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The Implementation from 1 April 2026 of New Profit Rates for Single Source Defence Contracts

16 March 2026

Proposing MP
Luke Pollard Lab
Plymouth, Sutton and Devonport
Type
Written Ministerial Statement
Department
Ministry of Defence
View on Parliament.uk -->

At a Glance

Issue Summary

The statement addresses the new profit rates for single source defence contracts to ensure a fair return for suppliers while maintaining value for taxpayers.

Action Requested

The Secretary of State has accepted the SSRO’s recommendation to set the baseline profit rate at 9.10% for financial year 2026/27, an increase from 8.56%, effective April 1, 2026. The government is also progressing with a review of Single Source Contract Regulations.

Key Facts

  • The baseline profit rate for single source defence contracts in 2026/27 will be set at 9.10%.
  • This represents an increase of 0.54 percentage points from the previous year's rate of 8.56%.
  • The new rates will come into effect on April 1, 2026.
  • The review of Single Source Contract Regulations is part of the Defence Industrial Strategy.
  • Workshops with industry and the SSRO have already taken place.
  • Table 1 outlines the recommended profit rates for 2025/26 and 2026/27.
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