Big Ships and Fast Boats

Why the future of UK Defence belongs to ecosystems, not organisations

There is an old saying that large organisations are like oil tankers: powerful, capable and able to move enormous volumes, but slow to change course. Smaller businesses, by contrast, are speedboats: agile, innovative and able to react quickly to changing conditions. In the defence sector, that analogy has never been more relevant.

The UK’s Defence primes are the big ships. They bring scale, programme management, financial strength, global reach and the ability to deliver complex, mission-critical capabilities over decades. SMEs are the fast boats. They bring innovation, pace, specialist expertise and a willingness to challenge established thinking. The reality is that neither wins the future alone. The strongest defence ecosystem is one in which big ships and fast boats sail together.

My own experience at Babcock, serving as Business Development Director at Rosyth, demonstrated how much the sector has evolved. At that time, there was often a mentality across many primes that we could do everything ourselves. It was not unique to Babcock; it was a mindset that existed across much of the industry. The belief was that if a capability was needed, the prime should own it, develop it and deliver it.

Thankfully, those days have largely passed.

Why Defence needs both

Today’s defence challenges move far faster than traditional procurement cycles. Emerging technologies such as artificial intelligence, autonomy, space systems, cyber capabilities and advanced data analytics are often being developed by highly specialised SMEs rather than large organisations. Primes increasingly recognise that they cannot be world-class at everything. Success now comes from building ecosystems, partnerships and supply chains that harness the best capabilities wherever they exist.

Where big ships and fast boats work well together is obvious. Primes understand how to navigate the complexities of Ministry of Defence (MOD) programmes. They know how to manage risk, comply with regulations, provide assurance and integrate multiple technologies into operational capability. SMEs, meanwhile, often provide the innovative edge. They can identify a problem, develop a solution and deliver a prototype at a pace that larger organisations sometimes struggle to match.

The combination can be incredibly powerful. The prime provides the platform and route to market. The SME provides innovation and speed. Together they create capability that neither could deliver alone.

Where collaboration can falter

However, the relationship is not always smooth.

My own experience has shown just how wide that gap can sometimes be. I recall, working in an SME being presented with a contract for work worth around £53,000, only to discover that the prime was seeking a £5 million limit of liability. From the prime’s perspective, the clause was simply standard contractual practice, inherited from the overarching framework. From the SME’s perspective, it represented a level of risk that could have threatened the entire business. After several weeks of discussion, we eventually negotiated the liability down to £1 million. Neither side was acting unreasonably, but the episode illustrated how processes designed for large organisations can unintentionally create significant barriers for smaller suppliers.

Many SMEs become frustrated by lengthy procurement processes, complex contracting arrangements and extended payment cycles. What feels like governance and assurance to a prime can feel like bureaucracy to a small business. Equally, primes can sometimes become frustrated by SMEs that underestimate the challenges of scaling technology from successful prototype to operational deployment. Developing an innovative solution is one thing; supporting it globally for decades in demanding operational environments is something entirely different.

Trust can also be a challenge. SMEs occasionally worry that their intellectual property or innovative ideas may be absorbed without adequate recognition. Primes, meanwhile, sometimes perceive SMEs as lacking the maturity, resilience or financial stability required for major defence programmes. Both perceptions can create barriers to collaboration.

The MOD’s direction of travel

The MOD increasingly views SMEs as a critical component of future defence capability and industrial resilience. The 2026 Defence Investment Plan emphasises the importance of innovation, technology adoption and strengthening the UK defence industrial base, while the MOD’s SME Action Plan has established a target of increasing SME spending to £7.5 billion by 2028, representing a significant increase in direct and indirect spending with small businesses. The MOD has also established the Defence Office for Small Business Growth and introduced measures designed to make procurement more accessible to SMEs.

This reflects a broader recognition that innovation often emerges from smaller, more agile organisations. The MOD’s ambition is not simply to spend more money with SMEs. It is to create a more diverse, competitive and resilient defence ecosystem capable of delivering capability at the pace demanded by modern threats.

The rise of new delivery models

Another significant trend is the emergence of venture capital-backed defence companies. Historically, many SMEs aspired to become suppliers to primes. Increasingly, some are becoming “neo-primes” in their own right. Driven by private investment, these businesses can scale rapidly, attract world-class talent and bring disruptive technologies directly to market. What begins as a fast boat can quickly become a frigate.

This changing landscape creates opportunities for everyone. SMEs can learn from primes about governance, programme delivery, quality assurance and long-term customer support. These disciplines are often the difference between a promising technology and a fielded defence capability.

Primes can learn equally valuable lessons from SMEs. Agility, entrepreneurial thinking, customer responsiveness and a willingness to challenge conventional approaches are traits that large organisations must continue to embrace if they are to remain competitive.

Recent developments suggest the sector is evolving in another important way. The launch of Spearhead this week, a new alliance bringing together 28 UK specialist defence and security SMEs under a single accountable delivery model, demonstrates that smaller businesses are also finding ways to scale. Rather than competing as individual ‘fast boats’, they are forming a coordinated flotilla capable of delivering complex programmes with the confidence and accountability traditionally associated with larger organisations. This approach aligns closely with the MOD’s ambition to increase spending with SMEs while broadening access to innovation. It also raises an interesting question for the future: could collaborative SME alliances become an increasingly important complement – and in some areas, an alternative – to the traditional prime contractor model?

While primes will continue to provide the scale and stability required for major programmes, with SMEs continuing to drive innovation and technological advantage, I fully expect new collaborative models will continue to emerge. Alliances such as Spearhead suggest that groups of specialist SMEs can both provide the expertise and carry the coordination, assurance and risk, offering customers both agility and greater delivery confidence. Rather than replacing the primes, they may create a new tier within the defence ecosystem, broadening choice and helping the MOD achieve its ambition of increasing SME participation

A stronger fleet together

Ultimately, the future of UK defence is not a choice between big ships or fast boats. It is about creating a fleet where each vessel plays to its strengths.

Perhaps that future fleet will not consist solely of big ships and fast boats, but also flotillas of fast boats sailing in formation.