The Ministry of Defence should pay more attention to the interests of small businesses, according to a new report by the Federation of Small Businesses.
‘The global defence and security industry: why small businesses matter’ looks at how the MoD can better engage with the small business sector to make procurement opportunities fairer as well as to support small business access to the defence export market.
John Walker, national chairman of Federation of Small Businesses, said: “In our report we have highlighted a number of problems faced by small businesses operating in this sector and have put forward a series of solutions that would not only directly benefit such businesses, but would also help the MoD, save the UK taxpayer money and most importantly provide a better level of service for our armed forces personnel.”
In the UK, the second largest defence exporter in the world with 9,000 small firms operating in the sector, 90 per cent of the defence exports are won by just the 20 largest UK companies.
According to the FSB, the Government should imitate other countries’ initiatives, like those awarding a proportion of each contract to small firms and providing access to funding (such as the Small Business Innovation Research Programme and ‘set asides’ in the US).
The Federation is concerned that the red tape around the MoD’s preferred suppliers and contractors list does not provide opportunities for other, perhaps more specialist firms, to bid for contracts.
Smaller companies struggle to make their voice heard, with existing organisations being dominated by the largest businesses operating in the industry.
Walker continued: “The Government has put the private sector and exporting at the heart of its plans for economic recovery. Facilitating small business access to this sector should be top of the Government’s agenda.”
The FSB is calling for the MoD to open up a dedicated channel of communication for this vital sector.
“There is however, a justified feeling among small firms that the MoD either does not recognise or understand the small business community – despite rhetoric to the contrary. It is obvious that small businesses are still placed at a significant disadvantage compared to their prime competitors, if this were not the case approximately 90 per cent of defence exports would not be won by the 20 largest UK companies,” Walker said.