Allowable Costs guidance (version 6)
The Allowable Costs guidance is statutory guidance to which the Ministry of Defence and its contractors must have regard when determining whether costs are Allowable in qualifying defence contracts.
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The Defence Reform Act 2014 (the Act) requires that qualifying defence contracts (QDCs) and qualifying sub-contracts (QSCs) are priced on the basis of Allowable Costs. Section 20(1) of the Act stipulates that the SSRO must issue guidance about determining whether costs are Allowable Costs under QDCs and QSCs, and the Ministry of Defence and its contractors must have regard to it, as specified in Section 20(3) of the Act.
This version of the guidance (version 6) was published on 7 November and applies to QDCs and QSCs agreed on or after 7 November.
It incorporates changes to the guidance on overheads and indirect costs following a public consultation. The updates are intended to assist parties meet their responsibilities under the Act in agreeing the overheads the supplier may recover under a qualifying contract and when negotiating cost recovery rates. We are always interested to hear the experience of users of our guidance to help us to understand how it may be further improved.
To assist stakeholders in understanding the guidance changes, the guidance document shows where the existing guidance text has been revised, deleted from or added in. Queries relating to the guidance should be addressed to [email protected].
The SSRO helpdesk is unable to provide advice on contract-specific queries but referrals to the SSRO can be made for an opinion or determination on such matters.