Accredited official statistics

MOD trade, industry and contracts: 2025

Published 25 September 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 2024/25. 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

£40.6 billion	Paid by MOD Core Department to UK and foreign owned organisations in 2024/25 (excludes FMS).
	This is an increase of £3.0 billion from 2023/24, which when adjusted for inflation is a 3.8% rise.
£0.6 billion	Value of payments made via Foreign Military Sales (FMS) agreements with the US Government in 2024/25.
	This is a nominal increase of £9 million from 2023/24.
45%	Percentage of MOD Core Department payments through non-competitive sourcing in 2024/25 (excludes FMS).
	This is up from 44% in 2023/24, and makes non-competitive contracting the predominant in-year sourcing method.
£20.9 billionp	Value of new contracts placed during 2024/25.
	An increase of £4.7 billionp and an additional 85p contracts compared to 2023/24.
49%p	Percentage of new contracts awarded through non-competitive sourcing in 2024/25.
	This is up from 45% in 2023/24 and makes single sourcing the predominant procurement method for new contracts. It is the highest level of single sourcing since 2015/16.

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 Section removal

Major Equipment Projects

This edition of the Trade, Industry and Contracts bulletin excludes the section on Major Equipment Projects. The underlying data on equipment spending plans has historically been included within the Project Performance Summary Table of the Defence Equipment Plan. However, this was not produced for 2024 and so comparable figures are currently unavailable. Within the Strategic Defence Review 2025 it was also set out that the Defence Equipment Plan would be superseded by the Defence Investment Plan in Autumn 2025.

Estimates of Identified Defence Export Orders 2024

The latest export orders data is not yet available. The next publication of the UK Defence and Security Export (UKDSE) statistics is expected to be published towards the end of 2025. Therefore, the section has been temporarily removed from this bulletin, and whilst the respective data tables are included (Tables 8 and 9), they have not been updated. It is the intention to update the figures in a planned revision in early 2026.

2.2 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.

2.3 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:

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• are well explained and readily accessible;
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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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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 2024/25, a total of £40.6 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 £3.0 billion from 2023/24, which when adjusted for inflation is a 3.8% 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 2024/25

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 45% (£18.4 billion).

35% of all MOD Core Department expenditure in 2024/25 went to organisations following a competitive bidding process. This is 1.3 percentage points less than the previous year.

In-year spend through non-competitive sourcing rose from 44% in the last financial year to 45% in 2024/25 and this means that it is the predominant procurement method for the third consecutive year. A little over half of the £2.0 billion increase in non-competitive payments came from a rise in single source procurement with BAE Systems, notably on contracts for future nuclear submarine capabilities, the Future Combat Air System (FCAS), and the Next Generation Munitions Solution (NGMS).

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 2024/25

Source: DBS Finance data sources and HM Treasury GDP Deflators (30 June 2025)

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. Year-on-year real term increases of between 6% and 8% occurred for the following three years coinciding with the multi-year budget settlement announced for Defence in November 2020. Defence expenditure has continued to rise in both nominal and real terms in 2024/25 and is up 3.8% after taking inflation into account.

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 2024/25, 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 (£1,202 million to the US Government and £372 million to the US Treasury) are predominantly for F-35 and Trident systems and are through international collaborative agreements.

In 2024/25, expenditure on FMS agreements totalled £623 million. This is a nominal increase of £9 million from 2023/24.

Figure 3: Amount Spent Through Foreign Military Sales Agreements with the US Government 2018/19 to 2024/25

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 2024/25 are shown separately, with those remaining grouped as ‘Other Projects’.

Note:
Acronyms used are UAS = Uncrewed Aircraft Systems.

The top five projects in the FMS portfolio remain unchanged from last year but, whilst total FMS spend across all projects increased by £9 million in 2024/25, spending across the five largest decreased by £18 million.

The largest FMS project in 2024/25 was Apache at £115 million and this spend remains relatively unchanged on last year. Apache was announced in 2016, and Defence Equipment and Support (DE&S) reported in Desider: issue 200 that the final 12 of 50 attack helicopters were delivered in the latest reporting year. The UK’s operational fleet is now fully established at the Army’s Wattisham Flying Station in Suffolk, while the training fleet is complete at the Army Aviation Centre in Hampshire.

In March 2024 a deal was finalised between the UK and US governments to order 14 extended-range Chinooks to bolster Britain’s heavy-lift capability. After the initial related outlay in 2023/24, expenditure on Chinook has since fallen by over 50% in 2024/25 to £47 million. Construction of the first batch of helicopters has commenced with Boeing in Philadelphia, with the first aircraft due to be delivered in 2027.

P-8A received the second most FMS spend in 2024/25 at £100 million, up £40 million on the year before. The last of the P-8A Poseidon fleet was delivered to the RAF in January 2022 but the multi-role maritime patrol aircraft continue to receive ongoing support on aircraft and training systems, engineering services, and capability upgrades.

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 438 organisations paid more than £5 million by MOD during 2024/25, 17 fewer than the previous year.

Figure 4: Organisations Paid Over £5 million in 2024/25

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 9,200 organisations paid in 2024/25, however they received 95% of the direct expenditure. Furthermore, payments are heavily skewed to a small number of suppliers, with the top 18 receiving around one half of the total procurement expenditure. A similar distribution of MOD’s supplier expenditure was seen in 2023/24.

Only 25 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 2024/25 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 £215 million in 2024/25, so this spend would not be included within the Boeing spend figure.

In 2024/25, there were 50 holding companies paid more than £100 million by MOD, seven more than in 2023/24. The total combined expenditure with these holding companies in 2024/25 was £24.2 billion, representing 58% of the total expenditure by MOD and its trading funds. This includes ten companies paid over £500 million which is unchanged on the previous year.

Figure 5: Holding Companies Paid £100 million or More by MOD in 2024/25

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 2024/25. Of the 50 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 focuses on the ten holding companies who received the most expenditure from MOD during 2024/25. 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 2024/25, over 39% of total MOD procurement expenditure was with ten suppliers. Both this split and the suppliers making up the top ten are unchanged on the previous year.

Figure 6: MOD Procurement Expenditure with Top Ten Suppliers in 2024/25

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 2024/25.

MOD expenditure with its top ten suppliers increased by £1.4 billion from 2023/24 to 2024/25, and additional spending with BAE Systems contributed nearly three-quarters of this rise.

BAE Systems has been the largest defence supplier in terms of annual MOD spend for over a decade, most recently receiving just over £6.7 billion in 2024/25. This represented 16.3% of all MOD expenditure for the year and is the highest recorded share going to a single supplier since figures were produced for this bulletin in 2007/08. BAE Systems’ top spot was reinforced in 2024/25 after it received an additional £1.0 billion in spending compared to the previous year, and this follows a similar nominal rise of £1.2 billion between 2022/23 and 2023/24.

Figure 7: Proportion of MOD Spend with Top Ten Suppliers in 2024/25

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 2024/25. 16.3% of MOD procurement spend was with BAE Systems PLC, decreasing down to The Boeing Company at 1.2%.

Airbus and Boeing saw substantial decreases in MOD expenditure in 2024/25, down £165 million and £68 million respectively compared to 2023/24. MOD spending with both suppliers has fallen year-on-year since 2021/22.

Falling MOD spend with Airbus since 2021/22 follows a change in satellite communication services provided by the company, most recently with provision of support to Skynet moving to Babcock in 2024/25.

MOD’s reduced expenditure with Boeing in 2024/25 was principally a result of decreasing spending on acquisition of three E-7 Wedgetail aircraft and their supporting infrastructure. The RAF’s new Airborne Early Warning and Control aircraft will be operated by 8 Squadron at RAF Lossiemouth once in service.

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.

MOD accounts for around 60% of all Babcock and QinetiQ company revenue.

Figure 8: Dependency on MOD Business for MOD’s Top Ten Suppliers in 2024/25

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 2024/25 on MOD business since 2014/15. Top ten supplier data labels not displayed (in descending order) are Rolls-Royce, Leonardo, Leidos, Thales, Airbus, and Boeing.

63% of Babcock International Group PLC’s global revenue came from direct MOD expenditure in 2024/25. This dependency is unchanged on the previous year and leaves the company as the most dependent key supplier for MOD business. MOD spend with Babcock has nominally increased year-on-year since 2014/15.

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 2024/25. 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 expenditure accounted for 13% of Serco’s global revenue in 2024/25. This follows an upturn in dependency from 1.6% in 2021/22 due to multi-billion pound contracts set up with VIVO Defence Services Limited in 2021 for the provision of Service Family Accommodation and facilities management. The decrease in dependency leading into 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.

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 focused 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 2024/25

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 2024/25, from 2015/16 to 2024/25.

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 2024/25 was £49 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 ODS tables.

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 seen the company’s level of competitive contracting with MOD remain at over 95% for the past decade.

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 8% in 2024/25 due to increased non-competitive contract payments. This was due to rising spend on Dreadnought and the trilateral UK, Australia and United States of America (AUKUS) submarine build programme which contribute to the UK’s future submarine capabilities, as well as future combat air systems with Tempest, and next generation munitions as mentioned earlier.

The split of competitive to non-competitive contracts with Airbus remained relatively consistent at around 70% between 2015/16 and 2019/20. Non-competitive contract payments then substantially increased at the same time competitive payments fell for each subsequent year until reaching 30% in 2023/24. This was a result of differing contract procurement methods used during a transition between Airbus contracts for Skynet 5 and Skynet 6A. In 2024/25, the split rose to 37% after the Skynet Service Continuity Contract (SSCC) with Airbus neared its contract end date. The SSCC was an interim contract with Airbus Defence and Space Ltd to maintain the satellite communication service and address critical technical issues between the conclusion of the PFI and start of the Service Delivery Wrap (SDW) with Babcock on 1 March 2024.

QinetiQ’s rising competitive percentage between 2018/19 and 2023/24 can be attributed to their successful bid for, and steeply 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). Expenditure against this contract levelled out in 2024/25 and this is reflected in the company’s level of competitive to non-competitive contracting holding at 55%.

The percentage of competitive contract spending for Rolls-Royce stayed at a consistent level between 2015/16 and 2021/22. In subsequent years, competitive contracting fell to near zero after the company sold off its share in AirTanker Holdings Limited.

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: Provisional A revision of both the total number and value of contracts let in 2024/25 is planned for early 2026. This is 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 2,406^p new contracts in 2024/25 with a collective value of £20.9 billion^p. This is an increase of £4.7 billion^p and an additional 85^p contracts compared to the previous year.

Figure 10: New MOD Core Department Contracts by Competition Indicator 2006/07 to 2024/25

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 2024/25 is provisional.

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.

A similar spike in value can be seen in 2024/25, this time as a result of increased use and size of non-competitive contracts. Directly awarded contracts in 2024/25 had a combined value of £12.6 billion^p, a rise of £5.8 billion^p from the year before. Collectively, these non-competitive contracts make up the majority share at 60%^p of the total value awarded.

In terms of number, there were 1,170^p new contracts let through direct sourcing in 2024/25, up by 128^p on 2023/24. This means that 49%^p of new contracts in 2024/25 were awarded non-competitively. This is the largest proportion of non-competitive contracts placed in a single year since 55% were let through direct sourcing in 2015/16.

In 2024/25 there were 26^p new contracts let over the value of £100 million, with a combined total of £13.7 billion^p. This compares to the 21 contracts awarded above this value the year before at a combined total of £9.2 billion.

The largest contract awarded in 2024/25 was the eight-year, multi-billion pound contract placed with Rolls-Royce Submarines Limited. The contract, known as Unity, will deliver the design, manufacture and support services to nuclear reactors powering the Royal Navy’s submarine fleet.

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).

MOD Core Department placed 560^p new contracts with SMEs in 2024/25 with a collective value of £941 million^p. This is a decrease of 10^p contracts and £213 million^p compared to 2023/24.

Figure 11: New MOD Core Department Contracts with SMEs by Competition Indicator 2018/19 to 2024/25

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 2024/25 is provisional.

In 2024/25, there was an 18%^p decrease in the value of new contracts awarded to SMEs compared to the previous year. However, the number of contracts let has remained fairly stable since 2023/24 meaning that new SME contracts in 2024/25 are, on average, of lesser value.

Provisional estimates show that the combined value of competitively awarded SME contracts fell by £200 million^p in 2024/25 and they now only account for 65%^p by value. This is down from 70% last year.

The actual number of competitive SME contracts also fell in 2024/25 and the relative proportion of competitive to non-competitive SME contracts is now equal at 48%^p. Note that the tendering process for 24^p contracts has not been recorded. This is the first time over the time period since 2018/19 that the number of competitive awards has not outweighed direct sourcing amongst SMEs.

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 2024/25 they represent only 23%^p of all newly awarded contracts.

Related to new MOD contracts placed with SMEs, details in MOD’s Regional Expenditure with Industry bulletin showed that 4% of MOD direct expenditure with UK industry in 2024/25 was with SMEs. Note 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.

9. MOD Payments on Private Finance Initiative Projects

This section provides an analysis of Private Finance Initiative (PFI) payments by MOD during 2024/25. 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.

30 PFI projects were paid a combined total of £2.0 billion in 2024/25, equivalent to 4.9% of total MOD Core Department expenditure. Last year, PFIs accounted for 5.4% of in-year MOD spend.

Figure 12: MOD PFI Project Expenditure in 2024/25

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

Figure 12 depicts a horizontal bar chart showing PFI project spend in 2024/25. Projects appear in descending order with the exception of ‘Other Projects’ which is shown underneath and groups together PFI projects with in-year expenditure of less than £10 million.

The Future Strategic Tanker Aircraft PFI was in receipt of the highest amount of MOD expenditure in 2024/25 at £582 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 £428 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.

Four PFI projects have been removed from this section in 2024/25 as they have received final payments and reached their contract end dates. The two oldest of these contracts for Apache simulator training and provision of water and sewerage services to Tidworth Garrison both began in 1998.

10. 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.

10.1 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.

10.2 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. In 2024/25 the competitive breakdown of new contracts data are provided as provisional estimates. A revision of both the total number and total value of new contracts let in 2024/25 is planned for early 2026. This is to account for the delayed reporting of new contracts which has historically resulted in a small adjustment in the number of contracts reported by around 1%.

11. 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 2024/25 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 defined by the Cabinet Office 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.

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.

12. Further Information

12.1 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.

12.2 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.

12.3 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.

12.4 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: 0303 378 6554 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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