Research and analysis

Engineering labour rates reported in Qualifying Defence Contracts 2015/16

The Single Source Regulations Office has published an overview of the engineering labour rate data provided in contract reports for qualifying defence contracts (QDCs) and qualifying sub-contracts (QSCs) entered into in 2015/16.

Detail

A key piece of information required in understanding the facts, assumptions and calculations relevant to each element of the Allowable Costs in a QDC/QSC is the labour rates used in pricing the contract. This bulletin examines the range of engineering labour rates used within QDCs/QSCs, as reported for 34 QDCs/QSCs entered into between 1 April 2015 and 31 March 2016.

The report shows no standard descriptor exists to collect data on engineering rates, as suppliers provide labour rate information which is specific to each company. This, and the wide variety of engineering roles provided, does not allow for analysis of a single category of ‘engineering rates’ that provides credible benchmarking information. Information about the composition of these rates is often limited and engineering labour rate data is not always provided; 19 out of 34 QDC/QSCs include rates that appear to be related to an engineering function. Irrespective of data quality and definitions, the quantitative information available indicates a range of rates reported by suppliers from approximately £11 to £74 per hour. These rates may or may not include other costs. Benchmarking using this engineering rate data alone will not assist in assessing how Reasonable the rates are within single source contracts.