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Small IT suppliers could have a better chance of winning defence business under new advertising rules.

The Ministry of Defence (MoD) has announced an initiative aimed at encouraging more small and medium sized companies to bid for defence contracts.

On 30 April 2007 the threshold for combat related equipment - above which it has to be advertised - has been cut from £500,000 to £93,000. On 30 June it will be reduced again to £40,000. The threshold for non-combat requirements will also be reduced on 30 June from £93,000 to £40,000.

Defence ministry project teams will be encouraged to advertise for requirements with values as low as £20,000. The MoD said the move has the potential to generate up to 7,000 additional adverts a year.

"This affects defence contracts at all levels," an MoD spokesperson told KableDirect. "Major corporations are our main suppliers, but this is trying to open up the market to more competition."

The change is in line with one of the key themes of the Defence Industrial Strategy, which commits the MoD to working with small suppliers.

Lord Drayson, minister for defence equipment and support, said: "In 2005, just over half of all MoD contracts let were placed with SMEs, to the value of over half a billion pounds. Today's announcement is a significant development and one which I am convinced will further promote a dynamic and competitive supplier base."

This article was originally published at Kablenet.

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