UK procurement reform rewards on-time delivery-05/18/2026

Research evidence excerpt

UK procurement reform rewards on-time delivery-05/18/2026

Kongsberg Gruppen

NEWSFLASH | 18 MAY 2026

UK procurement reform rewards on-time delivery

The UK government has proposed reforms to the Single Source Contract Regulations (SSCR), rewarding on-time delivery

and reducing returns for underperformers. We see the framework as net positive for established primes with strong

execution, while weaker performers face margin compression. KOG's execution has been very strong in recent years, with

higher Q4 margins likely reflecting cautious running recognition and/or incentive payments, implying a positive read-x for

KOG. Its UK exposure should rise going forward, with offsets from Norway's NOK 135bn frigate purchase benefiting local

manufacturers. We see ~NOK 20bn scope from standardized vessels and ~NOK 5-8bn from NSMs to UK’s frigates. The UK

also lacks mid- and long-range air-defence capabilities, which could drive NASAMS/FSAD orders.

What is new?

The UK government has proposed reforms to the Single Source Contract Regulations (SSCR), which govern sole-source MoD procurement.

The maximum incentive payment will be raised from 2% to 10% of contract costs for suppliers that deliver on schedule, improve productivity,

or assume greater delivery risk, while profit floors on lower-risk contracts will be reduced. The SSCR compliance threshold is also being

raised from GBP 5m to GBP 25m, exempting most SMEs from mandatory reporting while still capturing 97% of single-source contract value,

and a new Innovation Uplift will reward firms that self-fund development of new defence technologies without a guaranteed contract. The

reforms will be rolled out in phases.

What does this mean?