Review of single source contract profit rate methodology 2015
The Single Source Regulations Office has today published a consultation on how baseline profit rates for UK single source government defence contracts should be calculated.
The changes proposed are the most far reaching since 1968.
Under the Defence Reform Act 2014, the SSRO is required annually to review the figures used to determine the contract profit rate for pricing single source defence contracts. Section 19(2) of the Act requires the SSRO to provide the Secretary of State with its assessment of the appropriate baseline profit rate and capital servicing rates. Single source procurement represented around 53 per cent of new MOD contracts in 2014/15 and the MOD spent approximately £8.3 billion on single source contracts that year.
The most radical new measure is the proposal that there should be different baseline profit rates for different types of work.
This consultation is open to anyone with an interest in single source defence procurement. Please respond by 20 November 2015.