Defence procurement is often criticised for being slow and challenging for small firms to penetrate. To help turn this around, the Ministry of Defence (MOD) has established Commercial X to speed up the adoption of innovative technologies and lower barriers for smaller firms. DSEI Gateway spoke to Dina Kakaras, founder and head of Commercial X, to delve into how the organisation is trying to achieve this.

What is Commercial X?

Founded in 2022, Commercial X can be broken down into three core functions. The first involves discovering and testing new commercial ways of working to support faster procurement, and applying this learning across MOD commercial teams.

The second function centres on improving ‘exploitation’, specifically focused on scaling successful innovative technologies, including from the MOD’s various tech accelerators, Kakaras explained. Commercial X can ‘spot if something works well and amplify it if it’s something entirely usable by other communities within the commercial teams’.

One example of its technology scaling efforts is XV Excalibur, the experimental Extra-Large Uncrewed Undersea Vessel (XLUUV) delivered to the Royal Navy in May 2025 and supported by Commercial X and the Submarine Delivery Agency during trials and experimentation.

With the help of Commercial X officers, who are inserted in the various accelerators, the team can also spot synergies between the frontline commands and their stated requirements, thereby reducing duplication. Being a part of the new National Armaments Directorate Group helps with this too, Kakaras added. Currently, over 40 Commercial X officers are working across 434 projects with the frontline commands, as well as Defence Digital and Defence Equipment and Support – with feedback being ‘really positive’.

Third, Commercial X focuses on making it easier for smaller suppliers to do business with defence, by designing and implementing commercial solutions which help them identify opportunities and bid for projects more effectively.

Recognising the issues faced by Small and Medium Enterprises (SMEs), Kakaras noted that ‘it’s not just about proof of concept’. While smaller firms can demonstrate a proof of concept, the real difficulty lies in scaling their technology and transcending the ‘valley of death’, due to complex and lengthy procurement processes.

The ‘valley of death’ refers to the challenges of turning technology from a concept or prototype into a scalable capability – what Kakaras called ‘bridging the say-do gap’. Commercial X is attempting to address this and ‘find tangible ways’ to overcome this barrier. Efforts include the Dynamic Market, simplified terms and conditions for SMEs, and the Neutral Vendor Framework for Innovation (NVFi).

Dynamic Market – A marketplace for SMEs

Launched in July 2025, the Dynamic Market is described by Kakaras as a ‘marketplace for innovation’, designed to connect suppliers – especially SMEs – and defence buyers in a single space. Defence buyers can quickly identify technology which meets their needs, while suppliers can discover new procurement opportunities and gain visibility of current requirements, making the platform both a procurement tool and an ‘information space’.

Kakaras said that ultimately, this ‘dynamic marketplace is an ecosystem of suppliers that we build around specific capabilities, or categories’, which span everything from hardware to software. This market, she emphasised, is not like traditional MOD commercial frameworks, as it remains continuously open. Buyers can launch mini-competitions and onboard suppliers at any time, while suppliers can spot relevant opportunities before having to onboard and become locked into rigid timelines, procurement processes and frameworks. This allows new entrants into the market while ‘lowering that barrier to entry as well’.

‘It’s more than this though, it’s not just like a supermarket where people can buy equipment off the shelf, it’s about going out to industry with a problem or an ambition and working with them to deliver it, sometimes in partnerships with multiple suppliers where we’re pooling the best of our talent and capabilities’, she explained.

This model is notable, considering commercial frameworks are typically heralded by MOD officials as being an innovative approach to procurement. Once suppliers are down-selected, the military can quickly source from them without lengthy processes.

However, with technology now evolving so rapidly – sometimes in a matter of weeks – this model seems less suited to discovering the best innovations, especially when new entrants can only join during select periods. The Dynamic Market, therefore, appears better suited to the rapidly evolving technology environment.

It also has similarities with Ukraine’s recently formed Brave1 online marketplace, which functions essentially as an online store like Amazon, and where military users can independently select and order weapons, or the United States’ (US) ‘Innovation Marketplace’, an online portal which acts as a single access point for industry, academia and other partners to discover the US Department of Defence’s technology priorities and what funding opportunities and competitions are open.

While the Dynamic Market is aimed at the MOD community, Commercial X has also set up a different marketplace – NVFi – designed for use across His Majesty’s (HM) Government to source the latest innovations from micro and SME suppliers.

NVFi

Launched in September 2024, NVFi works by appointing a single ‘Neutral Vendor’ – Constellia – to manage a marketplace of pre-accredited, third-party technology providers in an effort to enable faster and more flexible procurement of innovative technology and services across 14 different science and technology areas. These include behavioural analysis, the ‘Internet of Things (IoT), robotics, future computing and cyber security, among others.

Importantly, NVFi is not limited to the MOD. Rather, it is a government-wide initiative, where different departments can access the marketplace through Constellia. These include the Department for Science, Innovation and Technology (DSIT), the Foreign, Commonwealth and Development Office (FCDO) and the Home Office – and the list is growing.

So far, 12 contracts have been awarded, worth around £8 million, with an additional £65 million in estimated demand from cross-government teams looking to use NVFi to acquire capability. 90% of projects delivered by the Neutral Vendor Solution were from the micro and SME community, Kakaras said.

While it is encouraging to see new initiatives appear, which enable SME integration across the government enterprise, winning contracts can be just the start for a small firm. Helping to address the next stage of their journey is the Defence Tech Scaler.

The Defence Tech Scaler

While the Defence Tech Scaler is an initiative from Defence Digital (the MOD department driving digitisation across defence), rather than a Commercial X one, Kakaras has noted that it is important to highlight because it helps companies transcend the challenges of exploitation and scale. Since winning a contract is often just the beginning of a lengthy process, which includes onboarding and meeting strict security standards, she added that ‘it’s not the end of the gauntlet’.

Launched in May by John Healey, Secretary of State for Defence, the Defence Tech Scaler is designed to function much like the Amazon Web Services (AWS) marketplace – where thousands of independent software vendors are listed for purchasers – by bringing more established organisations together on a single platform, Kakaras explained. Initially for software, data and Artificial Intelligence (AI) providers, the initiative plans on expanding in the future.

For the military, the platform offers a way to identify established suppliers more easily. The first companies on the platform are Adarga, Hadean, Oxford Dynamics and WhiteSpace, which already hold enterprise agreements with the MOD. The initiative also gives approved suppliers an accreditation badge, so buyers can recognise their authenticity. The North Atlantic Treaty Organisation (NATO) announced something similar in June as part of its ongoing procurement reform, called the ‘NATO Innovation Badge’.

Stamps of authenticity

These NATO badges act as a stamp of authenticity for their capabilities, John Ridge, Chief Adoption Officer for the NATO Innovation Fund, told DSEI Gateway. They demonstrate to potential investors or buyers that their technology has been used by NATO.

When asked about this, Kakaras explained that the team is adopting something similar, saying: ‘We want to give companies a “defence ready” stamp…and we’re also looking to promote even within our marketplace where they’ve already got those rubber stamps’. Even if the company has not necessarily worked with the United Kingdom (UK), but with one of its allies, it is still valuable for the military to be aware of that, she added.

Ultimately, it is promising to see Commercial X taking agile procurement seriously – actively exploring new approaches, challenging mindsets and embracing a willingness to experiment, even if it means breaking things. However, its greatest challenge may lie in shifting the MOD’s deeply rooted cultural resistance to change, and ensuring SMEs understand the myriad paths of entry into defence.

Olivia Savage is the Editor in Chief of Clarion Defence and Security, organisers of DSEI and other defence events. Previously, she was a Senior Defence Journalist at Janes, specialising in electronic warfare, uncrewed systems and space.

DSEI Gateway is a dedicated membership platform for SMEs, providing exclusive and tailored insights into military requirements, actionable opportunities, and access to key decision makers. For more information, please visit here.

To stay up to date with Britain’s World, please subscribe or pledge your support!

Subscribe now

What do you think about this DSEI Gateway article? Why not leave a comment below?

Space is essential, underpinning modern daily life and serving as a critical enabler for militaries. As noted in June 2025’s Strategic Defence Review (SDR), disruption to the Global Positioning System (GPS) alone could cost the British economy £1 billion per day.

Considering this, the United Kingdom (UK) is seeking to bolster its satellite communications, situational awareness and navigation systems in space to ensure freedom of navigation and connect its ‘integrated force’.

Dual-use technology is integral to this. This was reiterated in the SDR, which was written by three leading defence experts and urged His Majesty’s (HM) Government to ‘maximise the synergies between the UK civil space sector and clear military needs’.

Capitalising on this demand, commercial space companies are actively involved in supporting some of the Ministry of Defence’s (MOD) largest space programmes, including the multi-satellite surveillance constellation known as Istari.

Oxford Space Systems

One such company is a Small and Medium Enterprise (SME) – Oxford Space Systems (OSS), which was created 11 years ago by a group of founders who observed a gap in the market for deployable structures in space.

OSS has been critical to some major British defence space programmes, including the Oberon synthetic aperture radar satellite Intelligence, Surveillance and Reconnaissance (ISR) programme led by Airbus.

Airbus won the Oberon contract to build two Earth observation satellites – with support from OSS – in February 2025. OSS supplied the deployable carbon fibre Wrapped Rib Antennas (WRA).

The company came to work on the programme after receiving funding from the National Security Strategic Investment Fund (NSSIF), the Defence and Security Accelerator (DASA) and others.

Sean Sutcliffe, Chief Executive Officer (CEO) of OSS, explained to DSEI Gateway how this has allowed OSS to ‘take the technology from a stage where it is proven in feasibility terms, to one where we can realistically bid alongside Airbus’ in competitive processes.

The NSSIF is an initiative by HM Government and the British Business Bank to fund ‘pioneering dual-use technologies’, helping to scale innovations at pace. OSS won funding for the WRA in 2022.

Aside from defence, OSS has clients spanning the maritime and commercial air traffic control sectors.

‘Obviously, for defence applications, there are often higher specifications required for that, given the nature of the missions’, Sutcliffe noted, as he discussed how OSS modified its commercial solutions for defence.

While the products tend to have cross-sector utility, Sutcliffe acknowledged that ‘the main difference is probably the timetable that people are looking for’, as defence often has long procurement cycles.

OSS has also had support from other commercial partners in developing its technology; notably Airbus, but also Surrey Satellite Technology Ltd. (SSTL), another company spearheading the MOD’s dual-use agenda.

Surrey Satellite Technology Ltd.

SSTL is significantly older than OSS, as of March 2025 having launched over 74 satellites since the company was formed four decades ago.

Andrew Greenhalgh, Marketing Manager at SSTL, told DSEI Gateway that the company has generated £1.8 billion in total revenue, with 80% of this coming from exports.

Originally spinning out of the University of Surrey, SSTL’s shareholders once included Elon Musk (between 2005 and 2009). The company was sold to Airbus in 2009 and has since operated as an ‘arms-length subsidiary’, Greenhalgh said.

SSTL has three primary business lines. These are divided into its export business, institutional business and its relatively new defence business.

During the interview, Greenhalgh said that SSTL ‘didn’t have a defence business until Darren [Jones, Head of Defence Business] joined us a few years ago’, mainly because until recently, there was less demand from the defence sector for the size of satellite produced by the company.

SSTL’s defence business has won several high-profile deals in recent years, including contracts to build UK Space Command’s Tyche and Juno Earth observation satellites.

For Tyche, the company won a single-source contract from the MOD under the broader Istari ISR programme to build an Earth observation satellite after discussions with UK Space Command and the Defence Science and Technology Laboratory (Dstl).

Jones told DSEI Gateway that before Tyche, the MOD had ‘never owned an ISR satellite before’.

‘We built and launched [Tyche] for UK Space Command last August. It is based around our Carbonite series of spacecraft and has an optical telescope within it’, he continued.

On the dual-use and broad applicability of Tyche, Jones described how ‘it has a few elements that are tailored towards the requirements of MOD, but fundamentally, it is our Carbonite spacecraft’.

Juno, which also forms part of the Istari programme, is due to launch in 2027. It will build on the ISR capabilities provided by Tyche, and together they will be part of ‘a constellation of satellites supporting [MOD] ground systems by 2031’, SSTL states.

Speaking about why SSTL moved into defence, Greenhalgh explained that ‘today, satellites of that size [150kg] have got defence use, which they didn’t traditionally have…We envisage in the future that maybe 25% to 33% of our business will be comprised of defence customers’.

A key consideration for companies seeking to enter the defence market is how much adaptation, iteration or change is required to their existing product line. When asked about how SSTL has handled this, Jones said that ‘fundamentally, they’re the same’, with varying specifications.

Greenhalgh said that defence users would need ‘a higher resolution image than a commercial user’, which would mainly be monitoring ‘agriculture, urban planning, mapping [and] disaster monitoring’, for example.

Commercial companies like OSS and SSTL demonstrate the role of dual-use innovation in strengthening British defence capabilities within the burgeoning space market – and amid heightened international competition in the domain.

Benjamin Howe is a UK-based journalist working for Clarion Defence & Security, having previously worked as a Content and Community Manager on Clarion’s digital products.

DSEI Gateway is a dedicated membership platform for SMEs, providing exclusive and tailored insights into military requirements, actionable opportunities, and access to key decision makers. For more information, please visit here.

To stay up to date with Britain’s World, please subscribe or pledge your support!

Subscribe now

What do you think about this DSEI Gateway article? Why not leave a comment below?

Few sectors change as quickly as technology, and most others, defence included, must play catch-up to stay relevant. This game of catch-up, spurred by the rapid evolution of military capabilities and an ongoing effort to digitalise the sector, has created an urgent need for specialised talent and skills across industry and government.

However, the defence sector struggles to secure these skills. The National Audit Office found that, at the end of March 2024, digital and cyber skills were both significant ‘pinch points’ among the Ministry of Defence (MOD) workforce, despite being priority areas.

Experts in the United Kingdom (UK) have been vocal about the skills issue, with Julian David, Chief Executive Office (CEO) of TechUK, who referenced the problem at a parliamentary Defence Committee evidence session in March 2025, proclaiming:

One thing that I would like to introduce into this is digital skills, which are increasingly going to be a huge part of any defence deployment or defence capability that we have. That is really not being addressed in the current MOD and broader British defence forces environment. It is not being addressed in terms of the reserve either. There needs to be a big focus on that.

The digital skill shortage also made an appearance in His Majesty’s (HM) Government’s Strategic Defence Review (SDR), published on 2nd June, which noted that the MOD’s digital transformation had been hindered, in part, through a ‘persistent shortage of key digital skills within the armed forces and civil service’.

The defence industry is also struggling to find and access the right talent. For example, Indra, a Spanish defence company, has complained of a skills shortage in new technologies, according to a Euronews report.

Why does defence struggle with digital skills?

There are a range of reasons making effective digital skills acquisition a struggle for the defence sector, according to Fred Sugden, Associate Director for Defence and National Security at TechUK, which were highlighted during a conversation with DSEI Gateway.

A general shortage of skills in technology and engineering, for example, means the defence sector is forced to compete more aggressively with others looking for the same expertise, such as the finance, wider software engineering and technology sectors, Sugden said.

This puts defence, especially government, on the back foot, as it ‘can't necessarily compete with other industries when it comes to salaries’, Sugden noted, which shrinks the available talent pool.

‘There's a lot of competition for a fairly limited number of skilled people in that space’, he added.

Another big issue is the myriad barriers to entry in defence, according to Nick Walrond, Managing Director of Government and Defence at Sanderson recruitment.

‘The security clearance processes are definitely a problem’, Walrond told DSEI Gateway. ‘It means that skills acquisition isn’t an agile process when you weave in the requirement for security clearance for a lot of roles’.

In line with this, Walrond noted a ‘rigidity’ of environment in defence, which is likely to deter those used to working in digital areas. He also highlighted that defence roles are often unable to offer hybrid working models, which is off-putting for digital workers more used to a hybrid setup.

What does this mean for defence?

A shortage of digital skills puts strain on defence in several ways, forcing it to deliver projects less efficiently and holding back wider governmental or national objectives.

‘The best people go to the best opportunities that are made most available to them – that’s sort of classic market demand forces’, Walrond said.

With less talent, defence suffers from operational risk. ‘Capability can’t be delivered, projects drift, costs rise’, Walrond pointed out, adding that he had a ‘sense’ that the sector as a whole may try to outscore the problem, putting further pressure on costs.

Sugden added that a shortage of digital skills will hamper attempts to deliver on certain military ambitions, such as those in the SDR, noting that any increase in Britain’s military readiness will ‘require a skilled workforce to deliver’.

What can defence do to change?

Change at the governmental level is key to solving the skills crisis, with education a necessary focus point. For example, Sugden says that his company has suggested introducing dedicated technology apprenticeships, or degree apprenticeships with a defence focus.

This would involve HM Government working with universities which already have a defence presence or focus, or working to create technology certifications which are focused on specific digital skills in defence, Sugden said. Working with employers to find out their digital skills requirements would also be key to this strategy. He also added that this would help to address the challenges employers face in bringing in new people with the required digital skills.

Walrond echoed some of Sugden’s points, suggesting that HM Government should make skills a critical resilience issue, stating: ‘this SDR looks at setting up munition factories to ensure we don't run out of munitions – well, I would see digital skills as just as important’. As well as this, he added:

We should be maybe standing up talent pools and centres of excellence to serve the UK defence sector with…digital, data, cyber, AI [Artificial Intelligence] skills, and that could be done with collaborative work, partnering work with schools, universities, big tech firms and so on.

Defence technology also doesn’t seem ‘cool’ enough in Walrond’s opinion. Defence needs to work from a marketing perspective to make it ‘really, really attractive to the new generations that are coming out’, he said.

Among other ideas – such as simplifying the security process and levelling out the pay disparity between the public and private sector – Walrond suggested that HM Government take a longer-term view of the workforce challenge by building digital skills into procurement processes.

In terms of businesses themselves, which don’t have the power to create legislation, Walrond advised to become involved in collaborative partner ecosystems, saying that: ‘if you [businesses] can work with collaborative partners, you access a wider skills community, and that can mitigate against the digital skills issue’.

Adopting training and development programmes specific to the sector is also key for businesses, Walrond added, explaining that a long-term approach is necessary as it is ‘very difficult to drop somebody into the sector cold, without any exposure beforehand’.

He listed some of the outreach activity his own firm partakes in to exemplify this tactic, such as programmes targeted at early years and armed forces re-employment.

George Fitzmaurice is a UK-based defence reporter at Clarion Defence & Security. He previously worked as a reporter for tech publication ITPro, and as an intern at the New Statesman.

DSEI Gateway is a dedicated membership platform for SMEs, providing exclusive and tailored insights into military requirements, actionable opportunities, and access to key decision makers. For more information, please visit here.

To stay up to date with Britain’s World, please subscribe or pledge your support!

Subscribe now

What do you think about this DSEI Gateway article? Why not leave a comment below?

Defence budgets across Europe and the Indo-Pacific are rising. However, many governments are boxed in when it comes to funding these increases.

Meanwhile, traditional lenders are cautious of defence, with environmental and social governance rules often pointed out as blocking smaller firms and startups from securing finance.

The Defence, Security and Resilience (DSR) Bank, a multilateral bank recently proposed by leading officials in defence, is offering to help solve these issues.

The concept

In general, the concept of a multilateral defence bank is modelled after other international institutions, such as the European Investment Bank.

The difference, however, is that these institutions struggle to address adequately the problems facing governments when it comes to funding defence sufficiently, due to their wider mandates.

In view of this, DSEI Gateway spoke with key proponents of the DSR Bank, who outlined their vision.

The concept has four main goals: to finance high-priority defence procurement projects; to stabilise and expand deep-tier supply chains; to mobilise private investment in dual-use and resilient technologies; and to support joint procurement initiatives to ensure returns on investment and access to key capabilities.

The bank is targeting an operational date in 2027, provided it receives enough capital commitments and is ratified properly by partners, Rebecca Harding, DSR Bank Chief Economic Adviser, told DSEI Gateway.

Funded by founding nations – which are yet to be determined – the bank would have an initial £100 billion balance sheet. Harding suggests that £20 billion would be paid-in equity, whilst £80 billion would be callable capital.

‘That equity base, recorded as an asset on national accounts, enables the institution to raise several multiples of debt on capital markets at very low spreads’, Harding explained.

As more members join, the amount of paid and callable capital can be increased to match demand.

Harding added that ‘export-credit agencies, defence primes and specialist funds are already in dialogue to co-finance specific projects’, alongside the DSR Bank.

These partnerships, combined with the backing of founding members, will allow the bank to operate as a credit enhancer and compliance umbrella, she explained, ‘allowing private capital to participate at scale while meeting defence sector regulatory requirements’.

Progress and backers

So far, the DSR Bank team – ‘The Development Group’ – has incorporated as a not-for-profit entity and undergone a market sizing study.

A team of experts with backgrounds in defence and finance has been assembled, led by Rob Murray, former North Atlantic Treaty Organisation (NATO) Head of Innovation.

Among those who have publicly endorsed the initiative are Air Chief Marshal (rtd.) Lord Stuart Peach and Mircea Geoană, former NATO Deputy Secretary General.

Richard Burr, former United States (US) Senator, has also backed the DSR Bank concept, as have several well-known scholars such as Prof. Julian Lindley-French, chair of the Alphen Group.

Meanwhile, the DSR Bank team is in technical discussions with European investment banks, and has garnered significant support within European governments.

Notably, the European Union (EU) Parliament put forth a resolution calling for members to establish a DSR Bank on 10th March 2025, while there has been vocal advocacy of the concept within the British Parliament.

Luke Charters, a Member of Parliament (MP) for the Labour Party – who has a background in financial services and financial technology – first proposed the concept of a multilateral defence bank in Parliament, and has since been working alongside Alex Baker, another Labour MP, to champion the concept.

Together, they have called for the removal of barriers to defence finance and published a document titled ‘Rewiring British Defence Financing’, affirming that ‘Britain should become a founding member of a multilateral defence bank’.

Meanwhile, Scottish Labour MPs Graeme Downie – whose constituency hosts the United Kingdom’s (UK) Rosyth naval dockyard – and Calvin Bailey – a former Royal Air Force (RAF) officer – co-authored an article in April, in which they said that a DSR Bank ‘could revolutionise how Europe funds its defence’.

Aside from the UK and EU, the DSR Bank team is looking far and wide. While there would be an immediate focus upon enhancing European defence capacity, Harding emphasised that ‘the DSR Bank is deliberately structured as an open cooperative’.

At this stage, potential participants are expected to include Britain, Australia, Canada, EU member states, Norway, Japan and South Korea.

US participation is also being eyed, with the DSR Bank team looking to stay outside the EU’s treaty framework, allowing it to align with the EU, NATO and other partners as needed.

What could the DSR Bank deliver for defence?

If enough support is gained, and founding members ratify its initial endowments, the DSR Bank hopes to deliver significant opportunities to governments, industry and financiers alike. Harding believes it could deliver ‘cheaper capital, multi-year certainty and a dedicated compliance framework purpose-built for defence’.

Common technical standards – tied to its lending – could enhance interoperability, complementing existing mechanisms rather than challenging them.

For smaller firms, the DSR Bank looks to provide ‘working-capital guarantees and, where necessary, lend directly to these firms’, as noted by Harding.

She predicts that this will reduce the risks placed on private lenders and the insolvency risk faced by these companies, allowing them to scale production and ‘weather long government payment cycles’.

This should also benefit larger contractors (primes), bringing stability and greater resilience to their supply chains.

On a strategic level, the DSR Bank team aims to speed up the deployment of common systems, boost industrial capacity, protect critical infrastructure and enhance the defence of participating nations.

Summarising her remarks, Harding said that ‘the DSR Bank could become a cornerstone of a new global security architecture – one that ensures democracies remain united, innovative and prepared to defend their shared values’.

Benjamin Howe is a UK-based journalist working for Clarion Defence & Security, having previously worked as a Content and Community Manager on Clarion’s digital products.

DSEI Gateway is a dedicated membership platform for SMEs, providing exclusive and tailored insights into military requirements, actionable opportunities, and access to key decision makers. For more information, please visit here.

To stay up to date with Britain’s World, please subscribe or pledge your support!

Subscribe now

What do you think about this DSEI Gateway article? Why not leave a comment below?