UK defence procurement

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.

• Procurement Act 2023, s.7
• s.51

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.

• MOD Innovation Standard Contract, condition 18
• Procurement Act 2023, s.78

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.

• Defence Reform Act 2014, s.15
• SSRO 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.

• DEFCON 703 and 705, as listed in the MOD Innovation Standard Contract

Liability and indemnities

MOD sets caps contract by contract. The Innovation Standard Contract caps most contractor liability in aggregate, with indemnities carved out of the cap.

• MOD Innovation Standard Contract, limitation of liability

Export control

Export Control Order 2008: no export of military goods, or electronic transfer of military software or technology, without a licence.

• Export Control Order 2008, art.3

Security and classified work

Classified information is defined in the Procurement Act. Contractors holding it work under the Government Security Classifications and security conditions in the contract, with List X clearance for higher classifications.

• Procurement Act 2023, s.7

Cyber

DEFCON 658 requires compliance with Def Stan 05-138 at the contract's cyber risk profile, flowed down to sub-contractors, with immediate incident notification.

• DEFCON 658 (GOV.UK)

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.

• MOD Innovation Standard Contract, condition 2.c

Change of control and novation

MOD terms require notice of any change of control and let the Authority terminate within six months. The NSI Act requires a mandatory notice for acquisitions in the defence and military and dual-use sectors.

• MOD Innovation Standard Contract, condition 9
• NSI Act 2021, s.14

Government remedies and debarment

The Procurement Act creates exclusion grounds and a public debarment list, and lets authorities terminate where a supplier becomes excluded or excludable.

• Procurement Act 2023, s.62

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.

• Procurement Act 2023, s.68

Disputes and governing law

English law and the exclusive jurisdiction of the English courts, after a contract dispute resolution procedure.

• MOD Innovation Standard Contract, condition 2.f

Industrial participation and offset

The UK seeks industrial participation on some overseas purchases. UK exporters take on offset obligations under foreign governments' rules.