Daily Newsletter

15 September 2023

Daily Newsletter

15 September 2023

DSEI 2023: A military-industrial partnership must share financial risk

The UK government cannot afford to invest in everything, so emerging start-ups must learn to share the financial risk as well as benefits.

John Hill September 15 2023

At the Defence Security and Equipment International (DSEI) 2023 exhibition at London’s ExCel centre, ideas were flowing as a Naval Forum panel convened to discuss how small-to-medium size enterprises (SMEs) can access the UK Ministry of Defence’s (MoD) innovation and industrial base.

Through discussion with the Royal Navy, Submarine Delivery Agency (SDA), Future Capability Group (FCG) and representatives from innovative industry segments the panel examined how government can harness SMEs to aid defence and how defence can better work with industry.

Traditionally, interaction between start-ups and defence procurement is absent, even at the best of times. However, programmes such as Anti-Submarine Warfare (ASW) Spearhead aims to disrupt this procurement status quo as the MoD searches for innovative technologies that provide subsea surveillance.

The British military and their suppliers debate how far either side must risk spending on demonstrating a prospective concept before the MoD takes the plunge in securing a contract.

While the military is rightly cautious of companies “over-promising” the capabilities they have to offer, as the SDA Autonomy Unit Team Leader Mark Hyde suggested, SMEs are equally concerned about getting their foot in the door as they are often forced to lean on recognised defence primes – a process that curtails government investment in innovation.

“Fundamental risk-sharing”

SMEs must undergo a tense stand-off to sell their ideas to a government that is itself in the process of shaping an effective procurement process.

As the panelists agreed, this has forced the government to interact with the defence industry in a way that makes their requirements setting abundantly clear to emerging companies and “shows where [they] should invest [their] efforts,” as Hyde reiterated.

While the government tries to encourage innovative solutions from start-ups, the companies “have to share the risk with the military,” Brett Phaneuff, the Managing Director of MSubs, asserted.

Defining the military-industrial partnership today

As the Integrated Review Refresh indicated in March this year, geopolitical events are “threatening to create a world defined by danger, disorder and division – and an international order more favourable to authoritarianism.”

The panel agreed that the primary task of the MoD is the defence of the UK amid this deteriorating context. For that reason, Phaneuff explained that SMEs must expect a policy of “fundamental risk sharing” when it comes to pitching provable concepts to the Royal Navy that can be seen to work “in the water.”

The key takeaway? SMEs must not deliberate over the amount they can spend on prototyping their innovative solutions, but instead commit to demonstrating a viable concept that can be seen to work in the moment, in the water, and integrate across defence.

At least that is what the panel seem to agree will allow the military to successfully harness innovative solutions.

5G in Defense - Impact Analysis

Current 5G networking technologies provide increased data transmission speed and capacity, a factor which will be critical in enabling the digital transformation of the modern battlefield envisioned by military strategists worldwide. By combining 5G with other emerging technologies such as AI, VR, and defense cloud networking, armed forces have the potential to revolutionize real-time command and control (C2) on the battlefields of the 21st century.

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