Guidance on the alternative pricing of contracts (version 1)
Guidance on alternative pricing methods which may be applied to single source defence contracts
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The single source regulatory framework will now offer a range of flexible approaches to pricing contracts. Understanding the options available and how to apply them allows the MOD and industry to price contracts with speed and simplicity, ensuing that value for money is obtained on qualifying contracts and that contractors are paid a fair and reasonable price under those contracts.
To support this, the SSRO has issued guidance on the application of the “alternative pricing” methods, which will become available to use from 1 April 2024. These methods offer an alternative to using the traditional price formula, where that method may not be best suited to the circumstances of the contract.
This document is issued alongside the SSRO’s existing allowable costs guidance, and baseline profit rate and its adjustment guidance, the latest version of which should be read in conjunction with this document.
1.Allowable Costs guidance - Version 7.
2.Guidance on the baseline profit rate and its adjustment – Version 8.
We encourage those with an interest in the regulatory framework to familiarise themselves with these documents.
This guidance has been issued to support the implementation of changes to the legislative framework governing single source defence contracts. More information about the legislative changes and how the SSRO is responding to them can be found here.
The guidance takes effect on 1 April 2024. We are currently running a consultation on this guidance that will conclude on 17 April. Information on this consultation and how to respond can be found here. The SSRO will host a series of stakeholder seminars and workshops on pricing and reporting topics that we are consulting on.
Teach In and Q&A sessions
The SSRO is hosting a pricing guidance Teach In and Q&A session to support contractors who are (or may be) subject to the regulatory framework on 20 February, 0930 – 1230. The session will cover:
- What is in the new legislation?
- The SSRO’s new and updated pricing guidance: what it covers and where to find it.
- The new feature of pricing contracts, including what componentisation means and the seven new alternative pricing methods.
- Responding to questions from stakeholders.
We are holding a second Pricing Guidance Teach In and Q&A session 2: 10 April, 0930 – 1230. The session will cover:
- The changes to existing features of pricing contracts, including the cost risk adjustment and POCO.
- Responding to areas of interest raised in session 1 and subsequent feedback from stakeholders.
- Clarification of any aspects of the guidance.
The Teach Ins will be hybrid and held at a central London location and via Microsoft Teams. If you would like to attend, please send your name and which company your represent to [email protected], stating which Teach In you would like to attend and whether in person or via Teams.
Queries relating to the guidance should be addressed to [email protected]. We are always interested to hear the experience of users of our guidance to help us to understand how it may be further improved. Referrals to the SSRO can be made for an opinion or determination on such matters.
Updates to this page
Published 24 January 2024Last updated 12 February 2024 + show all updates
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Details of teach-in sessions added
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First published.