The Single Source Contract Regulations 2014

PART 1U.K.General

Citation and commencementU.K.

1.  These Regulations may be cited as the Single Source Contract Regulations 2014 and come into force on the day after the day on which they are made.

InterpretationU.K.

2.—(1) In these Regulations—

[F1“the Act” means the Defence Reform Act 2014, and references to sections are to sections of that Act;]

[F2“alternative pricing method” means one of the contract pricing methods described in Chapter 3 of Part 3;]

“business unit” means either—

(a)

a unit—

(i)

which carries on any activities for the purposes of an undertaking; and

(ii)

for which separate financial accounting statements are produced; or

(b)

an undertaking, or group of two or more undertakings, for which a single set of financial accounting statements is produced which is separate from the financial accounting statements of each of those undertakings;

[F3“competed rate” means the competed rate or price in accordance with the terms of the relevant framework agreement;]

[F3“component”, in relation to a contract, has the meaning given by regulation 9A;]

[F3“component completion date” has the meaning given by regulation 4(1A);]

“contract completion date” has the meaning given by regulation 4 [F4(1)];

[F5“contract price” has the meaning given by regulation 4A;]

[F6“contract pricing method” means an alternative pricing method or a default pricing method;]

“cost recovery base” means the unit of measure to which a cost recovery rate is applied in order to calculate a cost under a contract;

“cost recovery rate” means a rate calculated for a business unit that is used to determine a cost payable under a contract, being a rate per unit of a cost recovery base that is multiplied by the quantum of that cost recovery base to determine the cost;

[F7“default pricing method” means one of the contract pricing methods described in Chapter 2 of Part 3;]

“deliverable” means any goods, works or services which—

(a)

are provided under a contract; and

(b)

can be described using an output metric;

“further group sub-contract” has the meaning given by regulation [F813A(4)];

“group sub-contract” has the meaning given by regulation [F913A(3)];

“output metric” means a quantifiable description of any goods, works or services (including a number, weight, dimension, time or physical capability, but not including a monetary value);

“parent undertaking” has the meaning given by section 1162 of the Companies Act 2006 M1;

F10...

“SME” has the meaning given in Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises M2;

“TCIF adjustment” means an adjustment made under section 16(1)(b);

“the time of agreement” means—

(a)

in the case of a contract which is a qualifying defence contract by virtue of section 14(3), or a qualifying sub-contract—

(i)

the date the contract is entered into; or

(ii)

if the price payable under the contract is re-determined [F11in accordance with the Schedule], the date of that re-determination;

(b)

in the case of a contract which is a qualifying defence contract by virtue of section 14(4) or (5)—

(i)

the date of the amendment mentioned in section 14(4)(c) or (5)(b); or

(ii)

if the price payable under the contract is re-determined [F11in accordance with the Schedule], the date of that re-determination;

(c)

[F12 in the case of a component of a qualifying defence contract—

(i)

the date the component is entered into; or

(ii)

if the price payable under the component is re-determined in accordance with the Schedule, the date of that re-determination;]

“undertaking” has the meaning given by section 1161(1) of the Companies Act 2006;

“working day” means any day excluding—

(a)

Saturday, Sunday, Christmas Day, Good Friday or a bank holiday under the Banking and Financial Dealings Act 1971 M3; and

(b)

where a person gives the Secretary of State and the SSRO no less than 30 days' written notice of its intention to treat a day as a holiday, that day.

(2) A reference to a report provided under Part 5 includes a contract pricing statement (regulation 23), a contract reporting plan (regulation 24), a contract costs statement (regulation 29), and information provided under regulation 30 (on-demand contract report).

[F13(3) A reference to a report provided under Part 6 includes an estimated rates agreement pricing statement under regulation 38.]

Textual Amendments

Marginal Citations

M2O.J. L 124, p. 36-41, of 20 May 2003.

[F14Meaning of “defence purposes” and “substantially for defence purposes”)U.K.

3.—(1) “Defence purposes” means the purposes of defence (whether or not of the United Kingdom), or related purposes.

(2) A contract will be substantially for defence purposes if the contract fulfils a requirement for goods, works or services for defence purposes and paragraph (3) or (4) applies.

(3) This paragraph applies if the value of the goods, works and services for defence purposes is more than £5,000,000 and more than 30% of the total value of the contract.

(4) This paragraph applies if the value of the goods, works and services for defence purposes is more than £25,000,000.

(5) For the purposes of paragraphs (3) and (4), the value of goods, works and services for defence purposes is the difference between the total value of the contract and the value of the contract if it did not contain a requirement for such goods, works or services.]

Textual Amendments

Meaning of “contract completion date” [F15and “component completion date”]U.K.

4.—(1) The “contract completion date”, in relation to a contract, means—

F16(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)F17... the date on which the contractor completes all obligations which entitle it to final payment under the contract;

(c)if the contract is terminated before the date described in sub-paragraph [F18(1)(b)], the date on which the contract is terminated.

[F19(1A) The “component completion date”, in relation to a component of a contract, means—

(a)the date on which the contractor completes all obligations under that component which entitle it to final payment in respect of that component;

(b)if that component is terminated, but any other part of the contract is not terminated, before the date described in sub-paragraph (a), the date on which the component is terminated.]

(2) For the purposes of paragraph (1)(b) [F20and (1A)(a)], final payment under a contract [F21or in respect of a component] does not include—

(a)any payment relating to the effect of specified indices or rates (regulation 10(5) or (10));

(b)any TCIF adjustment;

(c)any payment under regulation 16 (final price adjustment); or

(d)any amount which is determined by the SSRO to be payable.

Textual Amendments

[F22Meaning of “contract price”U.K.

4A.  “Contract price” means—

(a)in relation to a qualifying defence contract which does not contain components and in relation to a component of a qualifying defence contract—

(i)the price payable under the contract or component to the primary contractor as determined in accordance with a contract pricing method; or

(ii)if the contract or component is amended in a way that affects the price payable under it, the price payable under the contract to the primary contractor as determined or, as the case may be, last determined in accordance with the Schedule;

(b)in relation to a qualifying defence contract which contains components—

(i)where the price has not been determined in accordance with regulation 19G (aggregation of components), the sum of the contract prices payable for each component of the contract; or

(ii)where the price has been determined in accordance with regulation 19G, the price of the contract as determined in accordance with that regulation (taking account of any adjustment to that price made in accordance with paragraph 18(3) of the Schedule).]

Textual Amendments

Calculating the value of a contractU.K.

5.—(1) The value of a contract [F23or component] is to be determined—

(a)by the contracting authority; and

(b)in accordance with this regulation.

(2) For the purposes of the Act and these Regulations, the value of a contract [F24or component] means the consideration (net of value added tax) which the contracting authority expects will be payable under the contract [F24or component].

(3) The contracting authority must determine the value of a contract—

(a)in the case of a proposed contract [F25or component] under regulation F26... 61 (assessing whether a contract would be a qualifying sub-contract), either—

(i)at the date of the assessment under regulation [F2761], or

(ii)at any later date on which it is proposed to enter into the contract,

whichever is the higher;

(b)in the case of a contract which is a qualifying defence contract by virtue of section 14(4) or (5), at the date of the amendment mentioned in section 14(4)(c) or (5)(b);

(c)in all other cases, the date the contract [F28or component] is entered into.

(4) In making that determination, a contracting authority must—

(a)where appropriate, take account of—

(i)any option contained in the contract and the likelihood that it will be exercised;

(ii)any effect which changes in the value of money are likely to have on the allowable costs it expects to be included in the contract price;

(b)exclude the value of any land, buildings, equipment, information, personnel or other resource that is provided by [F29the contracting authority];

(c)convert any amounts payable under the contract in a foreign currency to sterling, using a rate consistent with the contracting authority'sF30... policies [F31or where no such policies exist, a rate of exchange derived on a just and reasonable basis].

(5) Subject to [F32paragraph (6)], where—

(a)the purpose of the contract is to fulfil a requirement for goods, works or services, and

(b)the contracting authority has also entered into, or proposes to enter into, one or more other contracts [F33which are not the result of a competitive process] with the same person (or persons associated with that person) for the purpose of fulfilling that requirement,

the value of the contract is the aggregate of the consideration which the contracting authority has paid or expects to be payable under the contract and all of those other contracts or proposed contracts.

(6) For the purposes of paragraph (5)(b)—

(a)the contracting authority may disregard a contract if conditions A and B are met in relation to it;

(b)the contracting authority may disregard a proposed contract if, were it entered into on the terms proposed, conditions A and B would be met in relation to it;

[F34(c)the contracting authority must disregard a contract, or a proposed contract, which has a value of £250,000 or less where it is reasonably satisfied that the procurement has not been subdivided in order to avoid the requirements of the Act and these Regulations.]

(7) Condition A is that the contract has a value of [F35more than £250,000 but] less than £1,000,000.

(8) Condition B is that the aggregate value of—

(a)that contract, and

(b)any other such contract within paragraph (5)(b), each of which has a value of [F36more than £250,000 but] less than £1,000,000,

is less than 20% of the aggregate of the consideration which the contracting authority has paid or expects to be payable under all contracts entered into, or to be entered into, for the purpose of fulfilling the requirement mentioned in paragraph (5)(a).

[F37(8A) A contract which has a value of £1,000,000 or less shall not be treated as a qualifying defence contract by virtue of this regulation unless the contracting authority is reasonably satisfied that the procurement has been subdivided in order to avoid the requirements of the Act and these Regulations.]

F38(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13) In this regulation, “the contracting authority” means the party to the contract which is, or would be, liable to pay the contract price.

Textual Amendments

F26Words in reg. 5(3)(a) omitted (1.8.2018) by virtue of The Single Source Contract (Amendment) Regulations 2018 (S.I. 2018/917), regs. 1, 3(1)