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

SSTL to build Galileo navigation payloads

Under an Authority to Proceed signed with prime contractor OHB-System AG today, Surrey Satellite Technology Ltd (SSTL) is commencing work on building eight navigation payloads for Galileo, Europe's global navigation satellite

Leonardo and Hensoldt to upgrade over 350 UK air, land and sea platforms

Leonardo has signed a £290 million contract with the UK Ministry of Defence (MoD) which will see Leonardo and Hensoldt, working together as 'Team Skytale', to upgrade the IFF (Identification Friend or Foe) technology on more than

Boyce Precision Engineering brings first Hermle C250 to Belfast

Following their recent visit to the Hermle Open House in Gosheim, Southern Germany, Boyce Precision Engineering decided that the Hermle C250 platform provided them with the best route into 5 axis machining.

Hydro partners with IMCA Electronics

Aberdeen-headquartered subsea cable and connector specialist Hydro Group plc increases its global presences as it announces its partnership with Turkish firm, IMCA Electronics.

Old meets new at Air Tattoo

The Royal International Air Tattoo's celebrations marking the 70th anniversary of the United States Air Force at RAF Fairford on July 14-16 will feature a special 'then and now' formation of American fighter aircraft, as a North

STG Aerospace supports International Women in Engineering Day

In support of International Women in Engineering Day, STG Aerospace interviewed one of its female engineers - Rhian Bache, Design Engineer at STG Aerospace - to get her personal perspective.

Aviation Africa SK18418
See us at
DSEI LB0911150917SMI AirMissBT0305251017SMI12DE BT203280917SMIUAV BT1005280917Aviation Africa BT18418SMI FAVWS BT0504290617