in Defence

MoD Single Source Contract rate reduced

Posted 16 March 2017 · Add Comment

The Defence Secretary has announced the lowering of the baseline profit rate for contracts placed under Single Source Contract Regulations from 8.95% to 7.46%.



This represents a 16% reduction in the rate applied to single source contracts to ensure better value for money for taxpayers and give a fair return to industry. All savings will be reinvested into the defence budget, including delivering the equipment our Armed Forces need to keep the UK safe.

The unique nature of much of the MoD’s work means the department often has to award contracts without competition, either because there is one specialised supplier or because the procurement must not risk national security. This lower profit rate will ensure the UK taxpayer gets the very best deal, regardless of the way contracts are delivered. The MOD is making sure big business does its part to support an efficient and economical defence budget.

Defence Secretary Michael Fallon said: "Taxpayers can be confident that this reduced profit rate will deliver better value for money on contracts as our defence budget rises and we deliver our £178bn equipment programme.

"The defence sector is important for our prosperity, supporting high skilled jobs, and this rate provides a fair return comparable with that in other international markets."

A strong supplier base is essential to the security and prosperity of the UK. However, big businesses must do their part to deliver savings and balance the UK’s budget. The new lower profit rate ensures that these businesses receive a fair return for the work they do, while freeing money for reinvestment in vital defence equipment, supporting jobs and innovation.

The figure of 7.46% is the starting point for calculating the profit on each contract before taking into accounts factors such as risk and the amount of their own money suppliers invest. The new rate is similar to profits earned by government defence suppliers in Western Europe and North America. It will come into effect from 1st April 2017.

The Single Source Contract Regulations were brought into force in 2014, following the Currie Review into single source procurement, to ensure that such contracts were charged at the best possible rate both for taxpayers and suppliers.

 

* required field

Post a comment

Other Stories
Advertisement
Latest News

SEA addressing feasibility of wireless maritime comms at UDT

SEA will be outlining how it is working to utilise wireless technology to fulfil next generation maritime communications requirements at the Underwater Defence Technology (UDT) Conference in Bremen next week (30 May - 1 June).

Shaun Ormrod leaves Farnborough International

Shaun Ormrod, the CEO of Farnborough International Limited (FIL), has announced his departure from the business.

Easyjet to launch its largest ever pilot recruitment drive

EasyJet will be launching a recruitment campaign at the beginning of next month called 'For the love of Flying' to attract up to 450 new pilots, in what will be the largest recruitment drive in the airline's history an increase on the

SITAONAIR to deliver data capture on Air France's Airbus aircraft

SITAONAIR and Air France today announced a new deal to deliver seamless aircraft data to Air France's top-flight operations and maintenance optimisation programmes.

EAN satellite shipped to spaceport

The satellite which will power Inmarsat's revolutionary European Aviation Network (EAN) has been shipped to the Guiana Space Centre in Kourou, French Guiana in preparation for launch in June.

Wizz Air commence flights LJLA to Lublin

Wizz Air made its inaugural flight from Liverpool John Lennon Airport (LJLA) to the South Eastern Polish city of Lublin on Monday as its seventh destination from Liverpool, following the recent launch of their service to Craiova in

Getac SK2703270617
See us at
DSEI LB0911150917SMI AirMissBT0305251017SMI12DE BT203280917SMI FAVWS BT0504290617SMIUAV BT1005280917