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July 13, 2016

SSRO report alleges UK defence firms claimed £61m in non-allowable costs

The UK's Single Source Regulations Office (SSRO) has revealed in its latest report that defence companies have claimed £61m in potentially non-allowable costs from the taxpayer, therefore failing to comply with new regulations over non-competitive contracts.

By Srivari Aishwarya

The UK's Single Source Regulations Office (SSRO) has revealed in its latest report that defence companies have claimed £61m in potentially non-allowable costs from the taxpayer, therefore failing to comply with new regulations over non-competitive contracts.

According to the report, the contractors charged unnecessarily for goods or services that could in turn result in savings to the taxpayer.

Figures released by the SSRO show that a defence contractor had charged the UK Ministry of Defence (MoD) £32,500 for a charitable donation.

"This is precisely the sort of inappropriate expenditure that the Defence Reform Act was enacted to kill off."

The MoD was also reportedly overcharged £34,000 for staff welfare and entertainment costs.

SSRO chairman Clive Tucker said: “For too long single-source defence procurement went without effective scrutiny, and this is precisely the sort of inappropriate expenditure that the Defence Reform Act was enacted to kill off.

"Through the single source regime, we want to encourage improvements from both industry and the MoD resulting in better value for money for the taxpayer.

“The findings on military equipment in Sir John Chilcot’s report are a timely reminder of the importance of efficient and effective defence procurement and strong contract management and oversight to ensure equipment reaches the frontline commands on time and on budget.”

Other questionable costs allegedly included in the contracts were for sales and marketing, accommodation, depreciation, hospitality and entertainment, Christmas parties, rates and inflation, and faulty workmanship.

The MoD was also criticised for failing to notify the regulator of new contracts within the correct time frame.

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