The SSRO has published its recommendations to the Secretary of State for Defence on the review of Part 2 of the Defence Reform Act 2014 and the Single Source Contract Regulations 2014.
These independent recommendations are intended to support the Ministry of Defence’s review of the single source regulatory framework. They set out practical, evidence-led changes aimed at improving how the framework operates in practice, while preserving its core purpose: securing value for money for taxpayers and fair and reasonable prices for contractors in non-competitive defence procurement.
Why the SSRO is publishing the recommendations
The SSRO has a statutory function to keep the single source regulatory framework under review and may recommend changes to the Secretary of State where it considers them appropriate. These recommendations are being published to support informed discussion with the MOD, defence industry and other stakeholders and to provide transparency about the SSRO’s contribution to the MOD’s current review.
The publication comes at a time when the Government has published the Strategic Defence Review, Defence Industrial Strategy and the Defence Investment Plan, and is seeking to improve the pace, efficiency and effectiveness of defence procurement. The SSRO’s recommendations identify changes that could reduce unnecessary complexity; support more effective contract delivery; improve the use of data; and ensure the framework remains proportionate and fit for purpose.
What the recommendations cover
Our ten immediate recommendations for improving the existing single source regulatory framework include proposals that could be delivered through changes to the Single Source Contract Regulations 2014, alongside a smaller number of proposals that would require changes to the Defence Reform Act 2014.
The recommendations focus on three broad areas:
- Improving contract pricing, including profit‑rate flexibility with clear guardrails and simplification of pricing within the group supply chain.
- Reducing complexity and burden, including simplifying pricing amendments and component rules so administrative effort is proportionate, and reshaping reporting so it better meets MOD needs while reducing the obligations on suppliers (including changes to how information is structured and used through the Defence Contract Analysis and Reporting System (DefCARS)).
- Strengthening pace and confidence, including clearer supply‑chain protections for sub-contractors (timely notification and appeal rights), consistent statutory weight for all SSRO guidance to reduce disputes, and more effective routes (including referrals for SSRO determinations) so contentious issues do not delay contracts.
Looking beyond the immediate changes
The recommendations document also looks beyond the immediate review and makes proposals for how the framework could evolve strategically. It highlights the need to consider:
- opportunities to drive more consistent use of the regulatory rules to improve the pace of delivery;
- enhancements to the strategic oversight of major defence programmes and portfolios alongside contractual arrangements;
- making the regulatory framework more responsive to changing market conditions and government priorities on growth, industrial resilience and innovation; and
- targeted enhancements to the SSRO’s powers of information gathering, compliance and enforcement to support the Government’s objectives.
The document also sets out support for new approaches to defence finance and contracting, to drive better outcomes.
What happens next?
The recommendations have been provided to the Secretary of State for Defence and are intended to support the MOD’s review and subsequent implementation of any reforms. The SSRO will continue to engage and support the MOD and defence industry stakeholders as policy proposals are developed, legislated for and implemented.
Where changes are made to the framework, the SSRO will support implementation through updated guidance, stakeholder engagement and practical support for those applying the regulatory requirements. The SSRO will also continue to keep the framework under review, drawing on its statutory functions, data analysis and engagement with the MOD and industry to identify further improvements where needed.
