Chapter 1 - Finance
                             
Table 1.15 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), who are responsible for the payment of the majority of MOD contracts.
Current Prices (£ million)/Percentage
  1990/91   1997/98   2002/03   2003/04 2004/05 2005/06 2006/07 1 2007/08 2008/09 2
Total Value of MOD HQ Contracts Placed3
 7 000   8 073   12 815   13 107 14 888 18 242 28 148   14 388 32 656  
Percentage of Total Value:
                            
Contracts Priced by Competition
 44   67   60   70 65 51 62   36 59  
Contracts Priced by Reference
                            
    to Market Forces4
 19   8   8   9 8 7 7   11 5  
Contracts Priced on Estimates at Outset or
                            
    as soon as possible thereafter5
 23   20   22   18 23 35 22   29 22  
Contracts Priced on Actual Costs with
                            
    Incentives to Minimise Cost5
 13   1   10   3 4 7 9   24 14  
Contracts Priced on Actual Costs plus a % Fee5
 1   4   -   - - - -   - -  
Number/Percentage
Total Number of MOD HQ Contracts Placed3
 99 000   91 481   45 569   36 610 27 419 25 865 22 712   22 910 24 045  
Percentage of Total Number:
                            
Contracts Priced by Competition
 17   47   34   37 40 41 41   40 41  
Contracts Priced by Reference
                            
    to Market Forces4
 68   37   37   41 28 33 31   31 25  
Contracts Priced on Estimates at Outset or
                            
    as soon as possible thereafter5
 13   15   28   21 31 24 27   26 25  
Contracts Priced on Actual Costs with
                            
    Incentives to Minimise Cost5
 1   -   1   1 1 2 1   3 9  
Contracts Priced on Actual Costs plus a % Fee5
 1   1   -   - - - -   - -  
Source: MOD Commercial Project Enablement Team (CPET)
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. The increase in the overall value of MOD contracts in 2008/09 is due to a number of new high value equipment contracts and amendments to the value of
    existing contract arrangments. The most notable new contracts in 2008/09 were related (a) to the manufacture of the Future Aircraft Carrier (CVF) which
    was valued at some £3.1 billion and (b) the Future Strategic Tanker Aircraft with a contract valued at some £10.4 billion. It should be noted that the start
    date for this latter contract was 28 March 2008 but full details of the contract were not formally recorded on MOD financial systems until after 1 April
    2008. This contract has therefore been counted in financial year 2008/09.
3. Includes amendments which had financial implications for existing contracts.
4. Includes the use of informal competitive tendering procedures and commercial price lists.
5. Priced by reference to the Government profit formula.
 

Value of Contracts Placed by Type