The UK government has identified 22 obstacles making it difficult for commercial space companies to win defence and national security contracts, according to guidance published on 13 October. The barriers include complicated procurement rules, unclear military requirements, and limited access to funding.

The findings have prompted the UK Space Agency to set out the Unlocking Space Defence and National Security (USD) programme, aimed at helping companies navigate the defence procurement landscape, identify potential military customers, and develop technologies serving both civilian and national security needs.

What barriers face space companies seeking defence contracts?

The UK Space Agency's assessment identifies problems at almost every stage of the process, from understanding what defence customers want to securing the funding needed to develop a product.

Companies reported unclear customer requirements, restrictive contract conditions, complicated procurement procedures and a lack of obvious routes into the defence market. Other obstacles include security clearances, export controls, intellectual property arrangements, access to testing facilities and difficulties obtaining investment. The agency also identified poor communication between government departments and differences between civilian and military technical requirements.

The 22 barriers were identified through the Unlocking Space for Dual Use Request for Information, which gathered evidence from organisations already working across civilian and defence space, as well as those considering entering the market.

These challenges can be particularly difficult for small and medium-sized enterprises (SMEs), which may have limited resources to pursue contracts involving lengthy negotiations or complex security requirements. A company developing satellite imagery software suitable for both commercial customers and military intelligence users, for example, may struggle to identify the relevant defence organisation, understand its requirements, and secure permission to handle sensitive information—obstacles beyond developing the technology itself.

Three priorities under the USD programme

The UK Space Agency has outlined three priorities to address these barriers.

Education and Awareness

The first priority aims to make it easier for companies to understand how defence procurement works. A central initiative is the Unlocking Space One Stop Shop for Information, developed by the UK Space Agency with UK Space Command and the Defence Science and Technology Laboratory (Dstl).

The online resource brings together guidance on security clearances, export controls, regulations, commercial opportunities and other requirements faced by companies seeking government work. For businesses accustomed to selling products in civilian markets, defence security procedures can be unfamiliar—staff may require clearance to access classified information, while technology developed for commercial use may be subject to additional controls when supplied to military customers.

The programme also draws on GovBridge, a learning initiative within the UK Space Agency Accelerator that helps entrepreneurs understand how to sell products and services to government departments. GovBridge has provided separate learning programmes covering general government and defence opportunities, with an emphasis on helping companies secure contracts rather than relying solely on innovation grants.

Strategic Alignment

The second priority addresses the lack of coordination between organisations buying space technology for civilian and military purposes. The UK Space Agency plans to work more closely with UK Space Command, Dstl and other national security organisations to identify common requirements and provide clearer information about future capability needs.

Satellite communications, surveillance systems and technologies used to monitor objects in orbit are among the areas where civilian and military applications overlap. The agency has already mapped UK Space Agency-funded projects against priorities in the Space Industrial Plan and defence technical capability areas, an exercise intended to identify technologies that could meet requirements in both markets, assess how mature they are and highlight gaps where further development is needed.

International cooperation forms part of this work. The agency cited a NATO research meeting on dual-use space technology attended by more than 140 participants from industry, academia, government and international organisations, including the European Space Agency and NATO's Defence Innovation Accelerator for the North Atlantic. Discussions covered space domain awareness, intelligence and surveillance, satellite communications, space control and technologies for servicing and manufacturing in orbit.

Funding and Procurement

The third priority focuses on helping companies turn promising technologies into products that government organisations could eventually purchase. One existing route is the Space to Innovate programme, which supports technologies addressing defence and national security requirements.

Its latest competition, Delta Drop, is run by UK Defence Innovation on behalf of the UK Space Agency and Dstl. The competition focuses on three challenges: improving the speed and effectiveness of space-based sensing and response, developing ways for spacecraft to protect themselves, and making space systems more resilient against electromagnetic threats. These include technologies relevant to satellite surveillance, intelligence gathering, communications and protection against interference.

The agency also highlighted a procurement opportunity supporting the National Space Operations Centre's BOREALIS capability. The Contracts for Innovation initiative seeks technologies to improve the identification and characterisation of objects in orbit, including software, algorithms and analytical techniques that can help determine the characteristics of satellites and other objects using observations and imagery. Such capabilities are important for space domain awareness, which enables operators to monitor spacecraft, track debris and identify potentially threatening activity.

The procurement mechanism allows companies, including SMEs, to develop and test solutions against requirements set by government customers. It is intended to create a clearer connection between publicly funded research and technologies that defence organisations may eventually adopt. However, participation in a development programme does not guarantee a subsequent operational contract.

Space investment tied to national security

The USD programme sits within the government's wider effort to strengthen the UK space industry while increasing the use of space technology for national security. In March 2026, the government announced £40 million for the broader Unlocking Space programme, alongside plans to concentrate public support on satellite communications, in-orbit servicing and assembly and manufacturing, space domain awareness, and assured access to space through launch capabilities. The £40 million commitment covers the wider programme and is not a dedicated fund for defence procurement.