Review Board for Government Contracts

Monday 9th June 2014 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

I announced updated Government profit formula (GPF) allowances to the House on 15 April 2013, in line with recommendations made by the independent Review Board for Government Contracts. The review board is an independent non-departmental public body established in 1968 following an agreement between the Government and industry and its role is to recommend a fair and reasonable return for industry based on the principle of comparability in those situations where there is only one supplier of a particular good or service and, therefore, where there is no recourse to competition to establish prices.

Following the recommendations set out by Lord Currie of Marylebone in his 2011 report into the existing single source procurement system, the Government undertook a major reform programme aimed at delivering a more suitable and modern means of delivering on this key part of our procurement activities. This programme is making good progress and forms part 2 of the Defence Reform Act 2014 which received Royal Assent on 14 May 2014. This legislation will replace the review board with a more empowered public body, the Single Source Regulations Office (SSRO). In the meantime, we expect the review board to continue to produce recommendations for the current profit rate.

The review board has recently completed its 2014 General Review and has made its recommendations for the profit rate for the year beginning April 2014. The Government have accepted the board’s recommendations and the updated allowances will be implemented on new single source work undertaken in the financial year beginning 1 April 2014.

A copy of the review board’s 2014 general review report will be placed in the Library of the House.