The MOD buys through Defence Equipment & Support, the Submarine Delivery Agency, the front-line commands and UK Defence Innovation. Since 24 February 2025 it buys under the Procurement Act 2023, which has a category of defence and security contracts with its own exemptions. Contracts are built from standard conditions known as DEFCONs.
At a glance
| Standard terms | DEFCON standard conditions, chosen contract by contract; short-form and innovation contracts for low-value and UK Defence Innovation work. |
|---|---|
| How it pays | The Procurement Act implies a 30-day payment term for valid invoices into every public contract. Milestone plans are set contract by contract. |
| When it can walk away | Break on notice (20 business days in the Innovation Standard Contract), with an indemnity for unavoidable loss capped at the contract price, plus implied termination rights under the Act. |
| Assignment and transfer | No assignment without the MOD's prior written consent. Lenders usually rely on security over the proceeds or ask for consent on larger contracts. |
| Where awards are published | Tender, award and contract details notices on Find a Tender, the government's central digital platform, and opportunities on the Defence Sourcing Portal. |
The key terms, read across
From the United Kingdom column of procurement contracts.
Award route and challenge
Procurement Act 2023, in force from 24 February 2025, with a defined category of defence and security contracts. An eight working day standstill applies before most contracts are signed.
Termination for convenience
MOD standard terms give a break right on notice (20 business days in the Innovation Standard Contract), with an indemnity for unavoidable loss capped at the contract price. The Act adds an implied right to terminate on exclusion grounds.
Pricing and profit
Qualifying single source contracts are priced at allowable costs plus a contract profit rate under the Defence Reform Act 2014 and the Single Source Contract Regulations 2014, starting from the SSRO's baseline profit rate.
IP and technical data
MOD's research and technology condition (DEFCON 705) leaves results with the contractor and gives the Authority use rights. DEFCON 703 vests results in the Authority and is used only exceptionally.
Assignment and financing consents
MOD standard terms prohibit assignment without the other party's prior written consent. Lenders usually rely on security over proceeds, or seek consent for larger contracts.
Payment and milestones
The Procurement Act implies a 30-day payment term for valid invoices into every public contract. Milestone payment plans are set contract by contract.
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Related
- GOV.UK: Defence Equipment and Support
- Tool: Is this government contract financeable?
- Guide: Government contract receivables as collateral
General information on public law and standard terms as at 28 Oct 2026, not legal advice on any contract or transaction. Quoted wording is checked against the official text linked to it.