2021 Baseline Profit Rate Published
Defence Secretary Ben Wallace today announced a rise in the baseline profit rate for single source defence contracts to 8.31 per cent, while the underlying profit rate fell from 8.23 per cent for 2020/21 to 8.19 per cent for 2021/22.
The new rate for 2021/22 is in line with the recommendation of the Single Source Regulations Office (SSRO).
ADS Chief Executive Paul Everitt said:
“The small rise announced in the baseline profit rate continues the slow trend away from the historic low rates of previous years. However, industry would have welcomed a stronger recognition of the additional costs associated with maintaining programmes during the pandemic.
“The rate remains low by international standards. As industry looks ahead to publication of a new Defence & Security Industrial Strategy, the importance of the single source regime as a procurement route is set to grow in the years ahead.
“It must match the approach taken by our international peers and support a successful long-term partnership between Government and the UK defence sector, providing genuine value for money and a fair reward for the industry that enables and encourages domestic investment in new capabilities.”
The UK defence industry has an annual turnover of more than £24 billion, playing a vital role in protecting our national security and employing more than 130,000 people across the entirety of the United Kingdom.