UK Strategic Defence Review - what does it mean for industry?

What is the Strategic Defence Review?

The Strategic Defence Review (SDR) was published by the UK Government on 2 June. 

The remit of the SDR was challenging and radical: to determine the roles, capabilities and reforms required to meet the challenges, threats and opportunities of the twenty first century for the defence of the United Kingdom.

The report makes 62 recommendations across a wide range of areas to meet that challenge.  If fully implemented, the recommendations will transform the defence sector in the UK and should bring about sweeping reforms to UK Government transactions with the defence industry.

What does it mean for industry?

The SDR includes a plan to transform the UK’s defence capabilities, in the context of the Government’s commitment to spend 2.5% of GDP on defence, with the ambition of reaching 3% in the next Parliament.

The size and scale of this spending plan, if fully implemented, will have profound implications for all defence industries, as it recommends massive investment and spending in new capabilities and technologies.

Key points for industry include recommendations as follows:

• The creation of a new partnership with industry, with the objectives of engaging industry earlier on in the procurement process, ensuring that suppliers are rewarded for productivity and greater risk with their investments, and removing barriers to collaboration
• The new partnership should include a fundamental change in the approach to joint working with industry, including bringing in a wider range of partners alongside its prime contracts, from startups to SMEs and private investors
• A full reform of defence procurement process including developing the trailed segmented approach to procurement
• There should be a concerted effort to unlock private capital and expertise, with new funding models, and a better relationship with the financial services sector including establishing a Defence Investors’ Advisory Group
• Regional clusters for technologies should be adopted, to stimulate place based growth
• There should be a change in the approach to defence exports, to develop the capabilities for export and the relationships which underpin them

What happens next?

The Government has committed to implement all the recommendations but has warned that Defence Reform is a Parliament-long programme (until 2029 and beyond).

Spending commitments include undertaking a major defence investment programme, including for the Navy and RAF, missile defence, weapons, and autonomous systems.  

How we can help you?

If fully implemented, the plans should lead to a radical overhaul in process and a very large increase in spending by the UK Government in the defence sector.  As always with large Government programmes, there will be challenges in delivering this scale of reform to time and budget, and we expect some aspects to fall by the wayside, particularly where the levers of change are not in the hands of the UK Government or where internal politics are at odds.  However, given the volatile global environment, we expect there to be some serious impetus behind the agenda.

We recommend engaging with the proposals early on in order to align your business priorities with the emerging shape of the new regime.

If you are already active in the defence industry, we can support you with understanding the implications of new processes, decoding the new priorities, assessing what is realistic, and support you in your discussions with key procuring bodies and decision makers, to make the most of these opportunities.

If you are thinking of entering or investing in the sector, our experienced teams of dedicated defence lawyers can step you through the pitfalls and challenges, from contracting to regulatory advice; antitrust and competition issues; anti-bribery and corruption legislation; intellectual property and data rights; priority allocation systems in the US, UK, and elsewhere; and relevant treaties and other international agreements.