SSRO broadens guidance to help parties pricing defence contracts

The Single Source Regulations Office (SSRO) is using its new power to issue guidance, focusing on helping contracting parties better navigate the final price adjustment, which protects from excess profits and losses.
Image courtesy SSRO

Following recent legislation (the Procurement Act 2023), the SSRO is no longer confined to issuing guidance only on specific areas of the single source contracting legislation but can now issue guidance in relation to the application or interpretation of any area.

The SSRO is conducting a consultation on the development of new guidance regarding the 'Final Price Adjustment (FPA)' in response to feedback from stakeholders, who have told it this is an area where they would appreciate additional support. The guidance SSRO is consulting on will be used by parties to resolve common issues and enable swifter and easier resolution.

The FPA allows the contractor or the Ministry of Defence to share excess profits or losses that result from a contract, rather than having them fall solely on one of them. The FPA is generally used towards the concluding stages of a contract. However, should parties become aware during earlier stages that there are likely to be excess profits or losses then they should discuss use of the FPA at this stage. The guidance provides further detail as to when and how the FPA might be used.

To further strengthen its guidance, the SSRO have incorporated real-world scenarios to help users understand and resolve common issues, as well as signposting within the guidance the relevant Regulations and instructions on how to contact the SSRO for additional support. SSRO plans to use its new powers to issue more guidance in a broader range of areas, particularly where stakeholders told it they would like more support.

The consultation runs until 14th November.