How European defence procurement can strengthen military innovation and start-ups

The Ukraine War has demonstrated the changing nature of modern warfare. Battlefields are rapidly evolving, with new technologies shaping military strategy and tactics. Increasingly, these new technologies are being provided by startup firms, rather than by the legacy prime contractors. The purpose of this brief is to provide policy recommendations to the European Union and European governments on how to encourage greater innovation in defence procurement and the introduction of these startup firms into the defence ecosystem. We draw lessons from the United States, which is executing a new acquisition strategy that seeks to expand the universe of firms that have access to procurement contracts. Specifically, we examine three policy interventions that have encouraged small businesses and startup firms to engage with the U.S. Department of War and bid on defence contracts. European defence ministries must show greater willingness to enter into contractual arrangements with new players, giving these firms the upfront capital and market access they require in order to continue investing and producing relevant technologies for the armed forces.