Britain's military could save hundreds of millions of dollars by introducing new rules governing single-source equipment contracts, officials said.

The Ministry of Defense said the conclusion was drawn in a review of single-source contracting, which accounts for about 40 percent of all ministry procurement and in-service support of equipment.

So-called Yellow Book contracting rules means only one defense supplier is invited to tender for a contract.

David Curry was chairman of the review panel and the government has launched a public consultation on how to take forward the findings.

The review examines Britain's existing framework for pricing single-source contracts and considers whether costs can be cut and efficiency increased while making British industry more competitive on the world market.

"Current arrangements for single-source procurement have been in place for over 40 years and it is clear that they are no longer fit for purpose," said Minister for Defense Equipment, Support and Technology Peter Luff. "That is why I asked Lord Currie to review them.

"I welcome his report and its recommendations to deliver better value for money to both our armed forces and the U.K. taxpayer. Through careful implementation, I would be disappointed if we couldn't deliver savings rising to (nearly $313 million) per year -- although I expect this will take a number of years to reach its full value.

"To examine the savings potential and the implementation of these recommendations, I am now launching an extensive consultation across industry and government," he said.

Currie said in reviewing the existing single-source contracting system "it quickly became apparent that they needed to change."

"There are sound reasons why single-source will continue to represent a significant part of total (Defense Ministry) procurement," Currie said. "It is thus essential that the governing regime for this activity is robust and fit for purpose. This is the aim of our recommendations.

"I am encouraged by the changes the senior (Ministry of Defense) team are already introducing to address the past problems of defense procurement. Our proposals aim to complement and strengthen these changes."

Currie's recommendations focus on achieving greater transparency of costs and strengthening industry's incentives to be efficient. The benefits that could potentially be gained from implementing the report include:

-- A more open relationship between the Defense Ministry and the defense industry, ensuring standardized cost data are provided by contractors to the ministry, helping to provide greater transparency of costs which would improve the Ministry of Defense's ability to negotiate realistic prices.

-- incentivizing industry to be more efficient and tackling the cost-base while allowing industry to make reasonable profits and also enabling companies to become more competitive on the international market.

-- Small and medium enterprises will provide fewer data-reporting requirements and there will be a simplified profit rate process. Larger contractors will provide an annual statement on how they have engaged SMEs in their supply chain.

The report suggests the new arrangements will provide greater transparency over the overhead costs industry attempts to pass onto the ministry.

Currie recommends these arrangements be overseen by an independent single source regulations office that would replace the existing Review Board to provide stronger oversight of both the Defense Ministry and industry.