Non-UK defence firms net higher average contract award from MoD
Contracts awarded to non-UK companies in the 12 months from July 2024 by the UK Ministry of Defence (MoD) were 23.1% higher on average compared to UK-based defence companies, according to official figures.
Detailed in a 1 September UK parliamentary written response, UK Defence Procurement Minister Maria Eagle disclosed that between 1 July 2024 and 30 June 2025, 1,244 contracts valued at £17bn ($23.2bn) were awarded to suppliers based in the UK.
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By contrast, 174 contracts, worth £3bn, were awarded to suppliers located outside the UK.
Extrapolating the median contract value from the number of contracts and combined amount, it can be determined that non-UK companies received an average slightly in excess of £17.2m per award, compared to just over £13.6m for UK-based companies.
The contracts were among 2,674 awarded in the reporting period, with the remaining 1,256, representing £3bn, “currently under reconciliation” to determine the actual location of the supply base, Eagle stated.
Further, Eagle said the while MoD records contract awards based on the administrative address provided in the supplier’s successful tender, actual delivery of goods or service “may be carried out by an international parent company”.
Where are the UK’s industrial strengths?
Analysing the UK’s defence industrial base finds severe capability gaps in the delivery of specific complex items, particularly in the land domain which is heavily reliant on overseas expertise to deliver upgrades and new vehicles into service.
This is less apparent in the areas of the air and naval sectors, where UK companies still maintain, the ability to provide turnkey platform delivery to UK forces. However, recent decision to sideline UK equipment for overseas-origin platforms, such as the F-35, could weaken extant industrial capability.
Some non-military SMEs in the UK have found success in entering the defence sector, although issues remain in better understanding the labyrinthine contractual corridors of Main Building.
UK wants to use defence to drive economic growth
Since coming to power in mid-2024, the new UK government has sought to leverage the country’s defence sector as a lever for economic growth, seeking to use it to create jobs and inward investment.
To this end, the government has claimed an intention to increase defence spending to some 5% of GDP, although this is due to be delivered over a glacial decade-long roadmap.
Previous analysis of defence funding increases by the UK government found that the budgets of non-military entities, such as the intelligence agencies’ Single Intelligence Account, will be included in overall defence spending for budgetary purposes.
Of the intention to spend 5% of GDP on defence, some two-thirds of this could be claimed on investments into infrastructure that could have defence benefits, such as telecommunications and roads.
