Following consultation with stakeholders, we (Single Source
Regulations Office) have issued new guidance regarding the Final
Price Adjustment (FPA). This guidance will support contracting
parties to swiftly resolve common issues encountered in the
application of the FPA.
The FPA allows the contractor and the Ministry of Defence to
share excess profits or losses arising under a qualifying defence
contract, rather than having them fall solely on one of
them. The FPA is generally used after the contract has
concluded, but may now also be applied where a contract has
several pricing periods during the life. The guidance provides
further detail as to when and how the FPA might be used.
John Russell, Chief Executive said:
This new publication on the final price adjustment provides
valuable guidance to help resolve common issues between
contracting parties. Dealing with these issues should save time
and money for the MOD and contractors. This work reflects the
SSRO's approach of developing advice and guidance that is
accessible, easy to use and relevant to the major issues MOD and
industry face in negotiating and managing these vital contracts.
The SSRO has taken a new approach to how this guidance is
structured, to make it accessible and user friendly. Developments
include the use of real-world scenarios to help understand and
resolve common issues, as well as signposting to the relevant
Regulations and details of how to contact the SSRO for support.
An FPA calculator has also been developed and is available for
stakeholders' use. This development of SSRO guidance has been
well received by consultation respondents who said the guidance
will help with the agreement of the FPA.
We will keep the guidance under review and will update it to
reflect users' experience of its application.
The FPA guidance has been issued as part of the SSRO's new powers
arising from the Procurement Act 2023, which enable the SSRO to
issue guidance in relation to the application or interpretation
of any area of the law governing qualifying defence contracts. We
plan to use our new powers to issue more guidance in a broader
range of areas particularly where stakeholders tell us they would
like more support.
For more information, read the FPA guidance and
our response to
stakeholder feedback on the FPA consultation.
