GovWire

The SSRO has undertaken a review of its allowable cost guidance on indirect costs and overheads. Overhead cost recovery and cost recovery rates are an important aspect of ensuring both value for money and fair and reasonable prices, under the single source regime.

We have today published updated guidance that supports parties negotiating qualifying contracts in the following areas:

• Overheads: Helping to establish which overhead costs may be included in the price of a qualifying contract as allowable. We have refined and clarified the wording of the guidance to assist in its application.
• Indirect costs: Encouraging a structured and consistent application of the requirements of allowable costs in agreeing cost recovery rates. We have introduced new specific guidance in this area.

We engaged with stakeholder in the development of this guidance refresh through a series of workshops, working papers and a public consultation. We are grateful for the contributions of our stakeholders. The consultation response document explains how the feedback they provided has informed the final guidance. We are always interested to hear about the experience of users of our guidance to help us to understand how it may be further improved.

To assist stakeholders in understanding the guidance changes we have published a table that specifically shows where the existing guidance text has been revised, deleted or added, and the purpose of these changes.

The revised guidance will apply to qualifying defence contracts and qualifying sub-contracts entered-into on and after 7 November 2022, replacing existing guidance in those areas.