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

B&H to provide EMEA forward stocking location for AeroVision

B&H Worldwide is going to open a new forward stocking location with aerospace logistics provider AeroVision International, to service customers in Europe, the Middle East and Africa.

Aviation Skills Awards 2017 open for nominations

Nominations are now open for the 2017 awards which recognise and reward those who are doing exceptional work in aviation and training.

Leonardo delivers an AW119Kx and a GrandNew to the Philippines

Leonardo's presence in the Philippines is expanding with the recent delivery of an AgustaWestland AW119Kx and a GrandNew to corporate clients.

Stadium Stontronics introduces SRS low profile AC-DC power supplies

Stadium Stontronics has introduced a SRS series of medium- to high-power single-output enclosed type AC-DC power supplies, which have been designed with a very high performance ratio for industrial automation, control,

QinetiQ demos digital VR classroom

QinetiQ has demonstrated how emerging technology could make training more efficient and effective, in a showcase attended by military VIPs at QinetiQ's Training Innovation Facility in Farnborough, UK.

Theorem Solutions to preview multi-device visualisation app at Develop3D Live 2017

Theorem Solutions of Tamworth, Staffordshire, will be introducing Augmented (AR), Mixed (MR) and Virtual Reality (VR) App at Develop3D Live 2017 within the Virtual Reality Zone (in the Mead Gallery) on 28th March 2017 at Warwick Arts

KBR
See us at
SMI12DE BT203280917SMI BT1705SMI FHT BT0601190517Future Armoured Vehicles Situational Awareness BTDSEI LB0911150917SEKOSMI MSS BT0601270417