chair the review, delivering two reports: UK facilities by summer 2026, overseas by year-end.

Palantir awarded £240.6M data analytics contract — The MOD directly awarded Palantir Technologies UK a £240.6 million, three-year data analytics contract using defence and security exemptions, bypassing competitive processes. The deal, executed 30 December and disclosed 23 January, provides analytics across all classifications with NATO system interoperability. Implementation begins 1 April 2026.

The award raised data sovereignty concerns—given Palantir's US ownership and Peter Thiel's leadership—alongside revolving-door scrutiny. Five former MOD officials joined Palantir in 2025, including a former policy director now subject to business appointment restrictions.

RAF Halton House declared surplus to requirements — The Grade II* listed officers' mess at RAF Halton, acquired in 1918, is now surplus to operational requirements and scheduled for disposal. Personnel received 30 minutes' notice to evacuate in January 2025 following structural defect identification. RAF Halton's phased closure concludes no earlier than 2030. This estate rationalization generates both disruption and opportunities for construction and FM contractors.

Royal Navy studies Aster 30 integration with Mk41 launchers — The Royal Navy requested MBDA explore integrating the Aster 30 air defence missile with the US Mk41 vertical launch system. Type 26 frigates are equipped with Mk41 cells while Type 45 destroyers employ the French Sylver launcher. Integration would enable Type 45 fleet modernization and reinforce the SDR's "NATO First" direction—signaling increased missile integration work and supply chain possibilities across both platforms.

First military drone degree as autonomous skills pipeline takes shape — The Army invested £240,000 in a new Master of Engineering degree at NMITE in Hereford, launching September 2026. The three-year accelerated programme trains up to 15 civilian and five military students annually as drone specialists—the inaugural UK degree integrating military and civilian participants in uncrewed systems.

Pollard sets industry challenge amid escalating threat picture — At the ADS dinner, Pollard contextualized announcements within an intensifying threat landscape—20 cyber attacks against UK defence occurred that evening alone, 50,000 novel cyber threats identified daily, and Ukraine's conflict entering its fifth year. His direct appeal to 1,000 industry leaders: strengthen supply chain manufacturing, meet deadlines, control expenses, and "demonstrate honesty when complications emerge." The MOD anticipates heightened accountability as expenditure increases.