Updating the benchmarks used in determining the profit rate for non-competitive defence contracts

As part of determining the annual profit rate for non-competitive defence contracts, we use benchmarks derived from the business activities of a range of comparable companies. We are proposing changes to the way we select those companies. We want to hear your views.

Each year we are required to provide the Secretary of State for Defence with an assessment of the profit rate to be used in MOD contracts placed without competition - also known as single source contracts. The profit rate (known as the baseline profit rate or BPR) provides the starting point for calculating the contract profit rate for single source contracts.

To arrive at the profit rate, we have a methodology, which we publish on our website, and which has developed through use and stakeholder feedback over the past decade. One part of the methodology relies on using benchmark profit data of companies who undertake activities that are comparable to activities that contribute to the delivery of single source contracts.

We are consulting on changes to keep the activities representative of those that are known to contribute to the delivery of MOD single source contracts and to ensure we can produce a profit rate which supports our aims of ensuring value for money and fair and reasonable prices.

The consultation runs until 5.00 pm Friday 16 August 2024. Written responses should be sent:

• to: consultations@ssro.gov.uk (preferred).
• BPR Activities Review consultation responses, SSRO, 100 Parliament Street, London, SW1A 2BQ.

If you wish to discuss the guidance or consultation, please contact us on 020 3771 4767.