UK opens public contracts to AI startups

British AI startups are being offered a new route into major government contracts through a £100 million Sovereign AI R&D Procurement Scheme. The UK Government has launched the first competitions under the programme, using public procurement to commission technologies for specific public-sector challenges rather than relying only on research grants.

The first opportunities cover NHS productivity, defence, cyber security and AI computing infrastructure. The NHS challenge will seek tools for automating workflows, coordinating care and supporting decision-making, while other competitions will focus on reducing AI computing costs, securely connecting defence data and capabilities, and testing the resilience of advanced AI agents.

The scheme is intended to make procurement more accessible to smaller companies that may lack the turnover, reserves or public-sector track record of larger suppliers. Upfront payments will be available where appropriate, and successful businesses will retain the intellectual property they create, allowing technology developed for government needs to be sold to other customers.

Departments will act as early customers for technologies that have moved beyond research but have not yet reached broad commercial adoption. Further procurement challenges are expected as the programme expands.