Accredited official statistics

MOD trade, industry and contracts: 2024

Updated 6 March 2025

The Finance and Economics Statistical Bulletin series provides figures on the composition and scope of the Department’s expenditure, information on the impact of defence spending on the wider economy, and compares MOD’s spending to that of other departments and countries.

Trade, Industry and Contracts presents information on MOD spending with industry and commerce, and sets out the numbers, types and values of contracts placed by MOD, major equipment projects and payments made by MOD to its suppliers including via Foreign Military Sales (FMS) agreements with the US Government during 2023/24. Also included is a focus on the top ten companies that received the highest expenditure from MOD. Industry tables provide details of existing Private Finance Initiative (PFI) contracts. Trade data presents information on defence export orders.

1. Key Points and Trends

£37.6 billion	Paid by MOD Core Department to UK and foreign owned organisations in 2023/24 (excludes FMS).
	This is an increase of £4.6 billion from 2022/23, which when adjusted for inflation is a 7.3% rise.
£0.6 billion	Value of payments made via Foreign Military Sales (FMS) agreements with the US Government in 2023/24.
	This is a nominal decrease of £119 million from 2022/23.
44%	Percentage of MOD Core Department payments through non-competitive sourcing in 2023/24 (excludes FMS).
	This is up from 39% in 2022/23, and makes non-competitive contracting the predominant in-year sourcing method.
£16.2 billionr	Value of new contracts placed during 2023/24.
	An increase of £3.0 billionr from 2022/23 despite it being 61r fewer contracts in number.
39%	Total MOD procurement expenditure with top ten suppliers in 2023/24.
	An increase from 37% in the previous year.
£14.5 billion	Estimate of identified UK export orders of defence equipment and services in 2023.
	An increase of £4.8 billion from 2022, principally from new contracts placed with Europe.

Responsible statistician: Analysis-Expenditure Head of Branch

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2. Introduction

This bulletin examines data relating to MOD’s spending on equipment and services. It is produced as part of the transparency and accountability of the Ministry of Defence to Parliament and the public. Detailed statistics and historic time series can be found in the related Open Document Spreadsheet.

2.1 Context

The information in this bulletin has a wide range of users including the media, politicians, academic researchers and the general public who use the information to:

• understand the size and distribution of payments made to organisations by the MOD.
• set the context for other information on Defence.
• assist in understanding the impact of changes in Defence policy, for instance changes to Single Source procurement practice.

In the report we will analyse the level of payments made to organisations and holding companies by MOD and its Trading Fund / On-Vote Defence Agency. Trading Funds are self-accounting units that have greater freedom than other government departments in managing their own financial and management activities. Since 2017/18, the only Trading Fund is the United Kingdom Hydrographic Office (UKHO). The Defence Science and Technology Laboratory (Dstl) ceased to be a Trading Fund in April 2017, becoming an On-Vote Defence Agency of the MOD through which it continues to run its own financial activities. For the remainder of this bulletin, we will therefore refer to payments as either by:

MOD – All entities within the MOD Department Boundary, including UKHO and Dstl. Data is drawn from payments made through Defence Business Services (DBS) Finance Systems and separate financial data provided by UKHO and Dstl.

MOD Core Department - Entities within MOD Departmental Boundary but excluding payments made by UKHO and Dstl. This will refer to payments made through DBS Finance systems.

2.2 Accredited Official Statistics publication

Accredited Official Statistics are called National Statistics in the Statistics and Registration Service Act 2007.

These Accredited Official Statistics were independently reviewed by the Office for Statistics Regulation in June 2020. They comply with the standards of trustworthiness, quality and value in the Code of Practice for Statistics and should be labelled ‘Accredited Official Statistics’.

Accreditation can be broadly interpreted to mean that the statistics:

• meet identified user needs;
• are well explained and readily accessible;
• are produced according to sound methods; and
• are managed impartially and objectively in the public interest.

Further information on the accreditation process can be found from the Office for Statistics Regulation.

Once statistics have been designated as Accredited Official Statistics it is a statutory requirement that the Code of Practice shall continue to be observed. Further details about how this report has been developed since its confirmation as an Accredited Official Statistic can be found in the Background Quality Report.

Our statistical practice is regulated by the Office for Statistics Regulation (OSR). OSR sets the standards of trustworthiness, quality and value in the Code of Practice for Statistics that all producers of official statistics should adhere to.

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Alternatively, you can contact OSR by emailing regulation@statistics.gov.uk or via the OSR website.

3. MOD Expenditure by Type of Contract

This section looks at the expenditure made to organisations and holding companies under the terms of competitive and non-competitive contracts. Set up in 2014, the Single Source Regulation Office (SSRO) regulates the procurement by the UK government of ‘single source’ (non-competitive) military goods, works and services.

In 2023/24, a total of £37.6 billion was paid by MOD Core Department to UK and foreign owned organisations (including defence suppliers and intermediate bodies). This is a nominal increase of £4.6 billion from 2022/23, which when adjusted for inflation is a 7.3% rise.

This figure includes direct MOD payments to the UK Hydrographic Office. Prior to 2017/18 this expenditure figure also included payments to the Defence Science and Technology Laboratory. However, Dstl ceased to be a Trading Fund in April 2017 and are therefore no longer paid through contracts processed by DBS Finance Systems and are instead funded through the central MOD budget.

Figure 1: Direct MOD Core Department Payments by Type of Contract in 2023/24

Source: DBS Finance data sources

Figure 1 depicts a pie chart showing MOD Core Department payments split by competition marker; Competitive, Non-Competitive, or Other/Unknown. Non-Competitive payments make up the largest segment at 44% (£16.4 billion).

Out of all MOD Core Department expenditure in 2023/24, 37% of spending went to organisations following a competitive bidding process. This is the same split as the previous year. In-year spend through non-competitive sourcing has risen from 39% in the last financial year to 44% in 2023/24. It also means that non-competitive contracting is the predominant in-year sourcing method for the second year running.

It should be noted that roughly half of the increase in non-competitive expenditure for 2023/24 comes from a reclassification of contract payments to the NATO Eurofighter and Tornado Management Agency (NETMA). Commercial Officers have updated the underlying contract data as non-competitive transactions where the competitive indicator was previously missing. This accounts for nearly £890 million in 2023/24.

Other expenditure consists of payments made by means of miscellaneous transactions. These are agreements for goods and services that have been set up locally between MOD Branch and the supplier, and are legally binding, but do not have a competition marker recorded. Also included in this category are payments made to some international projects such as with the Organisation for Joint Armament Co-operation Executive Administration (OCCAR), payments made through the electronic Purchasing Card (ePC), as well as payments made to overseas governments and UK government departments. Contracts where the competition status is not known are also included within ‘Other’.

Figure 2: Direct MOD Core Department Payments by Type of Contract 2013/14 to 2023/24

Source: DBS Finance data sources and HM Treasury GDP Deflators (28 June 2024)

Figure 2 shows a time series of MOD Core Department payments in both current and constant prices. Current price spending is presented as stacked bars to highlight the breakdown of expenditure by competition marker.

Total MOD Core Department expenditure remained relatively consistent between 2013/14 and 2020/21. In each year after there were year-on-year increases in real terms spending of between 6% and 8%. This rise in spending coincides with the multi-year budget settlement announced for Defence in November 2020.

4. Foreign Military Sales Expenditure with United States Government

This section looks at MOD expenditure made via Foreign Military Sales (FMS) agreements with the United States Government. FMS is one mechanism used to purchase equipment from the US Government and can assist the UK MOD in gaining access to technologies that would otherwise not be available. It is generally used either due to US security constraints, or for cost savings due to economies of scale. For example, adding to an existing US and/or international procurement order can prove more cost effective than if the UK MOD were to source with suppliers separately.

FMS expenditure in this section is exclusive of all other sections, therefore it is not included within the total paid by MOD Core Department to UK and foreign owned organisations in 2023/24, nor is FMS expenditure included within the payments to the United States within Table 3a of the supporting data tables. Payments to the United States included in Table 3a (£973 million to the US Government and £466 million to the US Treasury) are predominantly for F-35 and Trident systems and are through international collaborative agreements.

In 2023/24, expenditure on FMS agreements totalled £614 million. This is a nominal decrease of £119 million from 2022/23 owing mainly to a decrease in Apache payments.

Figure 3: Amount Spent Through Foreign Military Sales Agreements with the US Government 2018/19 to 2023/24

Source: UKDPO data sources

Figure 3 shows a time series of MOD expenditure via FMS agreements with the US Government. The five FMS projects with the largest expenditure in 2023/24 are shown separately, with those remaining grouped as ‘Other Projects’.

Note:
Acronyms used are UAS = Uncrewed Aircraft Systems (previously referred to as RPAS or Remotely Piloted Aircraft Systems).

The top two projects under the FMS portfolio in 2023/24 were Apache at £113 million and Chinook at £100 million. Apache was announced in 2016, and 2024 saw the latest batch of attack helicopters be delivered to the British Army. The eventual 50-strong fleet is on course to be fully operational in 2026. In March 2024 a deal was finalised between the UK and the US Government to order 14 extended-range Chinooks to bolster Britain’s heavy-lift capability.

5. Organisations Paid over £5 million by MOD

This analysis presents payments made by the MOD to UK and foreign owned organisations, including defence suppliers and intermediate bodies. These organisations include UK and overseas defence contractors, overseas governments and other UK government departments, but exclude FMS payments to the US Government. DBS Finance is responsible for the majority of payments made by MOD, around 95% by value, whilst UKHO and Dstl make their own payments. Some organisations have been excluded from the analysis because their information has been redacted in line with Transparency rules.

There were 455 organisations paid more than £5 million by MOD during 2023/24, 31 more than the previous year.

Figure 4: Organisations Paid Over £5 million in 2023/24

Source: DBS Finance, UKHO and Dstl data sources

Figure 4 shows a bar chart for combined spend and count of suppliers by payment bracket. Whilst the majority of suppliers receive amounts in the lowest banding between £5 million and £10 million, most spend is with just a few suppliers in the largest bracket (over £500 million).

The organisations that received more than £5 million represent around 4.8% of the 9,600 organisations paid in 2023/24, however they received 95% of the direct expenditure. Furthermore, payments are heavily skewed to a small number of suppliers, with the top 20 receiving around one half of the total procurement expenditure. A similar distribution of MOD’s supplier expenditure was seen in 2022/23.

Only 24 suppliers received payments of over £5 million from either UKHO or Dstl.

Payments which are not in the figures include those from British Defence Staff (United States) and those made through local cash offices.

6. Holding Companies Paid over £100 million by MOD

Many of the suppliers paid by MOD are subsidiaries of larger holding companies. The term ‘holding company’ refers to companies which are full or part owners of other companies (subsidiaries and joint ventures). Payments to joint ventures have been allocated to their parent holding companies in proportion to their equity holdings. This analysis excludes payments made to public sector bodies, government departments and agencies, local authorities, UKHO, multi-nation project management agencies, charities and associations. Some organisations have also been excluded from the analysis as their information has been redacted in line with Transparency rules. All other holding companies paid more than £100 million by MOD in 2023/24 are presented below.

It is important to note that figures in the following sections are for payments made by MOD directly to holding companies. It excludes the indirect MOD expenditure to holding companies which are made through Foreign Military Sales (FMS) agreements with the US Government, international collaborative agreements (such as NETMA and OCCAR) and industry supply chain payments. For example, The Boeing Company is the prime supplier for Apache and P-8A Poseidon, but these projects were procured by MOD through FMS payments to the US Government, totalling over £173 million in 2023/24, so this spend would not be included within the Boeing spend figure.

In 2023/24, there were 43 holding companies paid more than £100 million by MOD, two more than in 2022/23. The total combined expenditure with these holding companies in 2023/24 was £21.9 billion, representing 57% of the total expenditure by MOD and its trading funds. This includes ten companies paid over £500 million which is two more than the previous year.

Figure 5: Holding Companies Paid £100 million or More by MOD in 2023/24

Source: Dun and Bradstreet, DBS Finance, UKHO and Dstl data sources

Figure 5 depicts a tree map showing the holding companies paid over £100 million by MOD in 2023/24. Of the 43 organisations displayed, BAE Systems PLC received the highest amount.

Further details on MOD’s spending with holding companies down to a level of £50 million can be found in Table 4a of the supporting data tables.

7. Focus on Key Suppliers

This section explores the nature and scope of MOD business with its key suppliers within industry and commerce. It focusses on the ten holding companies who received the most expenditure from MOD during 2023/24. It examines the relative importance of MOD sales to company revenues, how this has changed over time, and the amount of MOD business that comes from competitively let contracts.

7.1 Expenditure with Top Ten Suppliers

In 2023/24, almost 39% of total MOD procurement expenditure was with ten suppliers. This split is a slight increase compared to the 37% seen with the top ten suppliers in 2022/23.

Figure 6: MOD Procurement Expenditure with Top Ten Suppliers in 2023/24

Source: Dun and Bradstreet, DBS Finance, UKHO and Dstl data sources

Figure 6 depicts a horizontal bar chart showing that 39% of MOD procurement expenditure was with the top ten suppliers in 2023/24.

Serco Group PLC returned to MOD’s list of top ten suppliers in 2023/24 for the first time since 2016/17. This was due to a substantial £524 million rise in total Defence spending with VIVO Defence Services Limited between 2022/23 and 2023/24, a company in which Serco own a 50% share. These payments mostly relate to Future Defence Infrastructure Services (FDIS) for fulfilling MOD’s requirement for the provision of Service Family Accommodation in the UK.

General Dynamics Corporation dropped out of the list of top ten suppliers in 2023/24 after MOD’s payments to the company reduced by £28 million on the year before. The company now ranks as the 12th highest paid supplier in 2023/24.

Figure 7: Proportion of MOD Spend with Top Ten Suppliers in 2023/24

Source: Dun and Bradstreet, DBS Finance, UKHO and Dstl data sources

Figure 7 depicts a bar chart showing the percentage of total MOD procurement spend in descending order for the top ten suppliers in 2023/24. 14.7% of MOD procurement spend was with BAE Systems PLC, decreasing down to The Boeing Company at 1.5%.

BAE Systems PLC has been the largest defence supplier in terms of annual spend made by MOD for over a decade. This top spot was further reinforced in 2023/24 after they received an additional £1.2 billion compared to the previous year. In total, BAE Systems received just over £5.7 billion of the total MOD spend in 2023/24.

7.2 Dependency on MOD Business

This section aims to demonstrate the dependency of the top ten suppliers on MOD business by presenting total payments received from MOD as a percentage of their global company revenues.

Babcock and QinetiQ dependency on MOD business were over 60% in 2023/24.

Figure 8: Dependency on MOD Business for MOD’s Top Ten Suppliers in 2023/24

Source: Dun and Bradstreet, DBS Finance, UKHO and Dstl data sources

Figure 8 depicts a line graph showing the dependency of the top ten suppliers in 2023/24 on MOD business since 2013/14.

Note:
Top ten supplier data labels not displayed: (in descending order) Rolls-Royce, Leidos, Leonardo, Thales, Airbus and Boeing.

In 2023/24, 63% of Babcock International Group PLC’s global revenue came from direct MOD spend. This is an increase from the 54% dependency seen last year, and is their highest dependency on MOD business over the past decade. It also makes them the most dependent key supplier for MOD business. MOD spending with Babcock continues to rise which can in part be attributed to payments on Future Submarines and the Future Maritime Support Programme (FMSP). FMSP has replaced the previous Maritime Support Delivery Framework (MSDF) and Submarine Deep Maintenance Period contracts for naval base operations, plus submarine and surface ship fleet support.

QinetiQ Group PLC is now the second most dependent of the top ten suppliers on MOD business with 61% of its global revenue coming from MOD payments in 2023/24. This figure has remained broadly consistent since 2014 when QinetiQ sold its US Services business, which had previously been responsible for around 30% of the company’s global revenue.

MOD’s highest paid supplier, BAE Systems PLC, has seen its dependency on MOD business peak this year at 25% after remaining relatively consistent at around 20% since 2016/17. This is principally due to increased payments towards the delivery of Dreadnought nuclear submarines.

MOD expenditure accounted for 12% of Serco’s global revenue in 2023/24. This is up from 6% in the previous year, and results from multi-billion pound contracts set up with VIVO Defence Services Limited in 2021 for the provision of Service Family Accommodation and facilities management. The previous decrease in dependency observed in 2021/22 was due to the restructuring of AWE PLC which became an arm’s length Non-Departmental Public Body of MOD on 1 July 2021. Serco formerly owned a 24.5% share in the organisation which accounted for around 80% of the company’s revenue through MOD.

For the remaining six suppliers, MOD sales accounted for less than 10% of their global revenue.

7.3 Levels of Competitive Contracting

This section looks at the level of competitive expenditure for MOD’s top ten suppliers relative to their non-competitive spending. Importantly to note, any MOD expenditure with these suppliers received through means without a competitive indicator is excluded from the analysis. See the MOD Expenditure by Type of Contract section for more details on the types of competitive contracts and the exclusions under ‘Other Expenditure’.

The amount of competitive contracting depends on the type of company involved. Service based companies, such as Leidos, receive almost all their work through competitive contracts. The more recognisable defence focussed companies hold a lower proportion of competitive contracts by value. Some of these defence companies receive payments almost exclusively through non-competitive contracts.

Figure 9: Levels of Competitive Contracting with MOD’s Top Ten Suppliers in 2023/24

Source: Dun and Bradstreet, and DBS Finance data sources

Figure 9 depicts a line graph showing the percentage of competitive relative to non-competitive contracting with MOD’s top ten suppliers in 2023/24, from 2014/15 to 2023/24.

Note:
These calculations exclude any contract expenditure where the competition status is unknown. Combined across all of MOD’s top ten suppliers, the unknown competitive spend of contracts in 2023/24 was £57 million. Figures also exclude miscellaneous transactions, ePC payments and Trading Fund expenditure. Therefore, competitive breakdowns shown here may differ from those shown in Table 4a of the supporting data tables.

MOD’s biggest supplier, BAE Systems, has historically been primarily paid through non-competitive contracts, though over the past decade the company has seen significant changes in how this is split between competition indicator. Competitive contract payments dropped as low as 4% in 2019/20 before increasing to 12% in 2022/23. This has since fallen slightly to 10% in 2023/24.

The split of competitive to non-competitive contracts with Airbus remained relatively consistent at around 70% between 2014/15 and 2019/20. Non-competitive contract payments then substantially increased at the same time competitive payments fell for each subsequent year. This was a result of differing contract procurement methods used during a transition between Airbus contracts for Skynet 5 and Skynet 6A.

QinetiQ’s rising competitive percentage since 2018/19 can be attributed to their successful bid for, and increasing expenditure against, the Engineering Delivery Partnering contract. Through this contract, the company has become the default route for the procurement of engineering services for Defence Equipment and Support (DE&S).

Leidos Holdings Inc was created following the split of the Science Applications International Corporation (SAIC) into Leidos and the new SAIC in 2013. In its first few years Leidos received minimal payments from MOD totalling under £5 million annually which were nearly all non-competitively sourced. In 2015, Leidos won a competitively placed contract with a value of £6.3 billion for the transformation of MOD’s logistic and commodity procurement services. Ongoing expenditure recorded against this contract has since seen the company’s level of competitive contracting with MOD dramatically switch from near zero to over 95%.

8. New Contracts Placed

MOD Core Department places numerous contracts each year for a range of goods and services, including major equipment projects, infrastructure, and service support. This section provides an analysis of all new contracts placed by MOD Core Department broken down by whether they were let competitively or non-competitively. It further explores the level of new contracts placed with Small and Medium-sized Enterprises (SMEs).

Note: Revision A revision of both the total number and value of contracts let in 2023/24 was made in March 2025. This was to account for delayed reporting of new contracts which has historically resulted in a 1% adjustment to the number of contracts reported.

8.1 New Contracts by Competition Indicator

MOD Core Department placed 2,321^r new contracts in 2023/24 with a collective value of £16.2 billion^r. This is an increase of £3.0 billion^r compared to the previous year despite it being 61^r fewer contracts in number.

Figure 10: New MOD Core Department Contracts by Competition Indicator 2006/07 to 2023/24

Source: DBS Finance data sources

Figure 10 depicts a time series showing the number of new contracts let by financial year relative to their combined contract values in current prices since 2006/07. The number of new contracts is presented as stacked bars to highlight the breakdown by competition indicator. Data for 2023/24 has been revised.

The number of new contracts let each year decreased rapidly between 2009/10 and 2015/16. This historic reduction in the number of new contracts let by MOD was due to several factors including the increased use of Crown Commercial Service contracts and the privatisation of functions such as the military logistics capability and the Defence Support Group (DSG).

The value of new contracts placed can be quite volatile and so readily fluctuate year-to-year. It can be affected by particularly high value contracts, for example the 2015/16 figure was inflated by a £6.3 billion contract with Leidos Europe, which accounted for around 40% of the total value of contracts placed in that year.

In 2023/24 there were 21^r new contracts let over the value of £100 million, with a combined total of £9.2 billion^r. This compares to the 19 contracts awarded above this value the year before at a combined total of £6.3 billion.

Three contracts in 2023/24 had a value of over £1 billion, with a combined total of £5.0 billion. The largest of these was placed with Thales UK Limited and accounted for nearly half that figure. The Thales contract for the Maritime Sensor Enhancement Team (MSET) will ensure the long-term availability and resilience of critical assets used by Royal Navy ships and submarines over the next decade and a half.

8.2 New Contracts with Small and Medium-sized Enterprises

This section provides an analysis of the value and number of new MOD Core Department contracts with Small and Medium-sized Enterprises (SMEs) compared to all new contracts let in-year. Suppliers are classed as an SME or not according to the supplier’s own self-assessment of their company status against the Cabinet Office definition of SMEs as:

• enterprises with fewer than 250 full-time equivalent (FTE) employees;
• enterprises with either annual turnover of less than or equal to £44 million, or a balance sheet total worth no more than £38 million; and,
• either independent enterprises, or linked/connected enterprises where the above criteria have been applied to the full company structure (see SME Ownership Considerations).

This is broadly consistent with the previous definition used from the Organisation for Economic Co-operation and Development (OECD), although the OECD have recently dropped the turnover criterion. The changeover to the updated Cabinet Office definition now uses more specific and relevant UK financial nomenclature, and figures presented in this section have not been affected.

MOD Core Department placed 570^r new contracts with SMEs in 2023/24 with a collective value of £1.2 billion^r. This is a substantial decrease of 181^r contracts compared to 2022/23, yet the total combined value has only fallen by £33 million.

As laid out in the Defence SME Action Plan, the MOD had a target that 25% of its procurement spend would go to SMEs by 2022. Details published in MOD’s Regional Expenditure with Industry bulletin showed that 4% of MOD direct expenditure with UK industry in 2023/24 was with SMEs. Note however that this includes direct expenditure only and therefore does not account for indirect spending with SMEs in their support of the whole defence supply chain.

Figure 11: New MOD Core Department Contracts with SMEs by Competition Indicator 2018/19 to 2023/24

Source: Dun and Bradstreet, and DBS Finance data sources

Figure 11 depicts a time series showing the number of new contracts let with Small and Medium-sized Enterprises relative to their combined contract values in current prices since 2018/19. The number of new contracts is presented as stacked bars to highlight the breakdown by competition indicator. Data for 2023/24 has been revised.

In 2023/24, there was a 24%^r decrease on the previous year in the number of new contracts awarded to SMEs. However, the combined total of these contracts only fell by 2.7%^r over the same period, meaning that new SME contracts in 2023/24 are on average greater in value.

Whilst the combined value of new SME contracts in 2023/24 slightly decreased, the value of competitively placed SME contracts rose by £78 million^r and they now account for 70%^r by value. This is up from 61% last year.

In terms of the number of contracts placed with SMEs relative to all new contracts, this remained fairly consistent between 2018/19 and 2020/21 at around 37%. The number of new contracts let with SMEs has since fallen and in 2023/24 they represent only 25% of all newly awarded contracts.

Compared to all new contracts placed in 2023/24, contracts with SMEs are let on a slightly more competitive basis. 53% of new contracts with SMEs went to organisations following a competitive bidding process compared to 51% of all new contracts. This is a trend that has been observed in each year since 2018/19.

It should, however, be noted that with a shorter time series any trends could be due to the inherent variability of contract data and not indicative of a long-term trend. Therefore, these comparisons should be used with caution.

9. MOD Payments on Private Finance Initiative Projects

This section provides an analysis of Private Finance Initiative (PFI) payments by MOD during 2023/24. PFI is a system for providing capital assets (such as buildings, vehicles, equipment and water systems) for the provision of public services. Typically, the private sector designs, builds and maintains infrastructure and other capital assets, and then operates those assets to sell services to the public sector.

The values in the chart below represent payments made against contracts relating to PFI projects. The PFIs presented are ‘signed’ MOD projects from the HM Treasury PFI database as at April 2018. Although this is an historic list of PFI projects, the Chancellor announced during the 2018 Budget that the UK government would not use PFIs for any new projects. We can therefore be sure of capturing ongoing PFI spending using the latest list of PFI contracts and drawing in-year payment data against them from DBS Finance’s contract expenditure database.

A total of £2.0 billion of payments was made across 34 PFI projects in 2023/24, equivalent to 5% of the total MOD Core Department expenditure. This is a decrease from that seen in 2022/23, where £2.3 billion of payments were made across 36 projects, equivalent to 7% of the total spend.

Figure 12: Amount Spent on PFI Projects in 2023/24

Source: DBS Finance, HM Treasury, and Infrastructure and Projects Authority data sources

Figure 12 depicts a tree map showing the PFI projects that received £5 million or more of MOD spending in 2023/24.

The Future Strategic Tanker Aircraft PFI was in receipt of the highest amount of MOD expenditure in 2023/24 at £544 million. This is the most recent MOD PFI to come into operation, starting in 2012, and it maintains its ranking as top PFI for expenditure ahead of Project Allenby/Connaught at £414 million. Project Allenby/Connaught however, which provides fully serviced, purpose-built living and working accommodation for soldiers, has the furthest foreseeable contract end date with payments expected to continue until 2040/41.

This does not represent the PFI with the longest period of contract operation. This goes to the 39-year long contract set up for the design, construction and delivery of training services at the Medium Support Helicopter Aircrew Training Facility at RAF Benson.

Two PFI projects have been removed from this section in 2023/24 as they have received final payments and the contracts closed. These were the 22-year PFI for Central Scotland Family Quarters and the 15-year PFI for the Provision of Marine Services. Support to the Royal Navy provided by the latter of these has continued through a £227 million contract placed directly with Serco in 2022.

10. Major Equipment Projects

This analysis looks at MOD’s 14 largest equipment projects on which the main investment decision has been taken (post ‘Main Gate’). The commentary reflects the affordability of spending plans for equipment procurement and support as at 31 March 2023.

It presents the affordability of plans following strategy and financial resets provided by the Integrated Review and Spending Review, with projects supported by the multi-year financial settlement announced for Defence in November 2020.

Figure 13: CADMID Cycle

Figure 13 depicts a diagram outlining the CADMID cycle (Concept, Assessment, Demonstration, Manufacture, In-Service, and Disposal), which is the basis for MOD Smart Acquisition.

Smart Acquisition is a long-term MOD initiative to improve the way the Department acquires defence capability. The main investment decision and Major Project Approval is taken at Main Gate, meaning the post-assessment phase, with the aim of ensuring there is a high level of confidence in achieving time, cost and performance targets. Further information is contained in the MOD Equipment Plan.

There are multiple changes to the project population from 2022. Astute Boats, Marshall, New Style of IT, and Sky Sabre have all been removed. Chinook and Fleet Solid Support are new additions in 2023.

The total current forecast cost of the 14 projects in the MOD’s Project Performance Summary Table (PPST) 2023 is £62.1 billion. ‘Dreadnought’ was the most expensive post Main Gate equipment project in 2023, with a forecast cost of £23.6 billion.

Project teams produce cost forecasts using quantitative risk analysis to model the range of cost outcomes for projects. The cost forecasts are made at a confidence level where there is an equal chance of actual costs being above or below the forecast amount.

Figure 14: Forecast Costs of 14 Major Equipment Projects as at 31 March 2023

Source: Project Performance Summary Table 2023

Figure 14 depicts a horizontal bar chart showing the current and original forecast costs of the 14 major equipment projects.

All but the new project addition of Fleet Solid Support had in-year changes on cost to completion this year. Dreadnought had the largest increase since 2022 with costs rising by £1.7 billion. Information for Dreadnought reflects the phased approval regime and the current Approved Budgetary Limit (up to and including Delivery Phase 3+) for the programme. The overall budget envelope for the Dreadnought programme was set at SDSR15 at £31 billion plus a £10 billion contingency.

The greatest decrease in forecast costs was for Skynet 6A. Project costs have been revised downwards by £44 million and means Skynet is currently expected to come under cost by £80 million.

Further details on the project changes can be found in The Defence Equipment Plan.

11. Estimates of Identified Defence Export Orders

In 2023, the UK won defence orders worth £14.5 billion. This is an increase of £4.8 billion^r compared to 2022.

Defence export orders in 2023 are at the highest level in nominal terms since the beginning of the time series in 2000 (see supporting data tables for further historic data not displayed in Figure 15). This latest rise principally comes from new contracts with Europe, specifically through major deals with Poland.

As seen in the multiple peaks and troughs of Figure 15, defence export orders can be highly volatile. A moving five-year average can be applied to remove some of this volatility observed through large year-to-year order variations. Over the five years from 2019 to 2023, annual UK defence orders in current prices averaged £9.6 billion. The five-year moving average has slowly risen each year from £9.1 billion in 2020.

Figure 15: UK Export Orders by Sector 2005 to 2023 ^{[footnote 1] [footnote 2] [footnote 3]}

Source: UK Defence Statistics Compendium, Department for Business and Trade, and UK Defence and Security Exports Statistics

Figure 15 presents a time series of UK defence export orders in current prices. This shows the volatile and almost cyclical nature of the defence export market over the past two decades. A five-year moving average displays data trends over time whilst smoothing out some of the large peaks and troughs. Export orders are presented as stacked bars to highlight the breakdown by sector. Where either exports cannot be placed in a single sector or the information is not available they have been labelled as ‘Mixed or Unknown’.

Air, Land and Sea all observed increased year-on-year defence export orders in 2023. Air clearly remains the dominant UK sector with 44% of all orders by value, although this is substantially less than the 63% share seen for the sector in 2022.

Europe has replaced the Middle East as the UK’s largest market for defence exports. In 2023, the percentage of UK exports to Europe increased by 18 percentage points^r up to 46% from the year before.

Figure 16: UK Defence Export Orders to Regions 2021 to 2023 ^{[footnote 4] [footnote 5]}

Source: UK Defence and Security Exports Statistics 2023

Figure 16 depicts a horizontal bar chart showing the split of UK defence export orders by destination for the past three years.

All the singularly named regions (not the ‘Mixed or Unknown’ grouping) observed increased UK defence export orders in 2023. Exports to the Middle East increased by £248 million on the year before but still only accounted for 28% of total UK defence exports. This was due to a considerable increase of £3,990 million in defence exports to Europe. In 2023, orders destined for Europe made up almost half of all UK defence export orders.

Note that figures for Europe do not, in most cases, include the UK’s transfer of defence equipment and expertise to Ukraine as these have been supplied as separate military assistance packages in relation to Ukraine’s ongoing conflict with Russia.

More information on identified export orders can be found in the DBT UK Defence and Security Exports Statistics for 2023. It should be noted that export orders can be cancelled or changed at any time after the initial order has been placed.

12. Methodology

This short section on methodology sets out the processes and methods used to make some of the tables and charts in this bulletin. More detailed explanations of the data sources and methodologies used can be found in the related Open Document Spreadsheet and Background Quality Report.

12.1 Holding Companies

Structures for holding companies have been compiled from supplier expenditure data taken from the DBS Finance contract expenditure database. The suppliers are then mapped to holding company structures based on established MOD company hierarchies plus Dun and Bradstreet supplier information. The structures are stored on an internal database and updated annually for all new companies appearing on the DBS Finance database.

Where a company is part of an identified Joint Venture, expenditure is attributed to the company based on their percentage share of ownership. For example, if Airbus owns 37.5% of MBDA, then 37.5% of MOD spend with MBDA is assigned to the Airbus expenditure total. Trading Fund (UKHO) and On-Vote Defence Agency (Dstl) data is included in the process. Expenditure with consortia, such as the Modus Services Ltd Private Finance Initiative to redevelop Main Building in London, is not distributed amongst the members of the consortia.

12.2 New Contracts

The new contracts dataset includes details of all HQ contracts, which are formal contracts set up by MOD Core Department, where payment is made through DBS Finance. These contracts were previously set up by Commercial Officers with a DEFFORM 57 submission. With the implementation of MOD’s CP&F end-to-end procurement system the contracts are input directly by Commercial Officers on to the system. Contracts have been included in the relevant financial year based on the start date of the contract entered on to CP&F.

Contracts set up for MOD using the Crown Commercial Service (CCS) are included in the analysis. The Crown Commercial Service manages the procurement of common goods and services, so that public sector organisations with similar needs achieve value by buying as a single customer.

The competitive indicator is taken from the contract statistics form entered on to CP&F. Since the introduction of CP&F in 2016/17 there have been ongoing issues with the visibility of data within the contract statistics forms attached to new contracts, hence increases to both the number and value of contracts where the competition marker is not known. The Analysis Directorate is working with the appropriate teams to resolve the issue and to ensure a wider coverage of these key data fields going forward.

13. Glossary

Balance Sheet Total (also total assets) is the total of the fixed and current assets of an enterprise, before any liabilities are deducted, as stated in the annual accounts. For further information, please refer to Financial Reporting Standard 102 (FRS 102).

Constant Prices indicate a value from which the effects of inflation have been removed. They will refer to a year as the basis for the calculation, for example, “constant 2023/24 prices”. See also Gross Domestic Product Deflator.

Contracting Purchasing and Finance (CP&F) provides a single online end-to-end procurement system for all MOD procurement activity. All other processes, especially paper-based systems, will be either replaced or subsumed.

Core Department refers to entities within MOD Departmental Boundary but excluding the Trading Fund UKHO and the On-Vote Defence Agency Dstl.

Crown Commercial Service (CCS) manages the procurement of common goods and services so that public sector organisations achieve value by buying as a single customer.

Current Prices show expenditure without removing the effects of inflation.

DBS Finance provides expert information, advice and services to and on behalf of MOD business areas, including processing four million invoices, totalling more than £23 billion a year. See also Defence Business Services.

Defence Business Services (DBS) was established on 4 July 2011 to transform the delivery of corporate services to the Department. The services delivered initially included: Civilian HR, Finance, Information Systems and some Information Services. On 1 April 2014 DBS merged with the Services Personnel and Veterans Agency and now has responsibility for managing HR processes for Military personnel including pay and pensions. Also see DBS Finance.

Defence Equipment Plan is the MOD’s annual report to Parliament on progress in equipment procurement. It provides a summary of each project’s current status and progress to date. It provides comparisons on current forecast costs and in-service dates. It is reviewed by the National Audit Office (NAO) to ensure transparency and assurance.

Defence Equipment and Support (DE&S) is a bespoke trading entity, and arm’s length body of the Ministry of Defence. By working closely with industry, partnering agreements and private finance initiatives, DE&S manage a vast range of complex projects to buy and support equipment and services to the armed forces.

Defence Science and Technology Laboratory (Dstl) was a former Trading Fund of MOD created in July 2001. It supplies impartial scientific and technical research and advice to MOD and other government departments. In April 2017 it ceased to be a Trading Fund and became an On-Vote Defence Agency of MOD.

Defence Support Group (DSG) was a former Trading Fund of the MOD created following the merger of the Army Base Repair Organisation (ABRO) and the Defence Aviation Repair Agency (DARA) on 1 April 2008. On 1 April 2015 the land repair and maintenance business was sold to Babcock. The remaining part of the business, the Air division and Electronics and Components division, stayed under MOD ownership as the Defence Electronics and Components Agency (DECA).

DEFFORM 57 completion of this form was mandatory for all contracts where the Defence Business Services (DBS) was the payment authority. It was used to set up a contract with DBS for payment purposes and was an important source of capturing data on contract activity within the Ministry of Defence. The form has now been subsumed into CP&F as data is input directly to the system by Commercial Officers.

Department for Business and Trade UK Defence and Security Exports (DBT UKDSE) helps the UK defence and security industries to export by building strong relationships with industry and overseas governments. Prior to February 2023 it was known as the Department for International Trade UK Defence and Security Exports (DIT UKDSE).

Electronic Purchasing Card (ePC) was introduced in 1997 as a convenient and cost-effective way to make low-value purchases. The card was made available to all public-sector organisations, including central government departments, local authorities and NHS organisations. When it was first introduced the card was called the Government Procurement Card (GPC) but has since been renamed.

Foreign Military Sales (FMS) are a mechanism used to purchase equipment from the US Government and is generally used due to either US security constraints or cost savings due to economies of scale. For example, where it would be more cost effective for the UK’s MOD to procure through FMS rather than directly with the supplier.

Full-Time Equivalent (FTE) employment is a figure that allows part-time workers’ hours to be put into the same units as full-time workers.

Gross Domestic Product Deflator (GDP) is an implicit price deflator for the Gross Domestic Product and is derived by dividing the estimate of GDP at current prices by the estimate of GDP at constant prices. The GDP deflator is commonly used as a measure of inflation in the economy for the country to which it refers.

Holding Company refers to companies which are the full or part owners of other companies.

HQ Contracts are formal contracts set up by MOD Core Department which were previously set up by a DEFFORM 57. Details of HQ contracts are now recorded within CP&F with the data being input directly by Commercial Officers.

Ministry of Defence (MOD) is the United Kingdom government department responsible for implementation of government defence policy.

Miscellaneous Contracts are payment methods employed by DBS Finance (MOD’s primary bill paying authority) for running service items such as the provision of utilities. These items are covered by “miscellaneous” transactions, where no ‘MOD HQ Contract’ exists. These agreements for goods or services will have been set up locally between MOD Branch and the supplier and are legally binding.

National Audit Office (NAO) scrutinises public spending on behalf of Parliament. It is independent of government and audits the accounts of all government departments and agencies as well as a wide range of other public bodies. It reports to Parliament on the economy, efficiency and effectiveness with which government bodies have used public money.

NATO Eurofighter and Tornado Management Agency (NETMA) is the prime contractor for the Eurofighter Weapon System. The arrangements for the management of the Eurofighter programme were set out in the NATO Charter dated 18 December 1995, in which the international management agencies of the Tornado and Eurofighter programmes were integrated into a single agency, NETMA. This NATO agency is essentially a multi-nation HQ project office for these two collaborative projects, involving the UK, Germany, Italy and Spain. The RAF fleet of Tornado aircraft were retired from service in early 2019, and in the UK the Eurofighter is now called ‘Typhoon’.

OCCAR (Organisation Conjointe de Coopération en matière d’Armement) – the Organisation for Joint Armaments Co-operation was originally set up in November 1996 by France, Italy, Germany and the UK with the aim of improving the efficiency and lowering the cost of managing co-operative defence equipment programmes involving European nations (for example A400M). Belgium and Spain are now also members.

Office for National Statistics (ONS) is responsible for the production of a wide range of independent economic and social statistics. The statistics are there to improve understanding of the United Kingdom’s economy and society, and for planning the proper allocation of resources, policy-making and decision-making. It is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to Parliament. ONS is the UK government’s single largest statistical producer.

Organisation for Economic Co-operation and Development (OECD) is an international organisation that works to establish evidence-based international standards and to find solutions to a range of social, economic and environmental challenges.

Private Finance Initiative (PFI) is a system for providing capital assets for the provision of public services. Typically, the private sector designs, builds and maintains infrastructure and other capital assets (such as buildings, vehicles, equipment and water systems) and then operates those assets to sell services to the public sector. In most cases, the capital assets are accounted for on the balance sheet of the private sector operator.

QinetiQ was formerly part of the Defence Evaluation and Research Agency (DERA). QinetiQ became a limited company in July 2001. UK government holds a Special Share, through the Secretary of State for Defence, which confers certain rights to protect UK defence and security interests.

Single Source Regulation Office (SSRO) was set up in 2014 and regulates the procurement by the UK government of ‘single source’ (i.e. non-competitive) military goods, works and services. It is the independent statutory regulator of single source defence procurement, issuing statutory guidance, assessing compliance and determining how the regime applies to individual contracts.

Small and Medium-sized Enterprises (SMEs) are recognised as independent organisations that have fewer than 250 employees, and either an annual turnover of less than or equal to £44 million, or a balance sheet total worth no more than £38 million. Linked or connected organisations, such as those fully or partially owned by another enterprise, may also qualify as an SME if the previous criteria stand when considered alongside its wider corporate structure and company ownership. This definition is taken from the Cabinet Office and is broadly consistent with the previously used definition from the Organisation for Economic Co-operation and Development (OECD), although OECD have recently dropped the turnover criterion.

Smart Acquisition is a long-term MOD initiative to improve the way defence capability is acquired. MOD no longer replaces military equipment, services, estates or business information systems on a like-for-like basis but instead takes into account how such a capability will integrate with other capabilities to achieve optimum effect by its armed forces. A through-life approach to acquisition is adopted, rather than concentrating resources on the initial procurement.

Trading Funds were introduced by the UK government under the Trading Funds Act 1973 as a “means of financing trading operations of a government department which, hitherto, have been carried out on Vote”. They are self-accounting units that have greater freedom than other government departments in managing their own financial and management activities. They are free to negotiate their own terms and conditions with their staff. For this reason, their grading structures do not always match that of the rest of the Ministry. From 2017/18, the UK Hydrographic Office operates as MOD’s only Trading Fund.

Turnover is the total annual income from the sale of products and/or services that are part of an enterprise’s ordinary or regular activities, less any rebates. For further information on calculating turnover, please refer to Financial Reporting Standard 102 (FRS 102).

UK Hydrographic Office (UKHO) was formed as a Trading Fund of the MOD in 1996 and is responsible for the provision of global hydrographic products and services to UK Defence and commercial mariners. In addition, UKHO discharges the UK’s obligation to provide hydrographic products and services needed for safe navigation in UK waters.

UK Statistics Authority (UKSA) is an independent body directly accountable to Parliament. It was established on 1 April 2008 and the Authority’s overall objective is to promote and safeguard the quality of Official Statistics that serve the public good. It is also required to safeguard the comprehensiveness of Official Statistics and to ensure good practice in relation to Official Statistics. The UK Statistics Authority has three main functions: oversight of the Office for National Statistics (ONS) (its executive office), monitoring and reporting on all UK Official Statistics, and independent assessment of Official Statistics.

14. Further Information

14.1 Symbols

Figures marked with ^p are provided as provisional estimates.

Figures marked with ^r are revised from the previous edition.

Data visualisations marked with “//” indicate there is a break in the data series. Surrounding commentary will declare the impact on the figures and whether the break in series arises from a data issue, or a change in methodology or process.

14.2 Rounding

Where rounding has been used, totals and sub-totals have been rounded separately and so may not equal the sums of their rounded parts.

14.3 Revisions

Corrections to the published statistics will be made if errors are found, or if figures change as a result of improvements to methodology or changes to definitions. When making corrections, we will follow the Ministry of Defence Statistics Revisions and Corrections Policy. All corrected figures will be identified by the symbol ^r, and an explanation will be given stating the reason and size of the revision. Corrections which would have a significant impact on the utility of the statistics will be corrected as soon as possible, by reissuing the publication. Minor errors will also be corrected, but for convenience these corrections may be timed to coincide with the next annual release of the publication.

14.4 Contact Us

The Analysis Directorate welcomes feedback on our statistical products. If you have any comments or questions about this publication, or about our statistics in general, you can contact us as follows:

Analysis Directorate (Analysis-Expenditure) Telephone: 030 015 86554 Email: Analysis-Expenditure-PQ-FOI@mod.gov.uk

If you require information which is not available within this or other available publications, you may wish to submit a Request for Information to the Ministry of Defence under the Freedom of Information Act 2000.

If you wish to correspond by mail, our postal address is:

Analysis Directorate (Analysis-Expenditure)
Ministry of Defence
Oak 0 West, #6028
MOD Abbey Wood North
Bristol
BS34 8QW

For general MOD enquiries, please call: 020 7218 9000

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1. From 2019 there was a change in the methodology used to count the number of exports. Prior to this date, collaborative exports were not counted (for example, Typhoon aircraft exports to partner nations such as Germany, Italy and Spain). UKDSE estimates that in 2019 this accounted for an additional £600 million in UK defence exports. This break in series is marked in Figure 15 by the symbol “//” between 2018 and 2019. See the Defence Export Figures for 2019 Methodology for further details. ↩

2. In 2023 there was a change in methodology that affected the collection and interpretation of data for Australian and Canadian defence contracts. Figures from 2013 now meet the new processes but values prior to this align to a different methodology. This break in series is marked in Figure 15 by the symbol “//” between 2012 and 2013. See the UKDSE 2022: Notice of Correction for further details. ↩

3. In 2024 there was a change in methodology that removed supplementary data sources used alongside the UK survey for export figures. UKDSE estimate this change has reduced the overall defence export estimates by 4%. This break in series is marked in Figure 15 by the symbol “//” between 2016 and 2017. See Methodological Changes for 2023 and the former Other Sources of Defence Data. ↩

4. A full list of the countries and organisations attributed to each region can be found in UK Defence Export Statistics 2023. ↩

5. Percentages below 3% have not been labelled to improve overall chart legibility. The full data can be found in the DBT UK Defence Export Statistics for 2023. ↩