‘Accelerator’ project intended to encourage innovation but may also encourage acquisitions
Historically, defence technologies used to lead development of civilian technologies. However, military research and development (R&D) budgets have been constrained over the past five years so we have seen civilian technologies leading the way, particularly in the communications sphere. I was therefore encouraged to read about the UK MOD’s new ‘Accelerator’ programme, which funds novel, high-risk and high-potential benefit research to develop new capabilities for UK defence and security.
There are two parts for the scheme. The Enduring Challenge is intended to provide a route into defence and security for any supplier who thinks they have a good idea. It has a budget of up to £6m in the financial year 2017/18 and typically funds proposals for proof-of-concept research in the range of £50,000-£90,000 for work of up to nine months duration. Whilst these figures may seem insignificant against an annual UK defence budget of ~£35bn, they are music to the ears of defence manufacturers who have been increasing their self-funded R&D spend to compensate for falling levels of customer funded R&D.
The second part of the scheme is themed challenges. Every month the MOD explains one of its research problems and invites submissions from companies who believe they have a technology that can help solve the issue. For example, this month the MOD is looking for ways to automate front line resupply in order to not put soldier’s lives at risk. Previous competitions have included how to detect and treat hearing loss, how to see through clouds and the future of aviation security.
Interestingly, the MOD publishes the successful recipients of awards so we can analyse how this money is flowing into industry. Approximately 50% of the awards are going to universities. 10% are going to the established defence primes (BAE Systems, QinetiQ, Airbus and Thales have all benefitted) and the remaining 30% are going to small unlisted companies. This lends further credence to my theory that with the ever changing nature of threat and the ability to borrow money cheaply, we may be about to see another round of M&A in the sector. The Accelerator scheme will not only make the MOD aware of new technologies, but will alert the primes to any ripe targets.
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