UK to Require Overseas Defense Suppliers to Invest Up to 100% of Contract Value in Britain From April 2027

Overseas companies winning significant UK defense contracts will be required to invest back into Britain from April 2027, the Ministry of Defence and HM Treasury announced on 30 October 2026. Under a new offset policy, contracts worth over £50 million will be considered for obligations that can reach the full value of the contract, delivered as jobs, apprenticeships, UK factories, domestic suppliers, technology transfer and UK-made components.

The Chancellor and the Defence Secretary announced the policy at BAE Systems Scotstoun in Glasgow, part of the "Back British" approach set out in the Budget. A new central Offset Authority will "agree, value and monitor delivery through dedicated Offset Agreements", the Ministry of Defence said, with the policy applied on a case-by-case basis. "A £100m contract could see new jobs, facilities, or skills training up to the same £100m value in the UK," the release said.

The accompanying policy paper, "UK Offset Policy", sets the default trigger at a contract value of £50 million or more, a threshold the Ministry of Defence may raise or lower. The standard offset agreement value "will be set at 100% of the procurement contract value, including in cases where the cost of the original procurement contract increases", although the Offset Authority may set obligations below that level. Exemptions may cover urgent operational requirements and national security sensitivities, among others, and the paper states that "suppliers cannot request an exemption".

The Ministry of Defence said that since 2016, over £35.2 billion has been spent on defense contracts and services with industry overseas, "representing 11 per cent of total MOD direct expenditure with industry and commerce between 2016/17 and 2025/26". Reuters independently reported the £50 million threshold, the April 2027 start and the £35.2 billion figure. Last year, MOD investment supported 274,000 jobs in UK industry, up 10 percent, and 85 percent of MOD expenditure already goes to UK firms, the ministry said.

"Every pound we invest in defence should be judged by what it does for Britain. That's why we are backing British by buying British wherever we can," the Defence Secretary said. The Chancellor said: "When a big contract goes overseas, these changes will ensure 100% of the value creates new opportunities for workers and businesses here at home."

The government set the measure against its target of 3 percent of GDP on defense in 2030, on the path to the NATO commitment of 3.5 percent in 2035, and a Defence Investment Plan backed by £298 billion over four years. The ministry pointed to Poland as one of three countries already using similar offset-type policies, alongside Norway, the destination of the recent £10 billion export deal for Type 26 frigates that the release also cited, and the Netherlands.

Section 2.1.5 of the policy paper, however, states that the policy "shall not normally apply where workshare or industrial outcomes are already governed by an international treaty, memorandum of understanding, collaborative programme framework or other government-to-government arrangement". Purchases arranged government-to-government therefore fall outside the default scope, and the regime's reach will depend on how the Ministry of Defence applies the clause to individual procurements. The release says the policy "will apply to a select number of procurements from April 2027".

According to GlobalMilitary.net's inventory data, 193 of the 712 aircraft listed for UK forces, about 27 percent, are of US design. The largest US-designed types in service are:

• AH-64 Apache attack helicopter, 47
• F-35 Lightning II, 47, acquired through a multinational program
• CH-47 Chinook, 45
• T-6C Texan II trainer, 14
• P-8A Poseidon maritime patrol aircraft, 9
• Protector RG1 (MQ-9B), 9
• C-17 Globemaster III, 8
• RC-135 Rivet Joint, 3
• E-7A Wedgetail, 2

The largest single type in UK service, the Typhoon at 111 aircraft, is a four-nation European program. The United Kingdom ranks seventh in GlobalMilitary.net's ATLAS military power ranking. The policy follows earlier UK industrial measures such as the restart of domestic tank and howitzer barrel production.

Suppliers will be notified early of the procurements concerned ahead of the April 2027 start, the Ministry of Defence said, and the policy paper commits to a review of the regime within 12 months of its effective date.