Office of Small Business Growth

The Office of Small Business Growth is a new body created within the Ministry of Defence to increase the share of defence procurement going to small and medium-sized enterprises, startups, and high-growth technology companies. It was announced alongside the PS20m MOD defence unicorn fund and is designed to act as the institutional home for all MOD engagement with non-traditional defence suppliers.

UK defence procurement has been dominated for decades by a small group of large prime contractors, with SMEs typically participating only as subcontractors to the primes rather than as direct government suppliers. The Office of Small Business Growth is intended to change this by creating a dedicated channel with simpler contracting processes, faster procurement timelines, and commercial terms that are compatible with the equity structures of venture-backed companies. The office operates alongside but separately from Defence Equipment and Support, the main MOD procurement body.

For the defence innovation ecosystem, the offices creation is symbolically important even if its practical powers are initially limited. It represents an acknowledgement within the MOD that the existing procurement system is structurally incompatible with the speed and risk appetite of innovative small companies, and that a dedicated interface is needed. Whether it will achieve meaningful procurement reform or become another layer of process depends on its mandate, budget authority, and the seniority of its leadership.