The UK government's Defence Investment Plan (published alongside the updated Ministry of Defence SME Action Plan in July 2026) is one of the most significant changes in UK defence procurement in years. For SME power suppliers and specialists in bespoke power design, conversion and management systems, it is a window of opportunity. If these businesses understand what the priorities are and position themselves correctly they could benefit from the plan.
A Renewed Commitment To SMEs
The MOD currently spends around £5 billion a year with SMEs, split between direct contracts and the wider supply chain. Under the new Action Plan the government has set out clear, measurable goals:
- An extra £2.5 billion in SME spend by summer 2028 - 50% increase on current direct spend
- Direct SME spend rising from £1.24 billion (2024/25) to £2 billion target by 2027/28
- Indirect spend through prime contractor supply chains rising to a £5.5 billion target over the same period
- A new Defence Office for Small Business Growth launched in January 2026 to reduce friction for smaller firms
- Regional support hubs & named SME Champions embedded within key programmes
The message from ministers is clear, SMEs are being treated as central to defence delivery not as an add on.
Why This Is Key For Power Specialists
Every major capability commitment has a power engineering requirement. The Defence Investment Plan sets out considerable investment across maritime, strike and digital capability programmes, including:
- Up to 12 SSN-AUKUS submarines
- Over 7,000 long range precision weapons
- 6 new munitions manufacturing sites
- Growing investment in autonomous systems, AI & cyber
Every one of these new platforms and facilities needs power conversion, management and distribution systems that meet exacting military standards. For firms specialising in AC-DC and DC-DC conversion, battery systems and ruggedised power solutions for harsh environments, this means rising demand in:
- Munitions manufacturing & testing infrastructure
- Uncrewed & autonomous systems requiring compact, resilient power supplies
- Naval & submarine platforms with long service life power requirements
- Digital & data systems needing secure reliable power
The Push For Onshoring & Resilience
A recurring theme in the plan is supply chain resilience. The government wants greater UK based production of critical components, reduced reliance on single points of failure and suppliers who can demonstrate both security awareness and the ability to scale quickly. For UK based power engineering firms already working to military standards this preference for domestic capability plays directly to existing strengths.
What SMEs Should Do
The opportunity is there but it won't arrive automatically. Businesses looking to benefit should:
- Review accreditations & certifications against current MOD & prime contractor requirements
- Engage early with the new regional support hubs & Defence Office for Small Business Growth
- Watch for prime contractors' subcontracting plans - Action Plan requires to be published with greater transparency
- Demonstrate scalability & continuity planning
- Build relationships with primes across priority programmes
Where On-systems Fits In
At On-systems our team has spent over a decade designing and manufacturing power solutions for defence, aerospace and marine applications, built to MIL-STD, DEF-STAN and STANAG requirements. As investment moves into the programmes this plan sets out, having a trusted UK based power partner who understands the standards and the speed required will be critical.
If you are looking at how these changes affect your programme or supply chain, we'd be glad to talk through your unique power requirements. Get in touch with our expert team.
