Written statement on Baseline Profit Rate for Single Source Defence Contracts 2023-24 - Mar 14

Secretary of State for Defence (Ben Wallace): I am today announcing that I have set the baseline profit rate for single source defence contracts at 8.29%, in line with the rate recommended by the Single Source Regulations Office (SSRO). This a decrease of 0.02 percentage points from 2022/23. I have accepted the methodology used by the SSRO to calculate these figures. The ‘underlying rate’ has risen 0.25 percentage points from 8.19% to 8.44%.

Last year, I removed financial year 2020/21 from the calculation of the profit rate to reduce the long term effect of COVID on our suppliers’ profit. The SSRO have taken the same approach this year. A full explanation of their methodology is published on their website.

I am also announcing the Capital Servicing Rates and a 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 2023.

Table 1: Recommended Rates agreed by the Secretary of State for Defence