Small and medium-sized enterprises (SMEs) say the Special Modernisation Programs (PEM) launched by Spain in 2025 are not reaching the broader industrial base.
What the programmes entail
The PEM were introduced by the government last year to raise defence spending to 2% of gross domestic product. Contracts have been awarded mainly to large firms such as Indra, Airbus and Navantia, which are tasked with leading the land, air and naval sectors.
Why SMEs feel left out
Industry sources told this outlet that the bulk of the funding is concentrated on the three prime contractors, limiting opportunities for smaller suppliers. The SMEs argue that the limited spill‑over hampers the development of a more diversified defence supply chain and slows the overall pace of modernisation.
Implications and next steps
Analysts note that a narrow procurement focus could affect Spain’s ability to meet its NATO spending goal and reduce the domestic economic multiplier of defence spending. Watch for possible policy adjustments, such as sub‑contracting mandates or new funding streams, as the government reviews the first year of the PEM rollout.