The SSRO today published a set of recommendations to help improve the regulatory framework for non-competitive (single source) defence contracts. This framework governs some of the UK’s most strategically significant defence contracts. Since 2015, the single source regulatory framework has applied to contracts worth £140.1 billion. The SSRO aims through its work to ensure that this spending delivers value for money for the taxpayer and fair and reasonable prices for contractors.
These independent recommendations contribute to the MOD’s ongoing review of the Single Source Contract Regulations (the SSCRs) and come at a vital time for UK defence procurement with the recent publication of the Defence Investment Plan following on from the Strategic Defence Review and Defence Industrial Strategy.
The proposed changes are based on the SSRO’s engagement with both the MOD and defence industry, and their feedback on the operation of the regulatory framework.
What the recommendations cover
Our recommendations document sets out ten immediate, practical changes for the MOD to consider. The proposals are intended to make the existing framework operate better in practice to deliver vital defence capabilities. They focus on three main areas:
- how profit can be used to incentivise performance and making contract pricing clearer, while keeping proper safeguards in place;
- cutting unnecessary complexity and reducing the reporting obligations on suppliers; and
- helping contracts progress quicker and making it easier to resolve difficult issues whilst giving clearer protection to sub-contractors.
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.
Why the recommendations – and the regulatory framework – matter
Single source contracts are used for national security reasons, because only one supplier can deliver the requirement, or has the specialist knowledge needed to support important defence equipment and capabilities.
As these contracts are not competed, the regulatory framework must do two things at the same time: protect value for money for the taxpayer, and make sure suppliers are paid a fair and reasonable price. The SSRO’s recommendations are aimed at keeping that balance between these two things while making the system simpler and quicker to navigate for both the MOD and industry.
What happens next?
The MOD continues to review and reform the single source framework having already announced on 14 May 2026 immediate and forthcoming changes. The review continues and as the reform work moves into further legislation changes and implementation, the SSRO will continue to engage and support both the MOD and industry so that changes can be introduced clearly and effectively.