The Defence Reform Act 2014 (the Act) and the Single Source Contract Regulations 2014 (the SSCR) set out a regulatory framework for pricing, recordkeeping and reporting in contracts for goods, works and services above £5M in value that are placed by the Ministry of Defence without competition (known as Qualifying Defence Contracts or QDCs). They also apply to single-source sub-contracts to QDCs above £25M in value (known as Qualifying Sub-Contracts or QSCs).
The Single Source Contract (Amendment) Regulations 2019 (the 2019 Amendment Regulations) will come into force on 1 September 2019, making some significant changes to the obligations of parties under QDCs and QSCs [1]:
- Additional information in relation to sub-contracts to be provided in the reports submitted under QDCs
- A new obligation on contractors to notify the MoD and the Single Source Regulations Office (SSRO) every time they carry out an assessment of whether a proposed sub-contract would be a QSC
- Amendments to the data to be provided to the MoD in supplier reports in relation to cost variance, budgeting, and the sites at which activities relating to QDCs are undertaken
- Clarification of how final price adjustments are calculated and a change to the way in which final price adjustments for QSCs are implemented
- Simplification of the way in which the values of related contracts are aggregated when determining whether they exceed the £5M threshold to be a QDC
This article summarises the key changes and offers some observations on what they mean in practice for the MoD and contractors.
[1] Part of the 2019 Amendment No. 2 Regulations which is unrelated to the subject of this article came into effect on 31 January 2019.
Get in touch
Please contact Chris Chesterman or Melissa Walford if you would like to discuss any of these changes or what they mean for your contracts.
Read the other articles in this series
Update to the Single Source Contract Regulations 2014: Changes to the categories of contracts that cannot be QDCs and QSCs
Update to the Single Source Contract Regulations 2014: New rules for pricing amendments to QDCs