The Secretary of State for Defence (Gavin Williamson)
I am today announcing that I have set the baseline profit rate for single source defence contracts at 6.81%, in line with the rate recommended by the Single Source Regulations Office (SSRO). I have also accepted the methodology used by the SSRO to calculate this figure. Element 2017 rates 2018 rates Baseline Profit Rate (BPR) (% on contract cost) 7.46% 6.81% Fixed Capital Servicing Rate (% on Fixed Capital employed) 4.84% 4.38% Working Capital Servicing Rate (% on positive Working Capital employed) 1.37% 1.21% Working Capital Servicing Rate (% on negative Working Capital employed) 0.59% 0.53% SSRO Funding Adjustment -0.025% -0.024%
I am also announcing new capital servicing rates and an SSRO funding adjustment as recommended by the SSRO, which can be found at table 1 below. These rates have also been published in the London Gazette, as required by the Defence Reform Act 2014.
All of these new rates will come into effect from 1 April 2018.
Table 1: Recommended Rates agreed by the Secretary of State for Defence.
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