The CASG Profit Principles were issued for the first time on 9th October 2017. The release of the Profit Principles followed lengthy consultation within CASG and with industry.
The aim of the Profit Principles is to provide guidance (not regulation) in the determination of Defence contract pricing where market competition does not occur. This is achieved by setting a standard approach for the determination of a fair and reasonable profit for sole source procurement and to provide transparency and clarity to all stakeholders. Application of profit ranges contained in the Profit Principles will provide returns comparable to the recent historical average, however a standardised approach to profit determination will provide more consistent outcomes and reward all contractors in a fair and equitable manner.
FIS should be engaged to assist Projects with the use of the Profit Principles and to provide guidance in the determination of appropriate profit levels for sole source procurements.
For more information or to provide feedback on the Cost Principles, please send an email to the Defence Financial Investigation Service.