Guidance on the baseline profit rate and its adjustment (version 7.3)
The SSRO’s guidance on adjustments to the baseline profit rate is statutory guidance to which the Ministry of Defence and its contractors must have regard when determining the contract profit rate for qualifying defence contracts
Section 17(2) of the Defence Reform Act 2014 sets out the six steps to be used when determining the contract profit rate for a qualifying defence contract (QDC) or qualifying sub-contract (QSC). The SSRO may issue guidance in relation to any of these steps and the Ministry of Defence and its contractors must have regard to it, as specified in Section 18(1) of the Act.
This version of the guidance (version 7.3) was published on 16 March 2023 and applies to QDCs and QSCs agreed on or after 1 April 2023.
Queries relating to the guidance should be addressed to email@example.com. 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 specific contract-related matters.
Updated to expand Appendix C to include computation 5 and correct the worked example.