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Thirteen small British technology companies have been awarded Ministry of Defence contracts worth up to £4 million each, as part of a government push to open defence procurement to innovative start ups and newer firms that have had little or no previous involvement with the MOD.
The contracts were awarded through Commercial X, the MOD's accelerated contracting vehicle, less than four months after the government announced its search for Britain's next "defence unicorn", the term used in the announcement for a future billion pound defence company. More than half of the winning firms are new to defence altogether.
At a Glance
- 13 contracts awarded to small British technology companies across England, Wales and Scotland
- Up to £4 million per contract, the largest in the scheme
- More than half of winning firms are new to defence contracting
- All companies founded after 2011, the majority in the last six years
- SME spend target: MOD committed to a 50% increase in spending with small and medium sized enterprises by May 2028, worth an additional £2.5 billion
What Was Announced
Defence Secretary John Healey MP announced the contracts on 19 May 2026 while addressing the Good Growth Foundation. He argued that Britain's increased defence investment must come with a commitment to back British industry, create jobs, and deliver technology for the armed forces rather than buying from overseas.
The contracts cover a wide range of technology areas the MOD has identified as priorities for the UK Armed Forces. These include quantum sensing, autonomous systems, secure communications, space manufacturing, and synthetic training, the use of simulation and AI to train military personnel. Commercial X assessed applicants across capability themes including AI and machine learning, robotics and autonomy, and precision capabilities.
The thirteen companies and where they are based
- The RC Den Ltd - London
- Aquark Technologies Ltd - Hampshire
- Aether Aerospace Ltd - Newport, Wales
- SpaceAM Ltd - London
- Avenue 3 Ltd - West Yorkshire
- Nereus Medical Ltd - Devon
- Kraken Technology Group - Hampshire
- Flowcopter Ltd - Edinburgh
- Helyx Secure Information Systems Limited - Buckinghamshire
- EP90Group Ltd - Winfrith Newburgh, England
- Ritson Reid Ltd - Berkshire
- SimCentric Limited - Oxfordshire
- Spectra Group (UK) Ltd - London
How Commercial X Works
Commercial X is a specialist function within the MOD created specifically to accelerate the procurement of digital technologies and advanced innovations. Traditional defence procurement is a notoriously slow and complex process, one that tends to favour established prime contractors with existing relationships and the administrative capacity to navigate lengthy tender processes.
The new scheme inverts that model by providing contracts directly to smaller, newer companies that would not normally have the resources or track record to compete through conventional routes. The government says it aims to get "innovative new kit into the hands of UK Armed Forces" faster, while simultaneously building a domestic supply base for the long term.
What the scheme provides
- Direct contracts: up to £4 million awarded without requiring a lengthy procurement history
- Accelerated route: faster than standard MOD procurement, designed for agile companies
- Investment signal: contracts help firms attract further private venture capital
- National reach: awards span Devon, Edinburgh, Newport and West Yorkshire
The wider context
- Defence spending target: 2.6% of GDP from 2027, described as the largest sustained increase since the Cold War
- SME spending: MOD committed to £7.5 billion total SME spend by May 2028
- Office of Small Business Growth: new MOD office providing a single access point for SMEs
- Dragons' Den event: a separate event connecting defence innovators with private investors has also been held
What the Companies Said
Chris Isaac, CEO and Founder of SpaceAM one of the thirteen contract winners described the impact as a "game changer," saying the fund had enabled the company to hire six staff, open its first commercial laboratory, and attract London venture capital investors, all within five weeks.
Phil Bottomley, CEO of Avenue3 in West Yorkshire, said the investment was "transformative" for the firm, allowing it to "grow sustainably, create high value jobs, and continue delivering complex engineering programmes at pace." He added that it was "a strong signal of the role that smaller, specialist companies like Avenue3 can play in supporting national priorities."
The Good Growth Foundation, which hosted Healey's address, said its research shows public support for defence spending depends on people seeing the economic benefits "brought home to the UK." Its director, Praful Nargund, argued that SMEs are too often locked out of defence contracts, causing "defence investment flows overseas rather than building resilience in Britain."
The Broader Defence Picture
The contracts sit within a wider government commitment to increase defence spending significantly. The government has stated it will hit 2.6% of GDP from 2027, a level ministers describe as the largest sustained increase in defence spending since the end of the Cold War.
Part of that commitment is a shift in how the MOD spends its money. The department has pledged to increase spending with small and medium sized enterprises by 50% by May 2028. That means an additional £2.5 billion going to SMEs, bringing total MOD SME spend to £7.5 billion. The defence unicorn fund and Commercial X contracts are the first visible output of that commitment in action.
The announcement also forms part of the government's Industrial Strategy. Rather than treating defence spending purely as a national security matter, the government is explicitly framing it as an economic development tool, one intended to create jobs in communities across the country, build a domestic innovation base, and reduce reliance on imported technology and foreign prime contractors.
Key Takeaways
- Thirteen British technology companies have received MOD contracts worth up to £4 million each through the Commercial X accelerated procurement vehicle
- More than half of the winning firms are new to defence contracting, with all companies founded after 2011
- Technology areas covered include quantum sensing, autonomous systems, secure communications, space manufacturing, and synthetic training
- The awards are part of a government commitment to increase MOD spending with SMEs by 50% to a total of £7.5 billion by May 2028
- The government is planning to reach 2.6% of GDP in defence spending from 2027, framed as the largest sustained increase since the Cold War