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Updated guidance for pricing and reporting on non-competitive defence contracts

The Single Source Regulations Office (SSRO) has published updated guidance.

In January 2024, the SSRO published new pricing guidance to support the implementation of changes to the single source regulatory framework, which came into force on 1 April 2024. Afterwards, they consulted stakeholders between January and April 2024, seeking feedback on the new guidance.

In response to the consultation, they have published updated guidance on alternative pricing types, allowable costs and the baseline profit rate and its adjustment.

The updated guidance documents will give contracting parties more support to use alternative pricing methods for contracts which allows non-competitive defence contracts to be priced in new ways. For example, an item can be priced by reference to competitive markets: simplifying and speeding up procurement.

There will be more flexibility and transparency through broadening the ability for a contract to be split into different components or parts, each with its own profit rate and price (known as componentisation). This allows contract prices to better reflect the risk-sharing between the MOD and defence contractors.

There will also be a rationalisation of how the contract profit rate is calculated, removing two steps from the previous six-step process and simplifying the agreement of contract profit rates.

As well as the pricing guidance mentioned above, there is also updated guidance on reporting including on contract report, supplier reports and DefCARS functionality.

This new and updated pricing and reporting guidance will apply to qualifying defence contracts and qualifying sub-contracts entered into or amended from 10 October 2024.

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