A golden opportunity in the era of Labour’s Procurement Act
The dust has barely settled on Labour’s Procurement Act, which kicked in back in February 2025, and defence SMEs find themselves at a crossroads. On one hand, they’re facing some real headaches; on the other, there’s a chance to make their mark as genuine trailblazers in social impact. With government scrutiny on spending ramping up, smaller players can actually stand out from the crowd by showing they’re serious about making meaningful change happen.
The changing landscape of Social Value
The Social Value Act was first introduced in 2012 when ‘social value’ was little more than a footnote in procurement discussions. It has been on quite the ride since then. Fast forward to 2020, when we saw the introduction of a proper framework with five clear themes: COVID-19 Recovery, Tackling Economic Inequality, Fighting Climate Change, Equal Opportunity, and Wellbeing.
Labour hasn’t wasted any time putting its stamp on things. Rayner’s ‘National Procurement Plan’ has teeth, making Social Value non-negotiable in contracts and holding suppliers’ feet to the fire. Since February, the new Act forces both buyers and suppliers to publish their Social Value KPIs in black and white. No more hiding in the shadows.
The SME challenge: David vs Goliath
It’s a totally different ball game for SMEs compared to the big boys. When that 10% Social Value threshold landed with PPN 06/20, industry giants barely blinked – Jacobs simply bought half a consultancy and created Simetrica-Jacobs overnight. Job done.
SMEs just don’t have that luxury – their piggy banks aren’t big enough for that kind of splash. To make matters worse, the advice they’re getting often comes from forums dominated by the very primes they’re competing against. Talk about the fox guarding the henhouse!
The measurement problem is another thorn in their side: current systems that love to attach pound signs to everything naturally favour those with deeper pockets. When an SME takes on one apprentice, it’s a big deal for them but it gets lost in the noise when compared to a multinational hiring a small army of graduates.
The SME advantage: agility and authenticity
But it’s not all doom and gloom. Defence SMEs have some aces up their sleeves – their nimble structure means they can weave Social Value into their DNA, rather than bolting it on as an afterthought.
As smaller and more flexible businesses, SMEs have the advantage of fully integrating Social Value into their core values, culture and everyday operations. Larger businesses often struggle to retrofit Social Value,but we, at RUK have been able to build it into the fabric of everything we do.
This isn’t just corporate speak – it translates into real-world impact. SMEs’ local roots mean they actually understand what communities need. With Labour banging the drum for regional development, that local knowledge is pure gold. They can pivot quickly, create initiatives that actually matter, and build partnerships that deliver more than just PR points.
Building Defence SME success in Social Value
At RUK, collaboration underpins everything we do and we believe that SMEs can punch above their weight by focusing on these partnerships that matter, creating their own bespoke tracking tools.
Developing a solid Social Value strategy takes graft, but we’ve found that having the right relationships in place makes all the difference when bidding for contracts. For RUK, Social Value isn’t a box-ticking exercise; it’s central to our entire approach to winning business.
SMEs can flip the script on their limitations. By zeroing in on quality rather than quantity, and developing focused initiatives that play to their strengths, they can create impact that resonates far more deeply than the scattergun approach often adopted by larger players.
A call to action for government and industry
For this potential to be realised, we need some fundamental changes. Government bodies must craft guidelines that actually reflect the reality of running an SME – the current one-size-fits-all approach simply doesn’t cut it.
The MOD’s defence SME Action Plan needs a serious Social Value upgrade:
- Supplier engagement needs proper channels where SMEs can genuinely shape the conversation, not just listen to it.
- Procurement policy must start recognising the relative impact of contributions, not just raw numbers.
- Easier business processes need crystal-clear guidance on how SMEs can showcase their Social Value credentials.
- Innovation frameworks whichcelebrate quality and context-specific delivery over sheer quantity.
With SMEs making up virtually the entire UK business landscape (99.9%) and pumping trillions into the economy, overlooking their social impact potential would be madness. By levelling the playing field and playing to their strengths, the defence sector could spark a revolution in meaningful social impact.
The Procurement Act is here. The clock is ticking. Now’s the time for defence SMEs to step up and for government to give them the platform they need to shine.
Chris Shepherd
Chris Shepherd, Chief Operations Officer at RUK Advanced Systems, brings over two decades of frontline and strategic experience in electronic warfare. After 23 years in the Royal Navy, serving on frigates and destroyers across the Arabian Gulf, Balkans and Afghanistan, Chris transitioned into senior leadership roles across the defence sector. His shore-based appointments included acting as the UK subject matter expert for a 5-Eyes SIGINT system and leading the Royal Navy’s EW training school. In 2013, he moved into industry, securing global contracts for Cobham Aviation and later establishing their Riyadh operation to support regional defence programmes. At Saab UK, he spearheaded sales in naval defence with a focus on seabed warfare innovation. Joining RUK in 2023, Chris is now focused on unlocking strategic growth opportunities as the company scales. Based near Portsmouth, he’s also a keen traveller and gardener.