Developing an information technology services activity group
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Benchmarking profit for an IT comparator group - consultation findings
The SSRO applies its Single Source Baseline Profit Rate, Capital Servicing Rates and Funding Adjustment Methodology to benchmark a profit rate for four activity groups:
- Develop and make (D&M);
- Provide and maintain (P&M);
- Ancillary services; and
- Construction.
The SSRO is today publishing its detailed findings following a public consultation on developing an information technology (IT) services activity group. We may in future use the group to benchmark a profit rate for this activity.
We sought to identify companies undertaking the development of bespoke IT software and the integration of off-the-shelf components to deliver a bespoke IT solution. We have identified a group of companies undertaking comparable activities that meet the necessary criteria to form a distinct comparator IT services group.
We will consider in September 2022 whether to include an IT services group alongside the benchmarks for the existing four activity groups. If the group is included, then an IT services activity benchmark will form part of the supporting information for next year’s BPR assessment.
We would like to thank all those who provided input to this work for sharing their views with us.
20 December 2020
The SSRO received four responses to the consultation. We would like to take this opportunity to thank all those who responded to the consultation for sharing their views with us. Where respondents gave permission for their responses to be published these are available below.
Respondents agreed that IT services can comprise a separate activity for the purposes of qualifying defence contracts and supported that activity including the following:
- development of bespoke IT software; and
- integration of off-the-shelf components to deliver a bespoke IT solution.
A range of suggestions were put forward for broadening the activity descriptions and modifying the approach to identifying comparable companies. These proposals addressed:
- the technical language used to describe IT services activities;
- development and integration of bespoke communications systems;
- satellite telecommunication activities;
- proposed search terms; and
- issues affecting use of NACE codes.
We are continuing to analyse this feedback with a view to how it may inform the development of a methodology to construct an IT services profit benchmark. We plan to provide a further response to the consultation in Spring 2022.
Feedback received
Original consultation
Consultation description
The SSRO applies its Single Source Baseline Profit Rate, Capital Servicing Rates and Funding Adjustment Methodology to benchmark a profit rate for four activity groups:
- Develop and make (D&M);
- Provide and maintain (P&M);
- Ancillary services; and
- Construction.
The SSRO is today launching a four-week consultation on developing an information technology (IT) services activity group, which might be used to benchmark a profit rate for defence contracts that are for the provision of IT services.
The SSRO has considered stakeholder feedback provided to date, alongside our own research, to develop a draft methodology. We are seeking input on whether we have correctly captured the IT services activities that may contribute to the delivery of QDCs and QSCs so that we can further develop the approach.
Responding to the consultation
This consultation is open to all interested persons. We particularly welcome comments from individuals or organisations with an interest in single source defence procurement and ensuring that good value for money is obtained in government expenditure on qualifying contracts and that the prices paid under these contracts are fair and reasonable. We also welcome comments from people or organisations with a particular interest in non-competitive defence procurement.
The consultation runs until 5.00 pm Friday 5 November 2021. Written responses should be sent:
- by email to: consultations@ssro.gov.uk (preferred),
- by post to: Baseline profit rate consultation responses, SSRO, Finlaison House, 15-17 Furnival Street, London, EC4A 1AB,
- by telephone including arranging an appointment to speak to the SSRO about the consultation: 020 3771 4767
Documents
Last updated 13 April 2022 + show all updates
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Detailed consultation response published
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Consultation outcome published
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First published.