Chapter 1 - Finance
                         
Table 1.16 Contracts Placed: By Type
This table provides an analysis of MOD new contracts and value of amendments to existing contracts broken down by contract type. It includes contracts set up for payment through the Financial Management Shared Service Centre (FMSSC) - formerly the Defence Bills Agency (DBA) - who are responsible for the payment of the majority of MOD contracts.
Current Prices (£million)/Percentage
  1990/91 1997/98   2001/02 2002/03   2003/04 2004/05 2005/06 2006/07 1 2007/08
Total Value of MOD HQ Contracts Placed2 7 000 8 073   13 136 12 815   13 107 14 888 18 242 28 148   14 388
Percentage of Total Value:                        
Contracts Priced by Competition 44 67   61 60   70 65 51 62   36
Contracts Priced by Reference                        
     to Market Forces3 19 8   8 8   9 8 7 7   11
Contracts Priced on Estimates at Outset or                        
     as soon as possible thereafter4 23 20   29 22   18 23 35 22   29
Contracts Priced on Actual Costs with                        
     Incentives to Minimise Cost4 13 1   2 10   3 4 7 9   24
Contracts Priced on Actual Costs plus a % Fee4 1 4   - -   - - - -   -
Number/Percentage
Total Number of MOD HQ Contracts Placed2 99 000 91 481   47 892 45 569   36 610 27 419 25 865 22 712   22 910
Percentage of Total Number:                        
Contracts Priced by Competition 17 47   35 34   37 40 41 41   40
Contracts Priced by Reference                        
     to Market Forces3 68 37   48 37 5 41 28 33 31   31
Contracts Priced on Estimates at Outset or                        
     as soon as possible thereafter4 13 15   17 28 5 21 31 24 27   26
Contracts Priced on Actual Costs with                        
     Incentives to Minimise Cost4 1 -   - 1   1 1 2 1   3
Contracts Priced on Actual Costs plus a % Fee4 1 1   - -   - - - -   -
Source: MOD Commercial Project Enablement Team (CPET) and Defence Estates
 
1. The increase in the overall value of MOD contracts in 2006/07 and the subsequent fall in value in 2007/08 can be attributed to the placing of a £9 billion     competitively let contract in 2006/07. This one contract has also impacted on the split between the value of competitively let contracts and the other     categories.
2. Includes amendments which had financial implications for existing contracts.
3. Includes the use of informal competitive tendering procedures and commercial price lists.
4. Priced by reference to the Government profit formula.
5. The variation between 2001/02 and 2002/03 in number of contracts placed both by "reference to Market Forces" and "priced on estimates at outset" are due     to a combination of increased requirements for Operation Telic and an internal reclassification of contracts in both of these categories.