15 October 2014

Defence and security SMEs look to a bright future

SMEs are a key part of the Government’s defence and security plans for the future, Philip Margerison, manager of the Defence Suppliers Service at the Ministry of Defence (MoD), told businesses from the three counties, with billions of pounds worth of contracts due to be awarded under the Defence Equipment Plan.

Mr Margerison was speaking at Harrison Clark Rickerbys’ Government Export and Sales Roadshow for defence and security contractors at the QinetiQ Conference Centre in Malvern, which provides cyber security for all government and military services.

The event included an introduction to the UK Cyber Security Forum by its founder and manager Dr Emma Phillpot and to the Herefordshire Security and Defence Group by Richard Morgan, Head of Litigation and Defence and Security Services at Harrison Clark Rickerbys, alongside Rear Admiral Philip Wilcocks and Adrian Blackshaw, an investment banker with experience in the defence and aerospace sectors in the UK and USA.

The importance of SMEs in the defence industry has increased as the Government has changed its approach to procurement in several key aspects. A Crown representative is now dedicated to the sector, pre-qualification questionnaires have been streamlined to make the assessment process more attuned to companies’ capacity and potential and e-procurement is becoming more prevalent, speeding up application, invoicing and billing systems.

Mr Margerison outlined the opportunities available in the sector, with the MoD spending £20.4bn with defence contractors last year, £916m of which was paid directly to more than 7000 SMEs in the UK defence industry. The Defence Equipment Plan, which covers spending on land, air and sea defence needs for the next ten years, has £159bn allotted to it.

SMEs can not only win contracts directly with the MoD, but are also a vital part of the supply chain for defence contracts. The Government is now asking its major contractors to give details of how they increase SME participation in the supply chain and is encouraging interaction with industry via the Defence Growth Partnership, which aims to offer opportunities to companies at all levels.

The key issues involved in public sector procurement were covered during the event, highlighting the need for value for money at all levels. The MoD’s acquisition strategy, their approach and competitive tendering processes and criteria, supplier selection and the types of contract available were all included. European requirements were also covered, as was the Government’s role in encouraging foreign firms to use UK companies for their defence and security requirements.

Mr Margerison stressed that the Government was also particularly interested in consortia of small companies, because they may be better able to offer solutions than individual firms acting alone.

Richard Morgan said: “We know that we have a wealth of defence and security knowledge within the county, reflected in the businesses we have here, which need high-quality advice and support to enable them to grow. We are taking the lead in developing the kind of groupings which will boost the potential of Herefordshire’s SMEs.

“They need to be able to protect their intellectual property rights, research and develop their products and services and position themselves so that they are prepared to take on Government contracts. Their own security levels are a key factor – if a firm seeks to handle sensitive Government information, it must be included on List X, the list of those whose security meets rigorous requirements – that can be a major challenge for SMEs.”

Richard, with Rear Admiral Wilcocks and Adrian Blackshaw, is addressing this issue by establishing the Herefordshire Security and Defence Group. The Group aims to bring SMEs together in an alliance, offering them financial, commercial and legal advice, networking, mentoring and access to secure premises via the Hereford Enterprise Zone. The Group aims to enable members to identify cross applications for existing technology, develop hybrid technology as joint ventures, identify opportunities for combined bids and tenders, and have access to new markets.

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About the Author
Richard Morgan, Partner, Head of Dispute Resolution, Defence, Security and the Forces Sector
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