Contract profit rate calculator 2022/23

Contents: The price of a qualifying defence contracts is its Allowable Costs (determined in accordance with one of six pricing methods) plus the Contract Profit Rate. This calculator is based on the SSRO's Contract profit rate guidance and also includes comparisons to actual contract profit rates published in the SSRO's Annual qualifying defence contract statistics.

Step 1

Set each year by the Secretary of State and applies to all contracts
SSRO guidance: Baseline profit rate
Contract statistics

The baseline profit rate has ranged from 6.81% to 10.60%. The mean average amount applied has been 8.03%.

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Step 2

Use the slider or input a figure between -25% and +25% of the baseline profit rate.
-25%
+25%
SSRO guidance: Cost risk adjustment
Contract statistics

Step 3

Calculated in accordance with the SSRO's guidance
SSRO guidance: Profit on cost once adjustment
Contract statistics

Only 11% of contracts have a POCO adjustment.

Step 4

Set each year by the Secretary of State and applies to all contracts
SSRO guidance: SSRO funding adjustment
Contract statistics

The SSRO funding adjustment has ranged from -0.000% to -0.057%. The mean average amount applied has been -0.03%.

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Step 5

Up to two percentage points at the discretion of the Secretary of State
SSRO guidance: Incentive adjustment
Contract statistics

Only 19% of contracts have an incentive adjustment.

Step 6

Calculated in accordance with the SSRO's guidance
SSRO guidance: Capital servicing adjustment
Contract statistics

In 2021/22 capital servicing adjustments ranged from 0.0% to 3.2%, with half of contracts falling within a range from 0.7% to 1.2%. The mean average amount applied across all years has been 1.03%.

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Total

Sum of the six steps above

The contract profit rate is a percentage point mark-up on costs. The equivalent margin on revenue is 0.00%.

Note: The calculation on this page is dervied from version 7.2 of the SSRO's Contract profit rate guidance and the SSRO's Annual qualifying defence contract statistics: 2021/22, available at ssro.gov.uk. Errors or ommisions can occur, or updates may not be reflected. Always check the source documents.