20 October 2006 | Paul Snell

The government is to launch a "grand challenge" later this year to encourage innovation among defence suppliers.

The competition will involve suppliers designing a system that can detect, identify, monitor and report physical threats in an urban environment. It could be, for example, a surveillance system to detect low-tech threats such as suicide bombers or insurgents.

Suppliers will compete against each other to win the chance to develop their system with the Ministry of Defence (MoD).

The MoD hopes the competition will make its procurement process more accessible to smaller companies and research laboratories. The Conservatives, CBI and Centre for Business Research have all called for public procurement to be used to stimulate innovation in recent weeks.

The initiative is designed to support the publication of the Defence Technology Strategy (DTS), launched by the MoD this week. The DTS highlights where the MoD is able to buy technologies "off the shelf" and where it needs to collaborate with suppliers.

Lord Drayson, defence procurement minister, said in the DTS: "We want to stimulate and nurture an environment of innovation. Working with our allies at many levels is vital to addressing challenges effectively."

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