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UNITED KINGDOM AND NATO
28 Jan 26. Search for Britain’s next defence unicorn kicks off with new £20m fund.
New routes for small businesses into Defence with £7.5bn investment into the defence sector.
- Government opening up new routes for small and growing businesses into the defence sector.
- British innovators who can create the tech of tomorrow for UK Armed Forces sought.
- Backed by Ministry of Defence’s commitment to spend an additional £2.5bn through to May 2028, taking total spend with small and medium enterprises to £7.5 bn.
The search for the UK’s next defence unicorn has kicked off with the launch of a bespoke £20m fund to offer accelerated contracts to small, innovative British startups who have had limited or no business with the Ministry of Defence.
The fund is part of the government’s commitment to make Britain the best place to start and grow a defence business. A unicorn company is a privately held start up valued at over US$1 bn. The contracts agreed through the fund will help accelerate new defence technology to the UK’s Armed Forces and gives exciting new companies the foundation and confidence to raise private capital to expand more rapidly. To access the fund, businesses must be fully or part UK-owned.
Speaking to defence industry and innovators at the annual ADS dinner yesterday (Tuesday), Defence Secretary John Healey MP celebrated that the UK has some of the best big defence businesses in the world – many of which started decades ago with an idea – and have grown to create thousands of good jobs, thriving communities and strengthened Britain’s national security.
As set out in the Defence Industrial Strategy, defence is an engine for growth, and small businesses are the backbone of UK defence, bringing the innovation, agility and fresh thinking that UK Armed Forces need to transform and stay ahead of increasing and evolving threats.
Defence Secretary John Healey MP said: “I am determined to make Britain the best place in the world to start and grow a defence business, and our military the fastest innovating in NATO. Backed by our record sustained increase in defence spending, we are delivering good jobs and growth across the UK by opening up new routes into the defence sector, giving small British-based businesses the jumpstart they deserve. If our entrepreneurs are willing to take chances, we must be willing to take them too. This is about a Britain that rewards risk takers and innovators and gives people the belief that this government will back them. This work demonstrates how the government is supporting the next generation of defence leaders and innovators by backing the British defence tech sector as the Ministry of Defence delivers on the Strategic Defence Review commitment to make the UK Armed Forces the most innovative military in NATO.”
Contracts awarded through the new fund will be driven by the requirements of the UK Armed Forces, led by UK Defence Innovation (UKDI). UKDI will lead the search for the best UK technology to exploit which is broken into sets of technology and capability themes, including AI, Machine Learning & data science; robotics & autonomy and Enhanced Precision Weapons
The fund, which comes alongside the £400 m ringfence for novel technology and the commitment to spend an additional £2.5 bn with SMEs through to May 2028 – taking MOD’s total SME spend to £7.5 bn – is in addition to a new ‘Dragon’s Den’ style event for Defence tech companies. The event aims to provide seed funding for new and novel ideas at an earlier stage of development, before businesses have got off the ground and will bring in the MoD’s Defence Investors’ Advisory Group – the first of its kind – to connect companies to private financing.
These efforts are part of the Defence Secretary’s drive to ensure the benefits of the government’s record sustained increase in defence spending can be captured by aspiring British entrepreneurs, and will helps to ensure those with exciting ideas and innovations that benefit UK warfighters aren’t locked out of the defence sector because of a lack of funding or contracts.
The Ministry of Defence has introduced new “Lite” Enterprise Agreements to support software and AI companies grow by reducing commercial barriers. These new agreements with companies including Adarga, Hadean, Oxford Dynamics and WhiteSpace were announced last year when John Healey MP became the first Defence Secretary to close trading at the London Stock Exchange.
The search for defence’s next unicorn comes as the Ministry of Defence launch the new Office of Small Business Growth to make it easier for SMEs to navigate the MOD procurement system and bring in new suppliers. The new office recognises that defence procurement has been too slow and complex to navigate, and will help to resolve these challenges to deliver real change to how the MOD procures – breaking down barriers and opening new avenues for innovation to ensure that SMEs can play a vital role in making Britain secure at home and strong abroad.
The government is delivery on the UK’s Defence Industrial Strategy, published last year – backing British jobs, British industry and British innovators. (Source: https://www.gov.uk/)
26 Jan 26. Red tape to be slashed as MOD launches new team to back British small businesses. A new team dedicated to supporting small British businesses to win more defence contracts has been established today by the Defence Readiness and Industry Minister, Luke Pollard MP, on a visit to the National Manufacturing Institute Scotland.
- New team to transform how small businesses can bid for and win Defence contracts.
- 30 pathfinder SMEs across the UK initially selected for support and to represent different sectors and regions.
- Work is part of the government’s drive to spend £2.5bn more with SMEs.
Known as the Defence Office for Small Business Growth (OfSBG), it will be made up of policy and commercial expert staff, who will support small and medium UK firms to bid for and win more defence contracts. The ambition is to reverse the decline in Ministry of Defence (MOD) spend on SMEs, as identified in the Defence Industrial Strategy. This will also help deliver on the Government’s pledge to increase defence spending with SMEs by 50% by 2028 and is a significant vote of confidence in around 12,000 SMEs across the UK, marking an important step in removing barriers faced by SMEs at a crucial time for national security and innovation. The team will help to simplify and speed up cumbersome processes, provide advice to SMEs, and encourage private sector investment, supporting the Defence Secretary John Healey’s pledge to make Britain the best place in the world to start and grow a defence business. The OfSBG will oversee a comprehensive programme of change, ranging from policy and commercial process simplification – such as improving cash flow when under contract – to encouraging private investment by providing long-term clarity on procurements. This work is in addition to enhancing transparency and knowledge sharing within the sector, all aimed at backing British SMEs. As well as visiting the National Manufacturing Institute Scotland, which backs the manufacturing of innovative technology, Minister Pollard also visited SMEs on Monday, including Viper::Blast, based in Aberdour, who specialise in fast, high-fidelity simulation of air blast, explosive detonations, and structural loading.
Minister for Defence Readiness and Industry, Luke Pollard MP, said: “Small businesses told us defence procurement was too slow, too complex and too hard to navigate. We listened, and now we’re acting. We’re breaking down barriers and opening new avenues for innovation. We are ensuring that our SMEs can play a vital role in strengthening our defence capabilities. Defence is an engine for growth, and small businesses are the backbone of UK defence. This is a collective endeavour, and we are committed to supporting British businesses, enhancing our security, and driving prosperity for working people across the country.”
Scottish Secretary Douglas Alexander said: “The creation of the Defence Office for Small Business Growth is great news for Scottish businesses, workers and the economy as it will help boost opportunities and access to investment, supported by our pledge to increase spending with SMEs by £2.5bn by May 2028. Defence is already a key driver for renewal in Scotland, with the Ministry of Defence spending more than £2bn a year with the sector in Scotland, supporting nearly 12,000 industry jobs. Now with our historic uplift in spending to protect our own and European security and this new support for small and medium enterprises we will further transform the sector. As we up our game on defence, Scotland’s world class industry and supply chain and global demand for Scottish expertise will play a big role in ensuring Britain’s security, deterring our adversaries and driving economic growth for years to come. UK SMEs saw £1.2bn of direct investment from the MOD in 2024/25. To make defence even more of an engine for growth, the Government has set an SME spend target of an additional £2.5bn through to May 2028, taking total MOD spending with SMEs to £7.5bn.”
For both new and existing suppliers, the OfSBG will act as a central hub for advice and support on engaging with defence, ensuring procurement processes are faster, simpler and more effective. Services include structured guidance on tendering, contracting and working with the MOD and wider defence supply chain, mentoring schemes, networking opportunities with prime contractors, signposting to regional defence clusters and trade associations, and a confidential channel for SMEs to raise concerns.
A public-facing web portal and contact centre will initially support 30 SMEs, from carefully selected sectors, covering cyber to aeronautical engineering, and covering the whole of the UK from the south coast of England to Scotland, Wales and Northern Ireland. They represent a cross section of industry including those who have previously worked with the MOD and those who are new, ensuring industry is supplying the best of British capabilities to defence. These companies will help rapidly test, trial, and refine the service before planned expansion to embrace the wider business community over the coming weeks and months.
National Armaments Director, Rupert Pearce, said: “SMEs are the backbone of UK defence, bringing the innovation, agility and fresh thinking that our Armed Forces need to stay ahead of evolving threats. A more vibrant SME supply chain means better capability for our Armed Forces, greater resilience in our industrial base, and economic growth for communities across the country. I look forward to working with businesses of all sizes to deliver on this ambition. By working across defence, government and with private investors, we will build a dynamic ecosystem of innovative, well-capitalised small businesses ready to deliver the capabilities our Armed Forces need. The work of the OfSBG will be reinforced by the newly introduced SME Commercial Pathway, providing clear, accessible guidance to ensure MOD teams are actively reducing barriers and increasing opportunities for SMEs to bid for and win MOD work.
The Pathway covers improved market engagement, reserving below-threshold procurements for SMEs, segmenting contracts to enable greater participation, engaging with prime contractors to manage SMEs within their supply chains, and strengthening SME resilience through improved cash flow when under contract.
The OfSBG will collaborate across defence, government departments, strategic partners and private investors to create a dynamic UK ecosystem of well-capitalised, high-growth small businesses.
These businesses will be encouraged to enter the defence market and contribute to rapidly delivering warfighting readiness to the UK Armed Forces – a key pillar of the Strategic Defence Review.
This government is delivering the largest sustained increase in Defence spending since the end of the Cold War – hitting 2.6% of GDP from 2027. That will see £270bn invested into defence across this Parliament. Increased investment in Small and Medium enterprises will ensure defence is an engine for growth in all the regions of the UK. (Source: https://www.gov.uk/)
27 Jan 26. The Royal Navy and wider UK military has the opportunity to strengthen their institutional role in the testing and procurement of new military capabilities, allowing them to keep up with the rapid evolution of military tech, a report has found. The Royal United Services Institute (RUSI) was supported by British advanced maritime technology company SubSea Craft (SSC) on work examining the increasing role of prototype warfare in responding to maritime threats and implications for the Royal Navy. The report, Prototype Warfare in the Maritime Domain, sets out the case for integrating novel protype warfare approaches into traditional capability development processes, marking a departure from their historical treatment as an internal R&D function within industry. Iterative prototyping forms a cornerstone amongst defence innovators like SubSea Craft, whose design philosophy of open architecture and interoperability allow for rapid testing and modification in collaboration with both end users and industry. To inform its recommendations, RUSI convened of a working group – comprised of Royal Navy, UK Government and industry representatives – to examine how this approach can be harnessed to ensure emerging maritime capabilities can progress more quickly into operational usage. The group – whose participants acted in their personal professional capacity – examined the combined role both industry and government can play to create active participation in the prototyping process, including how access to users, test infrastructure and regulatory environments can accelerate adoption. The Ministry of Defence has identified the importance of achieving progress towards prototype warfare to deliver an operational advantage in response to ever-changing threats, including in the Indo-Pacific and GIUK gap. Financing remains a key challenge for all stakeholders within the capability development process. While traditional procurement approaches remain lengthy and resource intensive – creating additional risk of decreased relevance once a product becomes operational – prototyping requires an availability of upfront capital to allow experimental systems to quickly mature towards production. Australia’s approach to part-financing its recent Ghost Shark UUV capability offers a potential route forward and a more radical model might involve partial UK state ownership of hardware production, according to RUSI. This could have the benefit of making the state a direct partner in scaling a product, rather than a customer, without stifling the advantages of prototype innovation. Following the recent UK Defence Industrial Strategy, the Ministry of Defence is working to cut cycles for prototype warfare procurement down to three months alongside ringfenced funding. This is underpinned by a broader shift to spiral development evaluation becoming the default across the work of the National Armaments Director Group. To attain a functioning model for this approach, RUSI emphasises the importance of setting clear parameters on the transition from prototype to scaled production. Discussion between end users and industry highlighted the need for increased coordination between SMEs, defence primes and government, so that new systems can move into service within Ministry of Defence timelines.
Dan Alexander, Business Intelligence Lead at SubSea Craft, said: “It was a pleasure to contribute to a practitioner-led dialogue on accelerating operationally relevant maritime capabilities. There is a clear global need for the responsive development of advanced maritime platforms that can meet evolving force requirements and objectives. Maritime defence innovation will be determined not by individual technologies alone, but by the ability to test, integrate and scale credible capability at pace. We look forward to continuing to make the case for advancing prototype warfare approaches within the UK’s defence ecosystem.”
27 Jan 26. UK picks seven suppliers to design Apache ‘loyal wingman’.
Project NYX, as it is known, is the search for an autonomous collaborative platform to support the Army’s Apache attack helicopters.
- Anduril, BAE Systems, Leonardo, Lockheed Martin UK, Syos, Tekever, and Thales have been selected to put forward a design for a loyal wingman to support the Apache helicopter
- The drones will operate on a “command rather than control” principle
- In March 2026 the shortlist will be down selected to four suppliers, when they will be offered contracts to participate in producing a concept demonstrator
Seven suppliers will put forward a design for an uncrewed air system (UAS) that will support the British Army’s Apache AH-64E attack helicopters. After a “rigorous” pre-qualification phase, the UK Ministry of Defence (MoD) has called on Anduril, BAE Systems, Leonardo, Lockheed Martin UK, Syos, Tekever, and Thales to present a viable UAS design under Project NYX, which first launched in November 2025, titled the Land Autonomous Collaborative Platform (ACP) project. In March 2026 the shortlist will be down selected to four suppliers, when they will be offered contracts to participate in research and development to produce a concept demonstrator, with initial operational capability for 2030. (Source: airforce-technology.com)
REST OF THE WORLD
22 Jan 26. Indonesia expands its Red White Frigate project. According to a new letter of intent, the Indonesian Navy (TNI-AL) plans to construct another two Red White Frigates. An associated licensing agreement was struck with Babcock, whose Arrowhead 140 design forms the basis for the Indonesian warship. The letter was signed on behalf of Indonesian President Prabowo Subianto, who was visiting the UK on a state visit at the time, and David Lockwood, CEO of Babcock. Babcock said in a press release issued on 21 January: “A letter of intent outlining Indonesian procurement aims for the Maritime Partnership Programme (MPP) has been signed, alongside an initial agreement for the two licenses, to be delivered in the next few months.” The MMP project created in November 2025 is worth some £4 bn (US$5.4 bn), and this is the first agreement under its auspices. The MMP will “jointly develop maritime capability for Indonesia’s navy, fishing industry and, in turn, food security,” the British company stated. Babcock also noted that the letter “paves the way for further agreements,” plus it “underpins the growing momentum of Babcock’s frigate exports”.
Subianto said, “We’re pleased to proceed with the maritime partnership. I think this is very important and strategic for Indonesia. This is a vital part of our maritime economic development.” He envisages major investment in Indonesian shipbuilding, naval modernisation, revitalising fishing communities and enhancing defence and maritime security.
Lockwood added, “As the lead industrial partner in this programme, we’re creating a strong and enduring alliance that will not only support Indonesia’s maritime goals but will sustain and grow jobs in both countries. This first work order, within this landmark framework, signals the importance of the pace and progress needed to deliver President Prabowo Subianto’s maritime transformation and underpins the growing success of our Arrowhead 140 export design.”
Indonesian shipbuilder PT PAL is already constructing a first pair of Red White Frigates (known locally as the Fregat Merah Putih). After that contract was signed in 2021, the first vessel (the future KRI Balaputradewa) was launched on 18 December 2025. Under a 2021 contract, the first vessel, the future KRI Balaputradewa, was launched on 18 December 2025. (PT PAL) While the overall ship design is British – the Arrowhead 140 design also forms the basis of the Royal Navy’s future Type 31 frigate – these Fregat Merah Putih heavily utilise Turkish systems and weapons. PT PAL told Asian Military Review that it changed about 60% of Babcock’s reference design in order to meet TNI-AL requirements. For example, there are two Leonardo Super Rapid 76mm naval guns, a 64-cell Roketsan MİDLAS universal vertical launch system amidships, and Indonesia sought a higher top speed of 28kt. Other armaments include a Rheinmetall Millennium 35mm close-in weapon system at the stern, four Leonardo Lionfish 12.7mm remote weapon stations, two Leonardo B515/3 triple torpedo launchers, and Aselsan Kartaca-N six-tube 130mm decoy launching systems. According to PT PAL, the frigate measures 140m long, has a 19.75m beam and 4.96m draught. It displaces 5,996 tonnes, a figure that rises to 6,626 tonnes at full load. The vessel has a complement of 177, and the frigate has a range of 7,560nm and 21-day endurance at its cruising speed of 15kt. Sensors to be installed are Aselsan’s Cenk 400-N S-band active electronically scanned array radar, Aselsan Mete Han X-band multifunction radar, Aselsan Mar-D helicopter control radar, Havelsan Advent combat management system, Aselsan Fersah 100-N/MF hull-mounted sonar, Aselsan Akrep fire control radar, Aselsan target designation sights and an ELT Group electronic warfare suite. The second frigate is expected to be launched this year. These are the most sophisticated warships that PT PAL has ever attempted to build. (Source: AMR)
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