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House of Commons Hansard
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Single Source Profit Rate
11 March 2015
Volume 594
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I am today announcing that the Secretary of State for Defence has accepted the revised profit formula allowances recommended by the Single Source Regulations Office (SSRO). The new profit rates for 2015, which are lower than those currently in force, will be published in the London Gazette, as required by the Defence Reform Act 2014 and will come into effect from 1 April 2015 onwards. The table below shows the change to the profit rate.

Element

Rates 2014

Rates 2015

Baseline Profit Rate (BPR)

(% on contract cost)

10.70%

10.60%

Fixed Capital Servicing Allowance

(% on Fixed Capital employed)

6.20%

5.94%

Working Capital Servicing Allowance

(% on positive Working Capital employed)

2.07%

1.72%

Working Capital Servicing Allowance

9% on negative Working Capital employed)

1.25%

1.03%

I announced on 9 June 2014 the Department’s intention to replace the review board with the more empowered independent public body, the SSRO, as a result of the new single source contract regime introduced by the Defence Reform Act 2014 and by the single source contract regulations 2014. This came into force on 18 December 2014. I am now able to announce the formal dissolution of the Review Board for Government Contracts with effect from 31 March 2015.

I would like to put on record my thanks to the review board chairman, Mr Price, and to his four board members Messrs Beesley, Dobbyn, Mathias and Ms Skoyles for their dedicated services to the review board these past years, and for their assistance in helping with the transition to the new regime.

[HCWS367]