TEKEVER's AR5 wins Project CORVUS - a new UK drone supply chain opens

On 25 July the Ministry of Defence (MOD) announced it has selected TEKEVER's AR5 uncrewed air system to replace the British Army's retiring Watchkeeper WK450, under Project CORVUS. The deal is worth up to £400 million over ten years, beginning with an initial order of six aircraft and rising to as many as 24 by 2029, with a minimum of five years of support and options beyond. The AR5 carries up to 50 kilograms of surveillance equipment, offers markedly longer endurance than Watchkeeper and has been combat-proven in Ukraine. TEKEVER will build the aircraft at a new factory in Swindon and run flight testing from West Wales Airport at Aberporth, sustaining and creating hundreds of jobs across South West England and Wales. Notably, the selection followed a competitive Project CORVUS tender that drew eight responses by its February closing date but produced no suitable bid, leading the Army to a sole-source route to a proven, in-service system. First deliveries are expected later in 2026, subject to final contract signature.

Business Winning Angle: This stands up an effectively new sovereign uncrewed-systems prime and its supply chain on UK soil, and that is the opportunity. TEKEVER is building UK production at Swindon and a test capability at Aberporth, and a programme of this length will need a British sub-tier across payloads and sensors, datalinks and ground control, sustainment, training and advanced manufacturing. Suppliers should get onto TEKEVER's UK vendor list now, while the industrial footprint is still being laid down and second-source decisions are open. There is a second lesson in how this was won: with a formal competition judged to have produced nothing suitable, the Army routed to a Ukraine-proven system with a credible UK footprint. On urgent capability requirements, demonstrable operational track record and a real plan to build and support in Britain are now beating paper compliance, and bids should be positioned accordingly.

The week opened with a change at the top of government. Andy Burnham became Prime Minister on 20 July, following Sir Keir Starmer's resignation, and his first Cabinet named Wes Streeting as Secretary of State for Defence, replacing Dan Jarvis, with John Healey becoming Chancellor of the Exchequer and Ed Miliband Foreign Secretary. Jarvis had held the defence brief only since June, when he replaced Healey, so the department has now had three Secretaries of State since early June, an unusual churn at the top. Streeting was visible in the role almost immediately across Farnborough week, fronting the £708 million combat-air award and the CORVUS decision, which points to continuity on the Defence Investment Plan's industrial priorities rather than a reset.

Business Winning Angle: A new ministerial team means new private offices, advisers and priorities across both Defence and the Treasury, and every supplier's stakeholder map now needs updating. The move that matters most commercially is Healey, a consistent advocate of higher defence spending, taking control of the public finances as Chancellor, which is a constructive signal for budgets and for the pace of the Investment Plan. Streeting's early endorsement of GCAP and CORVUS suggests the programme-level direction holds. The first few weeks of a new team are when relationships and reputations are set, so re-engaging early, through primes and trade bodies as well as directly, is time well spent now.

Several substantial MOD requirements went live on the Find a Tender Service this week. The largest near-term opportunity is ITQ58 European Requirement in Support of Project Phoenix II, run by Defence Equipment and Support (DE&S): a tender notice, published 23 July with a total value of £50 million, for the lease and the service, maintenance, repair and inspection of vehicles across the European continent, with delivery locations spanning Germany, Poland, Romania, Italy, Norway, the Netherlands and Belgium. Submissions close on 24 August. At an earlier stage, Defence Digital opened VOX NOVA Fixed Voice and Enterprise Voice, a £66 million preliminary market engagement published 20 July to modernise fixed and enterprise voice across UK and overseas sites, with the MOD restating its goal of placing at least 25 per cent of the work with small and medium-sized enterprises. A near-term one to note for anyone already positioned: the Royal Air Force’s (RAF's) requirement for 16 Air Traffic Control visual simulators, at £2.6 million, closes on 31 July.

Business Winning Angle: These are two different plays. Project Phoenix II is a sizeable, live opportunity with a European delivery footprint, and vehicle-leasing, fleet-maintenance and logistics providers have a firm window to respond before 24 August. VOX NOVA is at preliminary market engagement, which is the most valuable moment to influence a requirement, and communications and IT suppliers should engage now to shape lotting, standards and the SME split before the formal tender lands. All three surfaced through saved searches on Find a Tender, which remains one of the most valuable pipeline tools available: a well-tuned saved search puts these opportunities in front of you on the morning they publish, days before they reach most competitors' radar.

On 22 July the MOD awarded £708 million to a BAE Systems-led team, working with Leonardo UK, MBDA UK and Rolls-Royce, to accelerate the Future Combat Air System and feed the trilateral Global Combat Air Programme (GCAP) with Italy and Japan. The award sustains more than 4,500 workers across around 600 British-based companies, universities and suppliers, with roughly 90 per cent of those jobs outside London and the South East. It sits on top of more than £5 billion invested in the programme since 2018 and the £8.6 billion committed to GCAP over four years in the Defence Investment Plan. The new Defence Secretary called it "a clear vote of confidence in British industry".

Business Winning Angle: This is the clearest signal yet that GCAP's near-term funding is real, and it defines where combat-air money will flow next. Firms in digital engineering, model-based systems, advanced manufacturing, AI and mission software should treat the award as the cue to pursue work-share now, through the four primes and the widening supplier base, rather than waiting for the programme to mature. With around 600 organisations already in the chain, the competitive question is positioning against incumbents, so evidence of throughput, security readiness and niche differentiation is what will open doors this year.

Babcock wins CAD 1.1 billion for Canada's submarines - a franchise that travels

On 20 July Babcock secured a CAD 1.1 billion, six-year extension to the Victoria In-Service Support Contract, sustaining the Royal Canadian Navy's submarine fleet. Babcock has held the work for more than 18 years, and points to over 1,500 jobs supported each year and a supply chain of more than 450 firms. The extension deepens a through-life support franchise that the UK group has built into an exportable capability.

Business Winning Angle: Long-run sustainment contracts like this are the quiet backbone of a defence business, and they read across directly to the UK's own submarine enterprise and to AUKUS-related support demand. UK suppliers in naval sustainment, obsolescence management and specialist engineering should study where Babcock's international support model pulls work, because franchises of this kind create durable, multi-year sub-tier demand rather than one-off awards. It is also a reminder that support and availability, not just new platforms, are where a great deal of winnable defence revenue actually sits.

Also this week: Lockheed Martin UK was reported to have won a contract of around £20 million to design and build a Mach 5-plus hypersonic target vehicle for UK missile-defence trials, with a flight demonstration planned for 2027 (figure per trade press; treat as indicative pending a primary source).

On 22 July at Farnborough, BAE Systems unveiled Brontanax, an uncrewed Collaborative Combat Aircraft designed to fly alongside Typhoon and F-35 as a "loyal wingman". Roughly the size of a Hawk trainer and developed with the Royal Air Force since 2022, it has been built at Warton with hundreds of millions of pounds of BAE's own funding, aiming for flight testing in 2027 and possible service entry by 2030. It is positioned as the operational demonstrator for the government's sovereign Collaborative Combat Aircraft effort, "Storm Fighter", to which an initial £300 million was committed earlier in July. BAE is targeting around 70 to 80 per cent of a crewed fighter's utility at a fraction of the cost.

Business Winning Angle: A sovereign uncrewed-combat programme opens a supply chain that does not yet have entrenched incumbents, which is exactly where smaller and newer suppliers can win position. The demand will be in autonomy and mission software, open systems architectures, sensors and electronic warfare payloads, and low-cost, high-rate airframe manufacture. With a demonstrator already built and a government programme forming around it, the time to engage BAE's FalconWorks and the wider Storm Fighter effort is now, before the sub-tier consolidates.

GCAP's engine nears ground test - and a Reading hub opens the door

Also on 20 July, the Rolls-Royce, Avio Aero and IHI consortium developing GCAP's power and propulsion system reported it has completed more than 100 subscale component tests and is moving toward final approval of an all-new engine demonstrator design ahead of ground testing. The partners have opened a dedicated Collaboration Hub in Reading to co-locate teams with the GCAP agency and the joint industrial venture. The programme sustains more than 9,000 highly skilled aerospace roles across the three nations.

Business Winning Angle: Propulsion moving from design into hardware demonstration is the point at which the supply chain widens, drawing in specialist UK firms in advanced materials, precision components, instrumentation and test services. The new Reading hub is a concrete anchor for business winning, a physical centre of gravity for the UK propulsion effort where relationships and sub-contract decisions will form. Suppliers with relevant capability should be mapping their route in against the demonstrator build now.

Also this week: QinetiQ announced a £20 million investment to scale laser directed-energy weapon production at its Farnborough and Malvern sites, launching its HELENA high-energy laser brand (unmannedairspace.info ). And missile scale-up Frankenburg Technologies, one of last week's counter-drone award winners, selected BAE Systems' new BlackThorn warhead for its Mark I interceptor and signed a five-year rocket-motor partnership with Roxel UK, with a UK production site planned for 2027 (Defence Industry Europe ).

The arrangement we led on last week has now been approved. On 22 July EU member states approved the United Kingdom's participation in the European Union's Ukraine Support Loan, the EUR 90 billion framework of which EUR 60 billion is earmarked for defence industrial capacity and procurement across 2026 and 2027. UK participation, which follows a UK-EU contribution agreement signed on 13 July, means Ukraine can now use the loan financing to buy defence products from UK-based manufacturers, expanding the pool beyond EU and associated suppliers. The EU reported that EUR 28.3 billion of the defence package is expected to disburse in 2026.

Business Winning Angle: What was a proposal seven days ago is now an approved, allied-funded market that UK industry can sell into, and the practical work of positioning starts in earnest. Suppliers should map which Ukrainian requirements and national channels the loan will fund, qualify the routes to market, and engage UK Defence and Security Exports early. As with last week, incumbency and relationships built over the coming months will shape who is placed when the larger tranches are allocated, so this belongs on the active pursuit list, not the watch list.

Canada joins GCAP as first observer - the combat-air workshare widens

On 21 July, announced around Farnborough, Canada joined GCAP as an observer nation, the programme's first expansion beyond founding partners the UK, Italy and Japan. There is no financial commitment at the observer stage, but it opens a path to fuller participation and cost-sharing later, and was presented as an early foreign-policy win for the new Prime Minister.

Business Winning Angle: A widening partner base improves GCAP's long-term viability and, with it, the durability of the workshare and export pipeline that UK suppliers are positioning into. For firms weighing where to invest business-winning effort across combat air, a broader coalition is a reason for confidence in the programme's staying power. Watch whether observer status converts into an industrial arrangement, because that is when Canadian requirements and potential partnering routes would open to UK companies.

UPCOMING EVENTS

July 30 - Rolls-Royce Holdings 2026 half-year results. A read on defence order intake and delivery against a full order book, and the first set of numbers since Farnborough. Details

Aug 24 - ITQ58 Project Phoenix II submissions close. The £50 million DE&S European vehicle-support tender in this week's pipeline reaches its deadline. Details

Sept 16 - 17 - Defence Vehicle Dynamics (DVD) 2026, UTAC Millbrook. Land equipment community event sponsored by the National Armaments Director Group and Army Headquarters. Details

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