Making procurement work for Britain's AI startups
We know that government procurement hasn’t always been friendly for the way startups build.
Long forms, complex requirements, tight turnarounds, and expectations built around more established suppliers can often make it difficult for a startup to get through the door, even when it has the technology and innovative solutions government needs to provide better public services.
We think that can change.
We’ve launched our new R&D Procurement Scheme, with up to £100 million available over the lifetime of the programme. We’ve designed the Scheme to make it simpler for ambitious British AI companies to work with government, stripping back some of the barriers that can make public procurement difficult for startups.
There are no minimum turnover, net asset or cash reserve requirements. The application process is streamlined. Companies retain ownership of the IP they develop, and upfront payments may be available where genuine cash-flow constraints would otherwise make it difficult for a smaller company to participate.
The thinking is straightforward: if we want government to access the best new technology, startups need to be able to sell easily to government.
One of the hardest steps for founders is getting the technology into the real world. You need a customer willing to try something new. You need an environment where you can test it properly. And you need the chance to show that what you’ve built can solve a problem that matters.
Government has plenty of those problems.
The Procurement Scheme gives British AI companies a route to work directly with public-sector users on challenges that government is actively trying to solve. Companies will develop, test and demonstrate new AI capabilities in real operational settings.
The aim is to help founders move from “we think this could work” to “we’ve proved it works.” And because companies retain their IP, what they build through the Scheme can become the foundation for a much bigger business.
We’re starting with four areas where there is a real opportunity for AI to make a difference.
AI for a more productive NHS: working with the Department of Health and Social Care, companies will develop AI that can automate workflows, coordinate care and support decision-making across services.
Integrate AI at pace across Defence mission environments: working with the Ministry of Defence, companies will develop open and secure AI capabilities that connect data with frontier models across Defence environments.
Increased compute efficiency: working with the Department for Business, Innovation, Science and Trade and ARIA’s Scaling Inference Lab, companies will develop novel hardware and software to make public AI compute infrastructure more efficient.
Enabling safe AI agent adoption: working with the National Cyber Security Centre, companies will develop practical approaches to assessing and reducing the operational and cyber risks associated with AI agents.
The Scheme is focused on pre-commercial R&D: developing, testing, piloting and validating new capabilities before wider deployment.
Contracts range from £250,000 to £10 million, with most expected to be around £1–3 million. For a startup, winning one of these contracts can be an important moment. It means having the opportunity to work with a real customer on a meaningful problem and generate evidence that the technology works outside the lab.
That experience can then travel. A company that proves its technology with government can take that capability, the product it has developed and the credibility it has earned into other markets.
The Procurement Scheme is part of the wider Sovereign AI offer. We’re investing in British AI companies and helping them access capital, compute, procurement, R&D support, talent and regulatory expertise.
The ambition is bigger than changing how startups sell to government. We want to make it easier for Britain’s best AI companies to build here, find customers here and use the UK as a launchpad for global growth.
Government procurement is becoming one part of that.