In January 2024, the Single Source Regulations Office (SSRO) introduced updated pricing and reporting guidance for non-competitive defence contracts, aimed at enhancing the flexibility and efficiency of procurement processes. Following stakeholder consultation between January and April 2024, the SSRO has now published revised guidance, incorporating feedback from industry participants.
Key Benefits for Defence Suppliers:
1. Alternative Pricing Methods:
The new guidance supports the use of alternative pricing models, such as referencing competitive market prices, for non-competitive defence contracts. This allows for faster and more straightforward procurement, benefiting both the Ministry of Defence (MOD) and contractors by simplifying pricing decisions.
2. Componentisation for Flexibility:
A major update is the introduction of “componentisation,” allowing contracts to be split into various parts, each with its own profit rate and pricing structure. This approach provides greater transparency and ensures prices better reflect risk-sharing between the MOD and suppliers, enhancing contract adaptability.
3. Simplified Profit Rate Calculation:
The revised guidance reduces the steps in calculating the contract profit rate from six to four, streamlining the process and making it easier for defence suppliers to agree on profit margins. This simplifies contract negotiations, enabling quicker decisions and fostering smoother interactions with the MOD.
Updated Reporting Guidance:
In addition to pricing updates, the SSRO has also revised its reporting guidance, ensuring compliance with new legislative changes that came into effect on 1 April 2024. The updated guidance covers:
- Contract Reports
- Supplier Reports
- DefCARS Functionality
These changes aim to assist contractors in submitting statutory reports more easily while also improving the DefCARS system for reporting efficiency. Defence suppliers have expressed support for these updates, highlighting their role in fostering clearer compliance standards and enhancing operational transparency.
For detailed explanations of the changes and stakeholder responses, contractors are encouraged to review the full consultation response. The guidance updates reflect the SSRO’s commitment to a more streamlined and transparent defence procurement system.
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Post written by: Vicky Maggiani
Vicky has worked in media for over 20 years and has a wealth of experience in editing and creating copy for a variety of sectors.
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