{"id":15815,"date":"2017-10-25T19:25:39","date_gmt":"2017-10-25T19:25:39","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2017\/10\/25\/uk-contract-pricing-hawks-get-industry-pushback\/"},"modified":"2026-08-07T21:34:19","modified_gmt":"2026-08-07T21:34:19","slug":"uk-contract-pricing-hawks-get-industry-pushback","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/industry\/2017\/10\/25\/uk-contract-pricing-hawks-get-industry-pushback\/","title":{"rendered":"UK contract pricing hawks get industry pushback"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">LONDON \u2014 The organisation tasked with vetting noncompetitive defense contracts in the U.K. has saved the Ministry of Defence \u00a3313 million (U.S. $412 million) since its inception three years ago. However, it is facing a refusal by some suppliers to provide information on costs and prices, according to a report from the government\u2019s financial watchdog.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Most suppliers accept the need to work within the new noncompetitive procurement legislation introduced in 2014, but some are \u201cresisting them [the regulations] and their interpretation by the MoD and the Single Source Regulations Office (SSRO) with some failing to provide the required information\u201d said the National Audit Office in a report released Oct. 24.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThere is currently disagreement between the Department [the MoD] and certain suppliers, who are either refusing to be subject to the Regulations or will not provide the required information about costs and prices. The Department is considering what action to take in these situations,\u201d the report said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The National Audit Office did not name the companies who have failed to provide the required cost and price information.<\/p>\n\n\n\t<aside class=\"smg-interstitial-link wp-block-smg-interstitial-link\">\n\t\t<a href=\"https:\/\/one.sightlinemg.com\/defensenews\/global\/2016\/11\/03\/uk-regulators-push-to-upend-profit-rate-structure-on-contracts\/\" class=\"smg-interstitial-link__inner\">\n\t\t\t\t\t\t\t<div class=\"smg-interstitial-link__media\">\n\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"200\" src=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/fallon.jpg_50ed06.jpg?w=300\" class=\"smg-interstitial-link__image wp-post-image\" alt=\"\" \/>\t\t\t\t<\/div>\n\t\t\t\t\t\t<div class=\"smg-interstitial-link__content\">\n\t\t\t\t<span class=\"smg-interstitial-link__kicker\">Related<\/span>\n\t\t\t\t<h3 class=\"smg-interstitial-link__title\">UK Regulators Push to Upend Profit Rate Structure on Contracts<\/h3>\n\t\t\t\t\t\t\t\t\t<p class=\"smg-interstitial-link__excerpt\">The move, which would effect single-source deals, could cut up to \u00a33 billion off the cost of contracts during the next decade, in part by adopting a baseline profit scheme with different levels of return depending on the complexity of the work being undertaken.<\/p>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/a>\n\t<\/aside>\n\t\n\n\n<p class=\"wp-block-paragraph\">The report warned the regulatory effort \u201cwill fail if contractors can evade them by not cooperating. The Department faces a particular challenge in gaining agreement from contractors to bring existing contracts brought within the regime.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The report noted tensions between the SSRO and the MoD and industry over several issues, including exactly what the remit of regulations office is.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThe early stages of the regulations have been characterised by differences of opinion between industry and the regulatory body, in part, prompted by the SSRO\u2019s sometimes confrontational public tone. However, the SSRO and the MoD have also disagreed about the former\u2019s interpretation of its remit,\u201d the report said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The tensions have led to the SSRO losing two chairman in three years, and earlier this month they were joined by SSRO Chief Executive Marcine Waterman, who also announced she was resigning.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The government watchdog said that in the short term, the MoD needs to eliminate disagreements between key stakeholders and the continued opposition to aspects of the regime from some defense suppliers.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThe SSRO\u2019s interpretation of its remit has created additional friction, in part because it is seeking changes to its powers. The legislation does not confer on the SSRO many of the characteristics of an economic regulator and there are limitations on its ability to act independently of the MoD when it is seeking accurate and complete contract cost information,\u201d the report said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The report urged the MoD to \u201cresist calls to dilute\u201d the new regulations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Consultation on proposed changes are ongoing for the moment, but an industry source said SSRO efforts to introduce a flexible baseline profit scheme \u2014 which allocates returns based on the complexity of the task rather than the current one-size-fits-all approach \u2014 has quietly been put on the back burner.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">An SSRO proposal that the organization should scrutinize single-source government-to-government deals like foreign military sales is also being sidelined, according to the source.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To date, it is estimated the SSRO has saved \u00a3313 million, principally by disallowing costs to the tune of \u00a3154 million. Overall, though, the drive is to save \u00a31.7 billion over 10 years as part of the MoD\u2019s wider, so-called efficiency drive to help free up funds for a \u00a3178 billion equipment procurement program over the next decade.<\/p>\n\n\n\t<aside class=\"smg-interstitial-link wp-block-smg-interstitial-link\">\n\t\t<a href=\"https:\/\/one.sightlinemg.com\/defensenews\/global\/europe\/2016\/10\/24\/head-of-uk-regulations-enforcement-agency-resigns\/\" class=\"smg-interstitial-link__inner\">\n\t\t\t\t\t\t\t<div class=\"smg-interstitial-link__media\">\n\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"169\" src=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/clive-tucker.jpg.jpg?w=300\" class=\"smg-interstitial-link__image wp-post-image\" alt=\"\" \/>\t\t\t\t<\/div>\n\t\t\t\t\t\t<div class=\"smg-interstitial-link__content\">\n\t\t\t\t<span class=\"smg-interstitial-link__kicker\">Related<\/span>\n\t\t\t\t<h3 class=\"smg-interstitial-link__title\">Head of UK Regulations Enforcement Agency Resigns<\/h3>\n\t\t\t\t\t\t\t\t\t<p class=\"smg-interstitial-link__excerpt\">The chairman of the organization responsible for enforcing regulations covering UK Ministry of Defence contracts awarded to industry without competition has resigned with immediate effect just weeks before he was due to step down anyway.<\/p>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/a>\n\t<\/aside>\n\t\n\n\n<p class=\"wp-block-paragraph\">The MoD is as much as \u00a320 billion overcommitted on the equipment budget, as a result of hikes in the cost of major programs like the Dreadnought nuclear missile submarine, the weakness of the sterling against the dollar and the Euro, and other issues.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A government-published national security capability review, which also covers defense, is expected soon, cutting some capabilities but giving greater priority to other sectors like space and cyber.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The SSRO was set up to replace a largely discredited, decades-old government scheme known as the Yellow Book, which set allowable costs and other parameters for noncompetitive contracts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Defence Reform Act 2014 gave the SSRO a remit to recommend an annual baseline profit for noncompetitive contracts to the defense secretary and, among other things, adjudicate on allowable costs on contracts referred to it by the MoD.<\/p>\n\n\n\t<aside class=\"smg-interstitial-link wp-block-smg-interstitial-link\">\n\t\t<a href=\"https:\/\/one.sightlinemg.com\/defensenews\/global\/2016\/10\/19\/uk-regulatory-office-may-investigate-us-foreign-military-sales\/\" class=\"smg-interstitial-link__inner\">\n\t\t\t\t\t\t\t<div class=\"smg-interstitial-link__media\">\n\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"200\" src=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/uk-us.jpg.jpg?w=300\" class=\"smg-interstitial-link__image wp-post-image\" alt=\"\" \/>\t\t\t\t<\/div>\n\t\t\t\t\t\t<div class=\"smg-interstitial-link__content\">\n\t\t\t\t<span class=\"smg-interstitial-link__kicker\">Related<\/span>\n\t\t\t\t<h3 class=\"smg-interstitial-link__title\">UK Regulatory Office May Investigate US Foreign Military Sales<\/h3>\n\t\t\t\t\t\t\t\t\t<p class=\"smg-interstitial-link__excerpt\">The organization responsible for policing single-source defense contracts in Britain is to look at whether US foreign military sales should be scrutinized to ensure taxpayers&#039; money is being spent effectively.<\/p>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/a>\n\t<\/aside>\n\t\n\n\n<p class=\"wp-block-paragraph\">Single-source deals are big business in Britain. The MoD spent \u00a38.8 billion on noncompetitive contracts in the 2015-16 financial year \u2014 more than half of the entire procurement and support budget.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Nearly 2,000 single-source contracts are active in the U.K., but by July 2017 only 110 contracts with a combined value of \u00a323.9 billion had been brought within the scope of the regulations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The largest industrial players in single-source work in the U.K. include BAE Systems, Babcock International, MBDA, Rolls-Royce, Raytheon UK and Qinetiq.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Nuclear submarines, frigates, missiles and combat jets are among the platforms acquired by the MoD through single-source deals.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A spokesman for the SSRO said the organization welcomes the report, \u201dwhich makes a number of helpful recommendations.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A government organization in the U.K. is facing a refusal by some suppliers to provide information on costs and prices, according to a report from the government\u2019s financial 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By:"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>UK contract pricing hawks get industry pushback - Defense News<\/title>\n<meta name=\"description\" content=\"A government organization in the U.K. is facing a refusal by some suppliers to provide information on costs and prices, according to a report from the government\u2019s financial watchdog.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UK contract pricing hawks get industry pushback\" \/>\n<meta property=\"og:description\" content=\"A government organization in the U.K. is facing a refusal by some suppliers to provide information on costs and prices, according to a report from the 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