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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.
