A recent announcement at DSEI 2025 pointed to a shift in how the UK government intends to work with small suppliers like us at Optilearn; the Ministry of Defence plans to launch a dedicated SME Office in January 2026, targeting £2.5 billion in SME defence delivery contracts over the next three years¹. This is a step in the right direction; however, it also surfaces a more fundamental truth that we need delivery environments that are not just efficient, but adaptable. Agility is no longer optional, it’s a necessity in the ‘value for money’ equation.
Balancing Opportunity and Risk
One of the challenges of increasing SME participation in government delivery is that smaller suppliers are, by nature, less resilient than established primes. They often carry less of a financial buffer and can be more exposed to shocks such as delayed payments or shifts in policy. This means there is a higher probability that some engagements may not succeed, or that organisations may exit the market altogether. That risk is real, but let’s not overstate it. The trade-off is that SMEs bring adaptability, focus, and speed to the problem in ways larger suppliers cannot. Their smaller scale allows them to pivot quickly and embed directly with users, with less institutional inertia. The resilience gap could easily be mitigated by adjusting payment terms and designing modular contracts that limit exposure if failure occurs.
Personally, I think the SME Office is a welcome intervention to a commercial market that’s been stuck in a rut since the changes to the Intermediaries Legislation, but to make it effective, the focus needs to move beyond access to contracts (which I worry will be the initial focus) and go wider, sooner.
Five Practical Suggestions
1. Let Software Speak for Itself
Prioritise actual delivery outcomes over quantity. If the software works and meets real needs, that should carry more weight than a 95% utilised billing line or two unfilled team gaps. Value product-delivery skills, not just software-building skills.
2. Fund Discovery Explicitly
Where the problem space is unclear, fund the work required to understand it – it’s obvious, discovery is the sharp end of responsible delivery. Teams can’t build what they haven’t had a chance to explore.
3. Align Contract Structures with Learning
Avoid front-loaded contracts that assume the answer is known because it rarely is. Smaller, modular delivery phases give teams space to learn and adjust without breaking an outcome-first model. Practical approaches to structuring modular contracts exist, and SMEs are well placed to support departments in applying them.
4. Scale Governance to Fit the Work
Not every piece of delivery needs the same oversight. Use risk-based governance so that low-risk, high-value work can proceed without delay. If we can get this right, everything else will fall into place.
5. Bring Suppliers into Policy Feedback Loops
Policy frameworks like the Technology Code of Practice2 and DDaT3 playbooks guide procurement and delivery, but often evolve in isolation, away from those doing the actual work. Try shaping more grounded, adaptive frameworks that support practical delivery rather than hinder it.
These changes are all within reach and they would make it easier for SMEs to offer services. So how will we know is this SME Office is successful? It all comes down to what we will measure.
Why Measurement Matters
In 2024, only around 20% of UK public sector procurement spend went to SMEs, well below the government's longstanding 33% target⁴,⁵. A breakdown of recent spending illustrates where SME use is uneven:
Procurement by Department (2024)
Measurements matters because once the office is setup, we need to know whether it’s working. To know that, you have to measure the four key areas that the SME Office is aiming to fix. Below, I’ve outlined the problems and some metrics which could be used to validate progress.
For the SME Office to succeed, it must create the conditions for delivery that is closer to the needs of users. That means enabling smaller suppliers to play to their strengths of adaptability, proximity, and the ability to cut through layers of abstraction that slow government programmes down. If you want to explore how Optilearn is pushing the boundaries of government agility, or think you could help us, you know how to reach out.
References
1 “DSEI UK 2025: Exclusive – The UK’s New SME Office to Launch in January,” DSEI, https://www.dsei.co.uk/news/dsei-uk-2025-exclusive-uks-new-sme-office-launch-january
2 “Technology Code of Practice,” GOV.UK, https://www.gov.uk/government/publications/technology-code-of-practice/technology-code-of-practice
3 “Digital, Data and Technology (DDaT) Playbook,” Cabinet Office, https://www.gov.uk/government/publications/the-digital-data-and-technology-playbook
4 “Procurement Act must quickly deliver for SMEs,” British Chambers of Commerce, https://www.britishchambers.org.uk/news/2025/05/procurement-act-must-quickly-deliver-for-smes
5 “SME Procurement Tracker 2025,” Tussell / BCC / AutogenAI, https://www.tussell.com/hubfs/Tussell%2C%20BCC%20%26%20AutogenAI%20-%20SME%20Procurement%20Tracker%202025%20-%202025_05_12.pdf
6 Data: British Chambers of Commerce / Tussell, SME Procurement Tracker 2025