Secretary of State for Defence
THE IMPLEMENTATION FROM 1 APRIL 2015 OF NEW PROFIT RATES FOR SINGLE SOURCE DEFENCE CONTRACTS
The Secretary of State for Defence has accepted the Baseline Profit Rate and Capital Servicing Allowances recommended by the Single Source Regulations Office (SSRO), for use in pricing Qualifying Defence Contracts subject to the Single Source Contract Regulations 2014. In line with the requirements set out in the Defence Reform Act 2014, the Secretary of State must arrange for these profit rates to be published in the London Gazette prior to 15 March each year.
The rates which are effective as from 1 April 2015 are as follows:
Table 1: SSRO’s Recommended Rates agreed by the Secretary of State for Defence
| Element | 2015 rates |
|
Baseline Profit Rate (BPR) (% on contract cost) | 10.60% |
|
Fixed Capital Servicing Allowance (% on Fixed Capital employed) | 5.94% |
|
Working Capital Servicing Allowance (% on positive Working Capital employed) | 1.72% |
|
Working Capital Servicing Allowance (% on negative Working Capital employed) | 1.03% |
The new profit rates for 2015 will come into effect from 1 April 2015 onwards.