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

Aircraft deliveries add record value to UK industry

The value of aircraft deliveries to UK industry in Q1 2017 reached a new record of £6.5 billion, up a full £1 billion from the first quarter of 2016, driven by a 10% rise in deliveries of widebody aircraft.

Supacat wins Queen's Award

Supacat has won the Queen's Award for International Trade for Outstanding Short Term Growth.

MCL receives MoD order extension

Marlborough Communications Ltd (MCL) announced today a contract extension to an initial order from the UK Ministry of Defence (MoD).

UK and US mark F-35A milestone

Senior leaders from the US Department of State, US Air Force (USAF) and the Royal Air Force (RAF) gathered together on Wednesday to highlight a significant F-35A Lightning II programme milestone.

MBDA to support Royal Navy Type 45 Sea Viper system

MBDA has received a £175 million contract from the UK Ministry of Defence (MoD) for further In-Service Support to the Sea Viper weapon system, securing a key capability of the Type 45 fleet.

Oxford Airport sees trend in larger bizjets

London Oxford Airport has reported that it is regularly seeing larger business jets (over 40 tonnes), such as the Bombardier Global and Gulfstream G650, using its facilities, whilst its Oxfordjet FBO has seen an increase of 37% in such

Getac SK2703270617
See us at
SMI MSS BT0601270417SMI BT1705SMI12DE BT203280917SEKODSEI LB0911150917SMI FAVWS BT0504290617SMI FHT BT0601190517