Regulatory and compliance

UK Ministry of Defence consults on pricing changes for single source contracts

Published on 27th Nov 2023

Input sought by 1 December on proposals forming first tranche of reforms

Man in suit signing a document

The Ministry of Defence (MOD) has launched a consultation seeking input on proposed reforms to the Single Source Contracting Regulations (SSCR): Defence and Security Industrial Strategy: Consultation on amendments to the Single Source Contract Regulations.

The consultation follows a command paper it published in April 2022, which outlined several suggested changes aimed at aligning the single-source procurement regime with delivery of MOD's Defence and Security Industrial Strategy. 

The government has already taken the first steps to implement the reforms through amendments made to the Defence Reform Act 2014 (effected through Schedule 10 of the Procurement Act 2023), which effectively creates the framework for further changes to be made within the SSCR.

Two tranche process

MOD's intention is to bring the proposed changes to the SSCR forward through two tranches of secondary legislation.

The first tranche will deliver what it considers to be the most urgent reforms, aimed at providing greater flexibility in the ways contracts are priced.

Under the current timetable, the first tranche of changes is expected to be introduced to Parliament around January 2024 and to come into force during April 2024.

The second tranche will then look to deliver reporting and more technical changes covered by the command paper, with a further consultation exercise to follow.

Key changes

Key changes proposed in tranche one include:

  • the creation of an alternative pricing mechanism to allow a fair price to be determined without reference to the existing allowable costs plus profit approach; and
  • enabling qualifying defence contracts to be split into different components at contract award, so that different segments may be subject to separate pricing approaches and profit rates.

MOD is currently seeking input on the proposed pricing reforms covered in tranche one. Comments can be submitted to steve.davies262@mod.gov.uk before noon on 1 December 2023.

If you would like to hear more about how the changes proposed, or need assistance to respond to MOD's consultation, then get in touch with one of our experts.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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