Question to the Ministry of Defence:

To ask the Secretary of State for Defence, what the underlying factors were behind the Single Source Regulations Office recommendation for a rise in the baseline profit rate for single source defence contracts to 7.63 per cent.

My right hon. Friend the Secretary of State for Defence decided to set the 2019-20 Baseline Profit Rate (BPR) in line with the Single Source Regulations Office's (SSRO) recommendation. The SSRO methodology for calculating the rate has not changed significantly since last year. It is published on the SSRO's website alongside a question and answer briefing, information fact sheets on its methodology, and detailed supporting analysis.

The BPR is an average of the actual profit rates earned by companies whose activities are comparable to companies that contribute to the delivery of Ministry of Defence single source contracts. The SSRO's assessment is that the increase this year is mainly caused by changes in the performance of companies that make up the comparator groups, reflecting changing economic conditions.