This week’s developments underline a clear shift in how defence markets are evolving across Europe and allied economies. Governments are not only increasing spending but also actively reshaping market access, funding pathways and industrial participation to accelerate innovation and broaden the supplier base, directly influencing who secures future contracts.

While long-term funding certainty for new entrants remains unresolved, recent announcements point to a more structured approach to integrating small and mid-sized firms into defence supply chains. Shorter procurement cycles, delivery certainty and domestic capability are increasingly prioritised alongside traditional prime-led programmes.

Market Activity

United Kingdom: Opening the Market to SMEs and New Entrants

The UK Ministry of Defence has announced the creation of a dedicated Defence Office for Small Business Growth. The new unit will support small and medium-sized enterprises in bidding for and winning defence contracts, addressing a decline in SME participation identified in the Defence Industrial Strategy.

The office will be staffed by policy and commercial specialists and is intended to simplify procurement processes, provide targeted advice and encourage private investment. The initiative supports the government’s commitment to increase defence spending with SMEs by 50 per cent by 2028, representing an additional £2.5 billion in addressable opportunity.

An initial cohort of 30 pathfinder SMEs has been selected, representing a range of regions and defence-relevant sectors across the UK. The programme signals a shift from ad hoc engagement towards a more systematic SME integration model at a time of heightened security demand. Delivery risk will hinge on whether procurement reform keeps pace with policy intent, particularly around contracting speed, security accreditation and scale-up pathways.

On the same day, Defence Readiness and Industry Minister Luke Pollard announced plans for a new fund of up to £20 million to identify and support early-stage defence companies with global growth potential. The initiative will include a competitive pitch process to provide seed funding for emerging technologies.

Visiongain Insight: The UK is moving beyond rhetoric towards practical mechanisms for SME participation in defence. While funding scale remains modest relative to prime-led programmes, the creation of dedicated structures improves access, pipeline visibility and investor confidence. This positions SMEs more effectively for participation in domestic and allied supply chains as procurement becomes more distributed and delivery-focused.

United States: Long-Term Commitments to Data, Cloud and AI Infrastructure

In the United States, the Department of the Army has awarded a contract valued at approximately US$5.6 billion for enterprise Salesforce products and outcome-based services, with delivery extending to 2035. The programme supports the modernisation of data analytics and the integration of future AI-enabled capabilities across the Department of Defense.

Awarded through Computable Insights LLC, the contract reflects a shift away from short-term IT procurement towards long-duration platform commitments that underpin operational readiness, decision-making speed and enterprise-wide data integration.

Separately, Amazon Web Services has been awarded a US$581 million contract by the US Air Force to support the Cloud One programme through 2028. Cloud One provides secure, scalable cloud environments for weapons systems, command and control applications, intelligence processing and enterprise systems across both classified and unclassified domains. The platform is used across multiple Department of the Air Force organisations and forms a core element of digital force infrastructure.

Together, these awards illustrate how data, cloud and AI capabilities are no longer treated as supporting IT functions, but as mission-critical defence infrastructure. Investment is increasingly concentrated on platforms that enable multi-domain operations, rapid decision cycles and scalable AI deployment, rather than bespoke, programme-specific solutions.

Visiongain Insight: Digital infrastructure is now being procured as strategic defence capability. Long-duration contracts signal confidence in cloud and data platforms as enduring force multipliers, favouring suppliers that can deliver secure, interoperable systems at scale across services and mission sets.

Germany: Hypersonics and Loitering Munitions

Germany’s Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support has awarded a contract to POLARIS Spaceplanes to develop and flight test a reusable hypersonic vehicle, with a first flight targeted for late 2027. The programme signals growing German interest in sovereign access to advanced flight regimes and reusable test platforms, rather than reliance on one-off demonstrators or external partners.

In parallel, reports indicate that German start-ups Helsing and Stark Defence are expected to receive up to €600 million in combined contracts for loitering munitions, supporting deployment to a German armoured brigade in Lithuania. Parliamentary approval is expected shortly, with operational fielding planned for 2027.

Notably, Rheinmetall did not secure an award in this tranche due to the absence of a qualifying prototype, underscoring the shift away from incumbent advantage towards delivery readiness.

Taken together, the hypersonics and loitering munitions awards reflect a procurement approach that spans both frontier capability development and rapidly deployable, attritable systems. In both cases, maturity of execution and near-term deliverability are acting as decisive filters.

Visiongain Insight: Germany is increasingly willing to place substantial orders with non-traditional suppliers where prototype readiness and delivery confidence exist. Across both advanced and mass-capability segments, execution discipline is now outweighing legacy position in procurement outcomes.

Market Outlook

Defence markets remain structurally supported, with sustained investment driven by long-term security requirements rather than short-term political cycles. Demand for innovation, responsiveness and industrial flexibility is accelerating alongside continued funding for conventional platforms such as naval shipbuilding and armoured vehicles.

Near-term uncertainty lies less in intent and more in implementation. Funding cadence, industrial readiness and delivery timelines will determine outcomes as strategic defence reviews translate policy into procurement. Companies that can demonstrate deployable capability, rapid scaling and alignment with sovereign priorities are best positioned to secure durable growth.

Visiongain Insight: The next phase of defence market expansion will be shaped by delivery rather than declaration. Firms that combine technical capability with execution discipline and industrial resilience will outperform those reliant on ambition alone.

Related Visiongain Market Reports

Visiongain market reports provide the detailed data and forward-looking insight needed to evaluate funding priorities, capability development, and execution risk in defence markets. Research is evidence-based and analyst-led, supporting informed decision-making across procurement, industrial planning, and long-term strategy.

• Military Simulation, Modelling and Virtual Training Market Report 2026-2036
• Advanced Materials in Aerospace and Defence Market Report 2026-2036
• U.S. DoD & Space Force Budget Market Report 2026-2036
• Anti-Drone Market Report 2025-2035
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• Supersonic and Hypersonic Missiles Market Report 2025-2035

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