Further trends in the defence sector - supply chains, cybersecurity and space
Written By
Partner
UK
I am a specialist in outsourcing and large scale technology projects and co-head the firm's Technology Transactions and International Outsourcing practice groups.
Senior Associate
UK
As a senior associate in the Tech Transactions team, I primarily advise clients on technology contracts across the Technology and Defence sectors. I focus on emerging and cutting edge technology (Artificial Intelligence in particular), more 'traditional' defence contracting, and the intersection of the two - helping clients navigate the rapidly evolving Defence Tech sector.
The defence sector has increasingly prioritised supply chain security, sustainability, and visibility. The emphasis on ESG factors in supply chain operations continues to grow and reflects a broader commitment across sectors to responsible sourcing and operational resilience, driven by increased understanding and awareness of the need for climate resilience and ethical practices.
In recent years, constraints associated with supply chain disruptions and labour challenges have acted as a limiting factor on the revenues generated by defence companies. As such, it is expected that supply chain security and visibility will be a priority for industry participants in the upcoming year. A focus on supply chains has also been seen in the EU’s new defence industrial strategy; the EU has set a target to procure at least 50% of its defence procurement budget from EU-based defence suppliers by 2030, increasing to 60% by 2035.
Finally, there has also been an increased focus on cybersecurity and cyberwarfare, reflected in a global transformation in the cybersecurity regulatory environment. Much of a country’s critical infrastructure is now reliant on technology, meaning the risk posed by cybersecurity threats has never been more significant. In the EU, the deadline has now passed for member states to adopt and publish the measures necessary to comply with the Network and Information Security Directive 2 (NIS2), which aims to bolster cybersecurity frameworks and harmonise regulations across member states. Further, the EU Cyber Resilience Act was adopted by the European Council in October 2024, imposing mandatory cybersecurity requirements on manufacturers, distributors and importers of in-scope products and software. Similarly in the US, the US National Cybersecurity Strategy aims to shift the burden of cybersecurity onto organisations better positioned to mitigate risks. These regulatory changes reflect a global recognition of the need to fortify cyber defences against increasingly sophisticated threats.
Finally, the possible militarisation of space is emerging as an increasing concern, with significant implications for global security. In February 2024, the United States stated that it was monitoring the Russian development of anti-satellite capability, raising alarms about the potential for space-based conflicts and the risk to global communications systems. The disruption of these systems could have catastrophic consequences, akin to the vulnerabilities highlighted in the context of cybersecurity.
Our international defence and security team have worked with Lexology on the publication of Lexology Panoramic: Defence & Security Procurement. The team has written the global overview, the France, Germany, Italy, Poland, UK, Denmark, Sweden, Hungary and Australia chapters and Mark Leach and Will Bryson are contributing editors for the publication. All content on the hub is reproduced with permission from Law Business Research Ltd and was first published in Lexology Panoramic. For further information please visit: https://www.lexology.com/panoramic
