Guidance on the alternative pricing of contracts (version 1.1)
Guidance on alternative pricing methods which may be applied to single source defence contracts.
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The single source regulatory framework offers 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 issued guidance on the application of the “alternative pricing” methods, which became available to use from 1 April 2024. These methods offer an alternative to using the default pricing formula, where that method may not be best suited to the circumstances of the contract.
This updated version of the guidance has been amended based on stakeholder feedback to our consultation, which ran from January to April 2024. The SSRO’s response to stakeholder feedback can be found here. 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.
- Allowable Costs guidance - Version 7.1.
- Guidance on the baseline profit rate and its adjustment – Version 8.1.
We encourage those with an interest in the regulatory framework to familiarise themselves with these documents. We are always interested to hear the experience of users of our guidance to help us to understand how it may be further improved.
This guidance applies to qualifying defence contracts and qualifying sub-contracts entered into or amended on and after 10 October 2024.
Queries relating to the guidance should be addressed to [email protected]. Referrals to the SSRO can be made for an opinion or determination on such matters.