On 21 May 2025, Bird & Bird hosted its 2025 Annual Aviation & Defence Conference. This year the conference’s main theme was how the aviation and defence sectors continue to be revolutionised by geopolitical tensions, the transformative potential of AI and the ongoing transition to net zero.
The turbulence and instability of the geopolitical context hardly needs any emphasis. The war in Ukraine, the situation in Gaza, continued rivalry between the US and China, particularly over Taiwan, tensions with Iran and North Korea and the policies of the Trump administration are creating something of a perfect storm for European governments, including here in the UK. This is creating a greater sense of insecurity (and a perceived greater fear of war) than we have seen for many years, compounded by the uncertainty surrounding the US’s commitment to NATO.
In the UK, the Chancellor of the Exchequer, Rachel Reeves, recently committed to spend 2.5% of GDP on defence from April 2027 and an ambition to raise this to 3% of GDP in the next Parliament, which she described as “the biggest sustained increase in defence spending since the end of the Cold War”.
How the announced, and any future, increase in defence spending will be allocated, and the strategic priorities for UK defence policy going forward, is in something of a state of flux following the recent Strategic Defence Review (“SDR”). The SDR report was published on 2 June, following a ‘root and branch’ review of the entire UK defence enterprise it provided 62 recommendations to meet the challenge, threats and opportunities of the 21st century. Notwithstanding, the need to balance policy imperatives with the fiscal constraints (that any government will be under) will remain. And that in turn means that the relentless pressure ‘to do more with less’ and to make sure maximum benefit is derived from every taxpayer pound isn’t going to go away.
Andrew Dean opened the session by highlighting how procurement’s role has evolved from a purely technical exercise into a broader strategic tool for governments to respond to shifting global politics. For example, the UK-India Free Trade Agreement (which we have recently discussed in our article: UK-India Trade: Opportunities for your business under the new Free Trade Agreement) and the EU and UK’s Security and Defence Partnership (to set the framework for a new era of security co-operation between the UK and EU, which we discuss in our article: UK-EU Security Partnership: Bold Step Forward or Missed Opportunity?).
Andrew explained how defence procurement comes with its own layer of complexity. Special rules and exemptions mean foreign access often depends on the nationality of the supplier, the location of the buyer, and the prevailing political winds. The result is a fragmented, fast-evolving patchwork — one that’s increasingly hard to navigate for defence contractors looking to spot opportunities and manage risks.
Tom Ward presented a defence-focused overview of the UK’s new Procurement Act 2023 (“PA23”), emphasising its key changes and the complex nature of the patchwork of legislation.
Key changes include:
Although there have been a number of changes, the panel concluded that it is unlikely that suppliers in the defence sector are going to see significant changes in the way defence and security contracts will be procured, in particular due to the continued trend that an enormous proportion of the UK’s defence spending is on a single source basis.
Rounding out the panel, Kornelija Zilionyte from NATO’s Defence Innovation Accelerator for the North Atlantic (“DIANA”) presented DIANA’s mission and its supporting initiatives to find and accelerate dual-use innovation.
Kornelija explained that DIANA through an Alliance-wide network of innovators, accelerators, 180+ test centres, and end users, is solving critical defence, security and resilience challenges to support a more peaceful future.
The DIANA Accelerator Programme is designed to equip businesses with the skills and knowledge to navigate the world of deep tech, dual-use innovation. It does this through providing an immersive curriculum and ‘boot-camp’ involving the NATO innovation network and strategic business partners from the commercial and defence markets.
The 2025 challenge will soon be open to applicants with the potential of up to 150 innovators being invited to join. Although DIANA’s 2024 challenge is closed, as an insight into DIANA’s current focus areas, the 2024 challenge call included:
With the cross-cutting themes of:
Kornelija provided examples of success stories as a result of previous challenge calls, and explained DIANA’s Rapid Adoption Service (“RAS”). RAS aims to bridge the gap between DIANA and national and/or NATO procurement by providing a single, agile set of rules that facilitates quick and efficient contracting of innovators. The RAS accomplishes this using three pathways:
For more information, please visit DIANA’s website or its Linkedin site.
If you have any queries related to any of the above, please get in contact with Andrew Dean and Tom Ward, and visit our Defence & Security Procurement Hub for a comprehensive view of the defence procurement regimes in 8 European countries and Australia.