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SSRO Baseline Profit Rate 2016 recommendations as accepted by the Secretary of State for Defence

The Secretary of State for Defence has accepted the SSRO baseline profit rate recommendations for 2016.

The rate applies to contracts signed or becoming a qualifying defence contract or qualifying subcontract from 1st April 2016 through 31st March 2017. 

Please follow this link for the formal announcement BPR 2016 

Element          2015 rates       2016 rates
Baseline Profit Rate (BPR) (% on contract cost)  10.6% 8.95%
Fixed Capital Servicing Rate (% on Fixed Capital employed)  5.94% 5.08%
Working Capital Servicing Rate (% on positive Working Capital employed)  1.72% 1.4%
Working Capital Servicing Rate (% on negative Working Capital employed)  1.03% 0.74%


The UK MoD has retained a single baseline profit rate and not gone forward with the SSRO's proposal for two separate profit rates. The BPR profit rate reduction from 2015 to 2016 is approximately 15%. Due to the method of calculation it is expected that the BPR will reduce further in 2017