Single Defence Contracts: Baseline Profit Rate 2019-20
(Limited Text - Ministerial Extracts only)
Read Full debate
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 7.63%, in line with the rate recommended by the Single Source Regulations Office (SSRO). I have accepted the methodology used by the SSRO to calculate this figure. Element 2018 rates 2019 rates Baseline Profit Rate (BPR) (% on contract cost) 6.81% 7.63% Fixed Capital Servicing Rate (% on Fixed Capital employed) 4.38% 3.98% Working Capital Servicing Rate (% on positive Working Capital employed) 1.21% 1.18% Working Capital Servicing Rate (% on negative Working Capital employed) 0.53% 0.53% SSRO Funding Adjustment -0.024% -0.042%
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 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 2019.
[HCWS1417]