Section 17(2) of the Defence Reform Act 2014 sets out the six steps to be used when determining the contract profit rate for a qualifying defence contract. The SSRO may issue guidance in relation to any of these steps and contractors and the MOD must have regard to it, as specified in Section 18(1) of the Act.
We have today published updated statutory guidance on the adjustments to make to the baseline profit rate when determining the contract profit rate for all qualifying defence contracts and qualifying sub-contracts. It is a legal requirement to have regard to this guidance, which supersedes all previous versions.
This publication maintains the principles set out in previous version of this guidance. To aid users worked examples have been revised and the guidance now includes the rates that apply for 2017/18.