MoD contracts face review

28 January 2011
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28 January 2011 | Angeline Albert 

An independent review will investigate whether pricing rules for single supplier defence contracts should be changed to get better value for money.

Lord Currie will lead the review of single source procurement – where only one defence supplier is invited to tender – the MoD announced last month.

The review will examine the framework for pricing work to be procured under single source conditions and consider whether costs can be reduced and efficiency increased.

Single source procurement rules date back to a 1968 agreement with the defence sector that determines in advance profits and the costs suppliers can charge.

Defence minister Peter Luff said: “Getting single source pricing right is of great significance, not least to the taxpayer – over 40 per cent of our procurement is subject to this. We must ensure that the MoD is efficient, effective and fiscally responsible. This review will ensure single source procurement is delivering greater value for money.”

Contracts worth £9 billion annually are under single source arrangements because national security concerns restrict the number of companies allowed to tender.

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