UK defence is moving faster. Can its legal frameworks keep pace?

Nicola Phillips is a partner in Crowell & Moring’s London office and International Dispute Resolution Group, Edmund Northcott is a counsel, and Elise Marguerite Borg is a trainee solicitor.

The defence sector is entering a period of accelerated investment, technological change and international cooperation – and the message from government, armed forces and industry is unambiguous: defence needs to move faster.

Rapid technological development, lessons from Ukraine and the changing security environment are driving demand for capabilities that can be developed, deployed, adapted and scaled at pace.

The UK Government’s Defence Industrial Strategy prioritises transforming procurement, developing a resilient industrial base, supporting innovation and forging enduring partnerships. The Defence Investment Plan commits almost £300 billion over four years.

For participants in this growing market, however, increased speed and greater tolerance of risk make identifying and managing legal risk earlier more important.

From stockpiling equipment to building surge capacity

The emphasis is shifting from stockpiling today’s technology to producing and deploying at scale.

This has implications throughout the supply chain: can existing contracts accommodate rapid increases in production? Who bears the cost of maintaining unused capacity? How is intellectual property protected across multiple jurisdictions?

Supply chain resilience is not only an operational issue; it is also a contractual and legal one, and resilience planning should be reflected in the contractual architecture supporting the supply chain.

Faster procurement and higher risk mean greater need for legal discipline

Historically, defence procurement has prioritised lengthy processes and risk avoidance – an approach difficult to reconcile with the pace at which technology and threats now develop. Policy is now moving firmly towards faster procurement and earlier industry engagement.

The Segmented Acquisition Model, introduced in April 2026, tailors procurement to the capability being acquired, with six Commercial Pathways and more than 300 procurements already allocated. Understanding which pathway applies and engaging early is an increasingly important element of bid strategy.

The MOD’s £18.3 million procurement of Leonardo UK’s SONUS system illustrates the potential: awarded five years ahead of schedule, due to reach frontline troops within 12 months, sustaining 250 jobs and involving 29 UK SMEs.

Rapid programmes often require decisions before all uncertainties are resolved, making a legal framework that accommodates risk essential.

This may involve carefully defining scope where requirements are evolving; establishing change-control mechanisms; allocating development and delivery risk expressly; protecting intellectual property while enabling necessary access; and addressing termination, liability, indemnity and regulatory compliance as programmes evolve.

The question is not how to eliminate risk, but how to identify which risks can be accepted, which should be allocated contractually, and which require mitigation.

Buying effects, not just equipment

The shift from specifying equipment to defining the operational effect sought opens opportunities for SMEs and non-traditional suppliers, but raises more complex questions around performance criteria, acceptance testing, IP, data rights and integration responsibility.

Establishing early what the customer is actually buying – a product, a service, a capability or an outcome – is essential, as the answer materially affects the contractual and IP framework.

Entering the UK defence market

The Government’s “buy British by default” commitment adds complexity for international suppliers and UK businesses with overseas supply chains. Under the Procurement Act 2023, contracting authorities may exclude suppliers from outside the UK for certain defence and security contracts.

For SMEs entering the UK market, legal and commercial considerations begin long before a formal tender: understanding procurement routes, structuring relationships with UK partners, meeting security and regulatory requirements, and protecting intellectual property.

The MOD has committed to increasing SME spending by 50% by 2028, but the market remains difficult to penetrate: framework agreements are a key route and work tends to flow to subcontractors with established relationships.

A proposed offsets regime would require overseas suppliers to demonstrate wider UK economic benefits when securing MOD contracts, potentially affecting contract structuring and supply chain configuration.

Private capital will have an increasingly important role

The UK Government has identified private investment as essential to expanding defence capability. Initiatives include a forthcoming Defence Finance and Investment Strategy, the Defence Investors’ Advisory Group, a £50 billion Defence Export Facility and a Multilateral Defence Mechanism backed by the UK and NATO allies.

Due diligence in this sector must go beyond conventional corporate and financial issues to consider export controls, sanctions, ownership of sensitive technology, national security and foreign investment considerations, government rights in IP and the ability to scale production while maintaining regulatory compliance.

Collaboration requires trusted relationships and clear frameworks

Collaboration is already producing results, with accelerated contracts awarded to 13 British technology companies across quantum sensing, autonomous systems, secure communications and more.

Trusted relationships should not, however, substitute for clear legal arrangements on IP ownership, data rights, integration liability, exclusivity and the impact of sanctions or policy changes. These are easier to resolve when the parties are aligned than when a programme has become commercially or operationally critical.

What does this mean for defence businesses?

The overall direction of travel is clear: faster innovation, faster procurement, greater international cooperation and greater emphasis on resilience. For industry, that creates significant opportunities but also changes the legal risk profile.

Legal advice should form part of the process of determining whether and how to pursue an opportunity – from understanding procurement routes and regulatory constraints, through structuring supply chains and protecting IP, to navigating sanctions, export controls and conducting defence-specific due diligence.

Legal strategy needs to move at the speed of the sector

Resilience is not solely operational or technological: it also depends on whether the legal framework enables businesses to move quickly, collaborate securely, protect their technology and enter new markets without avoidable exposure. Businesses that build those foundations early will be better placed to respond when the opportunity arises.

In the near term, businesses should monitor the forthcoming DFIS, the “buy British by default” policy, the offsets consultation outcome and the first Defence Investment Plan progress update due in July 2027.

Our firm advises businesses across the defence supply chain on government procurement, tender and bid challenges, commercial contracting and negotiation, supply chain resilience, cyber incidents, intellectual property, regulatory matters, sanctions and export controls, and corporate transactions.