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The Single Source Contract Regulations 2014

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Regulation [F29C]

[F1SCHEDULEU.K.Re-determination of contract price

Textual Amendments

PART 1U.K. [F3General]

Textual Amendments

Application of ScheduleU.K.

1.—(1) This Schedule applies if the parties to a qualifying defence contract propose to amend the contract in a way that would affect the original contract price.

Such an amendment is referred to in this Schedule as a “pricing amendment” [F4of the contract or a component of the contract].

(2) In this Schedule—

“original contract price”, in relation to a qualifying defence contract [F5or component of such a contract], means—

(a)

the price determined in accordance with [F6a contract pricing method], or

(b)

where the contract [F7or component] has previously been amended in a way that affects the price payable under the contract [F7or component], the price determined or, as the case may be, last determined in accordance with this Schedule;

“the parties”, in relation to a qualifying defence contract, means—

(a)

the Secretary of State, and

(b)

the primary contractor.

Textual Amendments

InterpretationU.K.

2.—(1) In this Schedule—

[F8“contract profit rate”, in relation to a pricing amendment, means the contract profit rate that would be determined for the pricing amendment in accordance with regulation 11 as it applies for the purpose of determining the contract profit rate for a contract or component, and regulation 11(3) is modified for these purposes so that “under the contract or component” is to be read as “associated with the pricing amendment”;]

F9...

“contractual requirement”, in relation to a qualifying defence contract [F10or component of such a contract], means a provision of the contract [F11or component] setting out—

(a)

the specification of,

(b)

quantity of, or

(c)

time or place for delivery of,

the goods, works or services procured under the contract;

“cost-plus method” means the [F12default] pricing method described in regulation 10(6);

“original contract price” has the meaning given in paragraph 1(2);

“the parties” has the meaning given in paragraph 1(2);

F13...

F14(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F15(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

[F16Pricing amendments not covered by Part 2 or 4U.K.

2A.—(1) This paragraph applies if none of paragraphs 4 to 9 or 14 to 18 apply in relation to the pricing amendment.

(2) Where the pricing amendment creates a new component of a contract, the price payable under the component must be determined in accordance with a contract pricing method (and is to be treated for the purposes of these Regulations as if it was determined in accordance with that contract pricing method and not this Schedule).

(3) Where the pricing amendment does not create a new component, the price payable under the amended contract or, where the pricing amendment relates to an existing component, that component must be re-determined in accordance with a contract pricing method (and is to be treated for the purposes of these Regulations as if it was determined in accordance with that contract pricing method and not this Schedule).

(4) The parties—

(a)may agree which contract pricing method is to be used for the amended contract or component;

(b)may agree that components of the contract will be priced by different pricing methods.

Textual Amendments

Multiple pricing amendmentsU.K.

2B.—(1) This paragraph applies where the parties propose to make two or more pricing amendments to a contract or component at the same time (irrespective of whether the parties also propose to make, at the same time, any other amendment to the contract or component which is not a pricing amendment).

(2) Where this paragraph applies—

(a)the pricing amendments are to be treated separately and dealt with in turn,

(b)Part 2 or 4 (as the case may be) applies in relation to each pricing amendment as it applies to a single amendment, and

(c)the price payable under the amended contract or component is the price determined after the last of the pricing amendments has been dealt with.

(3) If the parties propose a pricing amendment which changes the contract pricing method used for the contract or component, that pricing amendment must be dealt with first.

(4) If the parties propose a pricing amendment to which paragraph 2A applies, that pricing amendment must be dealt with last.]

Textual Amendments

[F17PART 2U.K.Re-determination of price using a default pricing method]

Textual Amendments

[F18Application of Part 2U.K.

3.  This Part applies to determine the price payable under a contract or component if—

(a)the parties propose to make a single pricing amendment to a qualifying defence contract (irrespective of whether the parties propose to make, at the same time, any other amendment to the contract which is not a pricing amendment), and

(b)the price of the contract (if the pricing amendment does not relate to an existing component) or component (if the pricing amendment relates to an existing component) to which the pricing amendment relates was last determined in accordance with a default pricing method or with this Part.]

Textual Amendments

Change of [F19default] pricing methodU.K.

Textual Amendments

Amendment of the [F20default] pricing method used for a qualifying defence contractU.K.

4.—(1) This paragraph applies where the proposed pricing amendment will change the [F21default] pricing method used for the contract to another [F21default] pricing method (the “new [F21default] pricing method”).

(2) The price payable in respect of the pricing amendment must be determined in accordance with the following formula—

where—

(a)

“CPR” is the contract profit rate for the [F22pricing] amendment, and

(b)

“AC” means the primary contractor’s allowable costs after the time of agreement, determined in accordance with the new [F23default] pricing method.

(3) The price payable under the amended contract is the total of—

(a)the price payable in respect of performance under the contract on or before the time of agreement, and

(b)the price payable in respect of the [F24pricing] amendment.

Textual Amendments

Amendment of a [F25default] pricing method used for a F26... component of a contractU.K.

5.—(1) This paragraph applies where the proposed pricing amendment will change the [F27default] pricing method used for a F28... component of the contract to another [F27default] pricing method (the “new [F27default] pricing amendment”).

(2) The price payable in respect of the pricing amendment must be determined in accordance with the following formula—

where—

(a)

“CPR” is the contract profit rate for the [F29pricing] amendment, and

(b)

“AC” means the primary contractor’s allowable costs under the F30... component after the time of agreement, determined in accordance with the new [F31default] pricing method.

(3) The price payable under the amended contract is the total of—

(a)the price payable for performance under the contract (other than performance under the relevant F32... component),

(b)the price payable for performance under the relevant F33... component on or before the time of agreement, and

(c)the price payable in respect of the [F34pricing] amendment.

Textual Amendments

Change to an element of allowable costsU.K.

Amendment affecting a defined element of allowable costsU.K.

6.—(1) This paragraph applies where—

(a)the proposed pricing amendment will change a defined element of allowable costs under the contract or a F35... component of the contract, and

(b)the [F36default] pricing method used for the contract or F37... component (as the case may be) is a qualifying [F36default] pricing method.

(2) In this paragraph “qualifying [F38default] pricing method” means a pricing method described—

(a)in regulation 10(4) (firm pricing method),

(b)in regulation 10(5) (fixed pricing method),

(c)in regulation 10(9) and (10) (volume-driven pricing method), or

(d)in regulation 10(11) (target pricing method).

(3) The price payable in respect of the [F39pricing] amendment must be determined in accordance with the following formula—

where—

(a)

“CPR” is the contract profit rate for the [F40pricing] amendment, and

(b)

“AC” means the defined element of allowable costs after it is changed, determined in accordance with the qualifying [F41default] pricing method used for the contract or F42... component.

(4) The price payable under the amended contract is the total of—

(a)the original contract price less the adjustment amount, and

(b)the price payable in respect of the [F43pricing] amendment.

(5) For the purposes of sub-paragraph (4), “the adjustment amount” is the amount of the original contract price which can be attributed to the defined element of allowable costs that is being changed.

Textual Amendments

Change to a contractual requirementU.K.

Change to a contractual requirement: contract or F44... component not using cost-plus methodU.K.

7.—(1) This paragraph applies where—

(a)the proposed pricing amendment will change a contractual requirement of the contract or of a F45... component of the contract, and

(b)the [F46default] pricing method used for the contract or F47... component (as the case may be) is not the cost-plus method.

(2) The price payable in respect of the [F48pricing] amendment must be determined in accordance with the following formula and may be a negative amount—

where—

(a)

“CPR” is the contract profit rate for the [F49pricing] amendment, and

(b)

“AC” means the amount (which may be a negative amount) by which the [F50pricing] amendment will change the original allowable costs.

(3) For the purposes of sub-paragraph (2), “original allowable costs” means the allowable costs under the contract or F51... component, as determined for the purposes of calculating the original contract price.

(4) The price payable under the amended contract is the total of—

(a)the original contract price, and

(b)the price payable in respect of the [F52pricing] amendment.

Textual Amendments

Change to a contractual requirement: contract or F53... component which uses cost-plus method – distinguishable costsU.K.

8.—(1) This paragraph applies where—

(a)the proposed pricing amendment will change a contractual requirement of the contract or of a F54... component of the contract,

(b)the [F55default] pricing method used for the contract or F56... component (as the case may be) is the cost-plus method, and

(c)the allowable costs resulting from the [F57pricing] amendment can be distinguished from the original allowable costs.

(2) For the purposes of sub-paragraph (1)(c), “original allowable costs” means the allowable costs under the contract or F58... component before the contract is amended.

(3) The price payable in respect of the [F59pricing] amendment is to be determined in accordance with the following formula—

where—

(a)

“CPR” is the contract profit rate for the [F60pricing] amendment, and

(b)

“AC” means the primary contractor’s allowable costs resulting from the [F61pricing] amendment, as determined in accordance with the cost-plus method.

(4) The price payable under the amended contract is the total of—

(a)the original contract price, and

(b)the price payable in respect of the [F62pricing] amendment.

Textual Amendments

Change to a contractual requirement: contract or F63... component which uses cost-plus method – costs not distinguishableU.K.

9.—(1) This paragraph applies where—

(a)the proposed pricing amendment will change a contractual requirement of the contract or of a F64... component of the contract,

(b)the [F65default] pricing method used for the contract or F66... component (as the case may be) is the cost-plus method, and

(c)the allowable costs resulting from the [F67pricing] amendment cannot be distinguished from the original allowable costs.

(2) For the purposes of sub-paragraph (1)(c), “original allowable costs” means the allowable costs under the contract or F68... component before the contract is amended.

(3) The price payable in respect of the [F69pricing] amendment is to be determined in accordance with the following formula—

where—

(a)

“CPR” is the contract profit rate for the [F70pricing] amendment, and

(b)

“AC” means the primary contractor’s allowable costs under the contract, or F71... component, after the time of agreement, as determined in accordance with the cost-plus method.

(4) For the purposes of sub-paragraph (3), no account is to be taken of any costs incurred by the primary contractor before the contract is amended.

(5) The price payable under the amended contract is the total of—

(a)the price payable under the contract on or before the time of agreement, and

(b)the price payable in respect of the [F72pricing] amendment.

Textual Amendments

F73...]U.K.

Textual Amendments

Other amendmentsU.K.

F7410.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F75PART 3U.K.Multiple pricing amendments to a qualifying defence contract

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

[F76Part 4U.K.Re-determination of price using an alternative pricing method

Textual Amendments

Application of Part 4U.K.

13.  This Part applies to determine the price payable under a contract or component if—

(a)the parties propose to make a single pricing amendment to the contract or component (irrespective of whether the parties propose to make, at the same time, any other amendment to the contract or component which is not a pricing amendment), and

(b)the price of the contract (if the pricing amendment does not relate to a component) or component (if the pricing amendment relates to a component) was last determined in accordance with an alternative pricing method or with this Part.

Pricing amendment of contract or component priced using regulation 19A (commercial pricing)U.K.

14.—(1) This paragraph applies where the proposed pricing amendment is to a contract or component the price of which was determined in accordance with regulation 19A or this paragraph.

(2) Sub-paragraph (3) applies where—

(a)the pricing amendment will add a contractual requirement for the provision of goods, works or services (“the new goods, works or services”),

(b)if the pricing amendment were a new contract or component, the circumstances would exist for the price of the pricing amendment to be determined in accordance with regulation 19A, and

(c)the parties agree to determine the price of the pricing amendment in accordance with regulation 19A.

(3) The price payable in respect of the pricing amendment is to be determined as follows—

(a)determine the price of the new goods, works or services in accordance with regulation 19A, and

(b)adjust that price by a reasonable amount to account for a change in the costs of providing the new goods, works or services as a consequence of any existing requirements under the contract to provide similar goods, works or services.

(4) Sub-paragraph (5) applies where—

(a)the pricing amendment will remove a contractual requirement for the provision of goods, works or services (“the removed requirement”), and

(b)no costs have been, or will be, incurred in relation to the provision of the removed requirement.

(5) The price payable under the contract or component to which the pricing amendment relates is to be determined as follows—

(a)determine what price payable would have been determined in accordance with regulation 19A in respect of the contract or component at the time of agreement taking into account the removed requirement, and

(b)adjust the price payable under the contract or component so that it is equivalent to the price determined in accordance with paragraph (a).

(6) Sub-paragraph (7) applies where—

(a)the pricing amendment will remove a contractual requirement for the provision of goods, works or services (“the removed requirement”), and

(b)costs have been, or will be, incurred in relation to the reduced requirement (“the incurred costs”).

(7) Where this paragraph applies—

(a)the price payable under the contract or component to which the pricing amendment relates is to be determined in accordance with paragraph (5),

(b)the price payable in respect of the incurred costs is to be determined in accordance with another contact pricing method as if the goods, works or services to which those costs relate were provided under a new component, and

(c)the provision of the goods, works or services and the price payable in respect of them are a new component the price of which has been determined in accordance with the contract pricing method mentioned in paragraph (b) (and not in accordance with regulation 19A or this Schedule).

Pricing amendment of contract or component priced using regulation 19B (prices determined in accordance with law)U.K.

15.—(1) This paragraph applies where the proposed pricing amendment is to a contract or component the price of which was determined in accordance with regulation 19B or this paragraph.

(2) Sub-paragraph (3) applies where—

(a)the original contract price was determined in accordance with regulation 19B(3), and

(b)regulation 19B(3) applies to the goods, works and services to which the pricing amendment relates.

(3) The price payable under the contract or component is to be re-determined in accordance with regulation 19B(3), taking account of the pricing amendment.

(4) Sub-paragraph (5) applies where—

(a)the original contract price was determined in accordance with regulation 19B(4),

(b)the relevant law in accordance with which the original contract price was determined has been amended (but still applies), and

(c)the pricing amendment is made entirely in consequence of the amendment to the relevant law.

(5) The price payable under the contract or component to which the pricing amendment relates is to be adjusted by an amount which secures a price as close as possible to the price which would have been agreed between the parties in compliance with the Act and these Regulations but for the application of the amended relevant law.

(6) Sub-paragraph (7) applies where—

(a)the original contract price was determined in accordance with regulation 19B(4),

(b)regulation 19B(4) applies to the goods, works and services to which the pricing amendment relates, and

(c)the pricing amendment is not made entirely in consequence of an amendment to the relevant law in accordance with which the original contract price was determined.

(7) The price payable under the contract or component is to be re-determined in accordance with regulation 19B(4), taking account of the pricing amendment.

(8) Sub-paragraph (9) applies where—

(a)the pricing amendment will remove a contractual requirement for the provision of goods, works or services (“the removed requirement”), and

(b)the Secretary of State is no longer satisfied that the price of the goods, works or services to be provided under the contract or component subject to the pricing amendment must be set in accordance with a relevant law (within the meaning of regulation 19B(5)).

(9) The price payable under the contract or component to which the pricing amendment relates is to be determined as follows—

(a)determine what price payable would have been determined in accordance with regulation 19B in respect of the contract or component at the time of agreement taking into account the removed requirement, and

(b)adjust the price payable under the contract or component so that it is equivalent to the price determined in accordance with paragraph (a).

Pricing amendment of contract or component priced using regulation 19C (previously agreed price)U.K.

16.—(1) This paragraph applies where the proposed pricing amendment is to a contract or component the price of which was determined in accordance with regulation 19C.

(2) The parties must agree to—

(a)re-determine the price of the entire contract or component (taking account of any change to the contract or component as a result of the pricing amendment) in accordance with a contract pricing method other than that described in regulation 19C, or

(b)create a new component containing the obligations to provide goods, works or services which have not yet been performed under the contract or component (taking account of any change to those obligations as a result of the pricing amendment), and determine the price of that component in accordance with a contract pricing method other than that described in regulation 19C.

(3) Where—

(a)the price of a contract or component is re-determined under sub-paragraph (2)(a), the contract or component is to be treated for the purposes of these Regulations as a contract or component the price of which has been determined in accordance with the new contract pricing method (and not in accordance with regulation 19C or this Schedule);

(b)a component is created in accordance with sub-paragraph (2)(b), the component is a new component the price of which has been determined in accordance with the new contract pricing method (and not in accordance with regulation 19C or this Schedule).

Pricing amendment of contract or component priced using regulation 19E (competed rates applied to uncompeted volumes)U.K.

17.  Where the proposed pricing amendment is to a contract or component the price of which was determined in accordance with regulation 19E, the price of the contract or component is to be re-determined in accordance with regulation 19E (taking account of any change to the contract or component as a result of the pricing amendment).

Pricing amendment of a contract priced using regulation 19G (aggregation of components)U.K.

18.—(1) This paragraph applies where the price of a contract has been determined in accordance with regulation 19G or this paragraph.

(2) Where the price payable under a component of the contract has been re-determined under this Schedule, the price of the contract is to be re-determined in accordance with regulation 19G.

(3) Where the pricing amendment relates only to a change to an adjustment agreed in accordance with regulation 19G(3) to (7), the price payable under the contract is to be adjusted to take account of that change.]

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