Doing business with NATO: A glance at the recently published guidebook

In a world built upon diplomatic collaborations, it is no news that Finland and Sweden recently joined forces with NATO. But what you perhaps did not know was how it has unleashed the potential for Small and Medium sized Enterprises (SME) in Finland and Sweden to form new business partnerships and enter new international markets.

To give a preview of this excellent opportunity and how SMEs can benefit from this newly built alliance, a guidebook has been designed and published by Miltton USA in cooperation with international group of experts, Business Finland, Business Sweden and Innovation Norway. In this article, we provide you with a brief summary of the guidebook.

Currently NATO is rearranging their forces across the European continent due to arbitrary decisions and actions from their opponents. This has resulted in force realignment and increased defense spending. While many NATO allies have already contributed to this cause, Finland has also made its contribution by 2% of gross domestic product (GDP) and planning to further increase it by EUR 2.2 billion over four years. This only means one thing for SMEs and that is more and more business opportunities coming in your way! Rapid adoption of new technologies and enhanced collaboration and standardization are areas that NATO is ready to invest in, thus Finland and Sweden membership will be empowering NATO with their “regional expertise” on NATO’s opponents, technological expertise and military advancements of both countries.

According to the guidebook, NATO member state militaries are in need of new products and services soon under so many domains such as aviation, artificial intelligence, cyber defense, renewable energy and propulsion, digital transformation for engineering and manufacturing, infrastructure and so on. NATO has various types of budgets to support the services and products in the above-mentioned list of domains and more. To name a few, National Defense Budget, NATO Common Funds, Indirect Contributions and Multinational or Joint Funding arrangements invest in product and service development from which SMEs can always benefit from. For interested parties, it is necessary to have a general understanding of how these budgets function and to know particularly in which areas.

True, it is important for SMEs to familiarize themselves with the budgeting of NATO, but what even more important is that having a full understanding of how they can sell their products and services to NATO and what are the entry points to get involved with NATO’s affairs. For example, NATO has different entities where they carry out different types of activities and it is SMEs responsibility to search for entities and such agencies in the guidebook. In the guidebook, all the mentioned agencies are linked to their original web pages. We are certain that it will make things a lot easier for you when finding information regarding entry points for business opportunities to collaborate with NATO’s operations (Section: NATO Institutions: Points of Entry, pages 9,10&11)

The guidebook provides its readers with useful tips on how to look for opportunities for successful collaborations and how to grow the business strategically. Some of the key points are as following:

Joining the national defense industry association or an industry consortium
Seeking out prime contractors (who have existing defense contracts)
Seeking out conversations with potential end users of their product or service
Participating in Industry Days ( NATO Edge, Industry Forum, Centres of Excellence etc.)

In addition, it is also recommended to have sufficient commercial success before approaching the NATO agencies. A readymade capability statement and a pitch deck which is reviewed by a retired military professional will definitely help the SMEs when pitching their technologies to the NATO entities.

Companies should be aware of the differences between the incentive structure in the defense sector and the incentive structure in private entities. So far the waiting time for companies to receive a defense contract has been up to 18 months and to receive a R&D grant, 3 to 12 months. But the defense sector is currently hustling to shorten this timeline due to their urgent capability needs.

“Bidders should also bear in mind that defense market works on its own timeline with a unique budget cycle that is different from the commercial market, and there are different cycles across the Alliance. Building relationships with both defense and finance ministries officials in key markets can be very helpful and insightful when it comes to understanding whether programs will or will not be funded in a calendar year.”
Doing Business with NATO2024|milttonUSA

NATO is always open for innovations. Hence, their innovation programmes are readily available to offer entities funding or other kinds of support for R&D, prototyping, and scaling of new technologies that might benefit the military. Companies can always take part in these programmes if it serves both military defenses and companies’ purposes. Following is the main list of innovative programmes mentioned in the guidebook.

As we are approaching the end of this article, we would like to give you a few more facts about NATO’s procurement rules that are mentioned in the guidebook. It is mentioned that the procurement rules vary from programme to programme and agency to agency. These rules for each tender or opportunity will be specified under the RFI or RFP. There are bidding principles such as International Competitive Bidding (ICB) and Non-ICB principles. Value (BV) procurement, National Competitive Bidding (NCB), limited competition, sole/single source, and Basic Ordering Agreements (BOA) are some of the Non-ICB procurements. You can find more information regarding the NATO procurement rules on pages 17&18.

To summarize the article, let’s address some key points mentioned above. First, there are significant opportunities for Small and Midsize-scaled enterprises within the NATO defense market. Finding the right path to enter the defense market with some serious prioritization and innovative skills would seem like a big challenge. But with the right resources and a little bit of patience, it is more than a possibility. Host nations and member states play a major role in mediating between interested bidders and the NATO body. In this manner the success of the SMEs will contribute to the success of the NATO defense market which will ultimately result in the security of Europe.

And, isn’t that we all hope for?

Best Regards,

ICTOulu Team

The original guidebook is in pdf format, consisting 24 pages.