Under the Single Source Contract Regulations, the contract profit rate for a Qualifying Defence Contract (QDC) is determined by a six-step process, starting with a Baseline Profit Rate (BPR). The BPR is determined each year by the Single Source Regulations Office (SSRO). It is then adjusted to take account of various factors, including risk, capital servicing and SSRO funding, in order to determine the contract profit rate for each QDC.
Movements in the BPR over the past five years, together with details of some other adjustments, can be found in the 2020 contract profit rate update, which is published on gov.uk at the following link:
The site also includes a detailed supporting analysis and information on the methodologies used.