Single Source Regulations Office
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. We consulted stakeholders between January and April 2024, seeking feedback on the new guidance. Following consideration of consultation responses we have published updated guidance.
The updated guidance documents are:
- Guidance on Alternative pricing types version 1.1
- Allowable Costs guidance version 7.1
- Guidance on the baseline profit rate and its adjustment version 8.1
These updated guidance documents provide:
- 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.
- 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.
- A rationalisation of how thecontract profit rateis calculated, removing two steps from the previous six-step process and simplifying the agreement of contract profit rates.
We are grateful for the contributions of those who responded to the consultation. The consultation response document explains how the feedback they provided has informed the updated guidance documents. We are always interested to hear about the experience of users of our guidance to help us to understand how it may be further improved.
To assist stakeholders in understanding the guidance changes, we have included in each document a table that shows where the previous guidance text has been revised, deleted, or added to.
This revised guidance will apply to qualifying defence contracts and qualifying sub-contracts entered into or amended on and after 10 October 2024.