The Single Source Contract (Amendment) Regulations 2024

Amendment of regulation 27 (interim contract report)

31.  In regulation 27(1)—

(a) after paragraph (3) insert—

“(3A) Where the contract contains components—

(a) the primary contractor and the Secretary of State may agree different reporting dates for each component in accordance with whichever of paragraph (2)(a) or (3)(a) applies to the contract;

(b) where no different reporting dates are agreed in accordance with sub-paragraph (a) in relation to a component, the reporting dates for that component are the same as the reporting dates for the contract under paragraph (2) or (3) (as the case may be).”;

(b) in paragraph (4)—

(i) in the opening words, for “The report” substitute “Subject to paragraphs (4B) to (4E), the report”;

(ii) for “5” where it occurs in sub-paragraphs (c)(ii) and (iii) and (g)(ii) and (iii), substitute “3”;

(iii) for sub-paragraph (e) substitute—

“(e) except where the component is priced using a contract pricing method under which costs are indistinguishable from profits, the total amount of non-recurring costs at the time of agreement (split by defined pricing structure);”;

(iv) omit the “and” at the end of sub-paragraph (k);

(v) in sub-paragraph (l), for “make.” substitute “make; and”;

(vi) after sub-paragraph (l) insert—

“(m) where the report is provided on a reporting date for a component of the contract, the relevant component information in relation to that component.”;

(c) after paragraph (4) insert—

“(4A) In paragraph (4)(m), “relevant component information” means the following information in relation to the component so far as it is different from the information provided in relation to the contract in accordance with paragraph (4)—

(a) an explanation of which of the key deliverables specified in the contract relate to the component;

(b) an annual profile (or, if the contractor is of the view that it is not possible to express these matters in an annual profile, the total amount) of the following matters which have been, or are expected to be, taken into account in determining the contract price of the component—

(i) any risk contingency element included in the allowable costs of the component;

(ii) planned amounts of profit in respect of the component, excluding any amount resulting from an adjustment determined under step 3 of regulation 11; and

(iii) the maximum amount of profit in respect of the component resulting from an adjustment determined under step 3 of regulation 11;

(c) an annual profile of the estimated costs of the component (split by the defined pricing structure) at the time of agreement;

(d) except where the component is priced using a contract pricing method under which costs are indistinguishable from profits, the total amount of non-recurring costs for the component at the time of agreement (split by defined pricing structure);

(e) an annual profile of the estimated amount of each cost recovery base set out in the contract reporting plan in respect of the component;

(f) an annual profile (or, if the contractor is of the view that it is not possible to express these matters in an annual profile, the total amount) of the following matters—

(i) any risk contingency element in respect of the component;

(ii) planned amounts of profit in respect of the component, excluding any amount resulting from an adjustment determined under step 3 of regulation 11; and

(iii) the expected maximum amount of profit in respect of the component resulting from an adjustment determined under step 3 of regulation 11,

that reflect the costs already incurred in respect of the component and the forecast costs which are expected to be incurred in respect of the component, indicating for each year whether those costs have been incurred, are forecast, or a combination of both;

(g) an annual profile of the costs already incurred in respect of the component and the forecast costs which are expected to be incurred in respect of the component (split by the defined pricing structure) and indicating for each year—

(i) whether those costs have been incurred, are forecast, or a combination of both; and

(ii) the amount of each cost recovery base set out in the contract reporting plan in respect of the component; and

(h) a quantified analysis of the causes of variance (explaining not less than 90% of the total variance) between any estimated costs used to determine the contract price of the component and the total actual and forecast costs of the component.

(4B) If the contract price for a contract or component is determined entirely in accordance with regulation 19A (commercial pricing)—

(a) the requirements in paragraph (4) are modified as follows in relation to a contract—

(i) the estimated quantum of deliverables required by paragraph (4)(b) need not be expressed using the output metrics set out in the contract reporting plan;

(ii) the report need not contain the information specified in paragraphs (4)(c)(i) and (ii), (d) to (f), (g)(i) and (h);

(iii) paragraph (4)(i) has effect as if for the words from “any estimated costs” to the end there were substituted “the estimated price of the contract determined in accordance with regulation 19A(5) (method of determining commercial price) and the current estimated price”;

(b) the requirements in paragraph (4A) are modified as follows in relation to a component—

(i) the report need not contain the information specified in paragraphs (4A)(b)(i) and (ii), (c) to (e), (f)(i) and (g);

(ii) paragraph (4A)(h) has effect as if for the words from “any estimated costs” to the end there were substituted “the estimated price of the component determined in accordance with regulation 19A(5) (method of determining commercial price) and the current estimated price”.

(4C) If the contract price for a contract or component is determined entirely in accordance with regulation 19B(3) (prices determined in accordance with law)—

(a) the requirements in paragraph (4) are modified as follows in relation to a contract—

(i) the estimated quantum of deliverables required by paragraph (4)(b) need not be expressed using the output metrics set out in the contract reporting plan;

(ii) the report need not contain the information specified in paragraphs (4)(c) to (h);

(iii) paragraph (4)(i) has effect as if for the words from “any estimated costs” to the end there were substituted “the estimated price of the contract determined in accordance with regulation 19B(3) (method of determining price determined in accordance with law) and the current estimated price”;

(b) the requirements of paragraph (4A) are modified as follows in relation to a component—

(i) the report need not contain the information specified in paragraphs (4A)(b) to (g);

(ii) paragraph (4A)(h) has effect as if for the words from “any estimated costs” to the end there were substituted “the estimated price of the component determined in accordance with regulation 19B(3) (method of determining price determined in accordance with law) and the current estimated price”.

(4D) If the contract price for a contract or component is determined entirely in accordance with regulation 19C (previously agreed price) the report need not contain the information specified in paragraph (4) (in relation to a contract) or (4A) (in relation to a component), and must instead contain the following information in relation to the contract or component—

(a) the current estimate of the price; and

(b) details of any variance between the current estimate of the price and previous estimates of the price, and the reasons for that variance.

(4E) If the contract price for a contract or component is determined entirely in accordance with regulation 19E (competed rates applied to uncompeted volumes), paragraphs (4)(f) and (h)(ii) (in relation to a contract) and (4B)(e) and (g)(ii) (in relation to a component) have effect as if references to “cost recovery base” were references to “competed rates”.”;

(d) in the opening words of paragraph (5), for “If” substitute “Subject to paragraphs (7) to (9), if”;

(e) omit the “and” at the end of sub-paragraph (e);

(f) in sub-paragraph (f)(iii), for “sub-contract.” substitute “sub-contract; and”;

(g) after sub-paragraph (5)(f) insert—

“(g) where the report is provided on a reporting date for a component of the contract, the relevant component information in relation to that component.”;

(h) after paragraph (5) insert—

“(6) In paragraph (5)(g), “the relevant component information” means, subject to paragraphs (7) to (9), the following information in relation to the component so far as it is different from the information provided in relation to the contract in accordance with paragraph (5)—

(a) a forecast of any TCIF adjustment or final price adjustment (regulation 16) which the contractor expects will be made in relation to the component;

(b) a description of any event that has occurred, or circumstances which have arisen, since the component was entered into, that have had or are likely to have a material effect in relation to the component, including—

(i) the date on which the contractor became aware of the event or circumstances;

(ii) whether the event or circumstances are covered by any contingency element of the contract price for the component;

(iii) the effect that the event or circumstances have had on the costs already incurred in respect of the component (paragraph (4A)(g)); and

(iv) the forecast effect that the event or circumstances will have on the forecast costs which it is expected will be incurred in respect of the component (paragraph (4A)(g)); and

(c) an explanation of which delivery milestones set out in the contract relate to the component.

(7) If the contract price for a contract or component is determined entirely in accordance with regulation 19A (commercial pricing)—

(a) the requirements in paragraph (5) are modified as follows in relation to a contract—

(i) the report need not contain the information specified in paragraph (5)(a) and (d) to (f);

(ii) paragraph (5)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable”;

(iii) paragraph (5)(b)(iv) has effect as if for “costs which it is expected will be incurred” there were substituted “price payable”;

(b) the requirements in paragraph (6) are modified as follows in relation to a component—

(i) the report need not contain the information specified in (6)(a);

(ii) paragraph (6)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable”;

(iii) paragraph (6)(b)(iv) has effect as if for “costs which it is expected will be incurred” there were substituted “price payable”.

(8) If the contract price for a contract or component is determined entirely in accordance with regulation 19B(3), (prices determined in accordance with law)—

(a) the requirements in paragraph (5) are modified as follows in relation to a contract—

(i) the report need not contain the information specified in paragraph (5)(a) and (d) to (f);

(ii) paragraph (5)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable”;

(b) the requirements in paragraph (6) are modified as follows in relation to a component—

(i) the report need not contain the information specified in paragraph (6)(a);

(ii) paragraph (6)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable”.

(9) If the contract price for the contract or component is determined in accordance with regulation 19C (previously agreed price)—

(a) the requirements in paragraph (5) are modified as follows in relation to a contract—

(i) paragraph (5)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable after the contract has become a qualifying defence contract”;

(ii) paragraph (5)(c)(i) has effect as if at the end there were inserted “after it became a qualifying defence contract”;

(iii) the report need not contain the information specified in paragraph (5)(d) to (f);

(b) paragraph (6)(b)(iii) has effect in relation to a component as if for “costs already incurred” there were substituted “price payable after the contract has become a qualifying defence contract”.”.

(1)

Regulation 27 was amended by S.I. 2019/1106.