The Single Source Contract (Amendment) (No. 2) Regulations 2018

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Single Source Contract Regulations 2014 (“the 2014 Regulations”) (S.I. 2014/3337).

Section 15(3) of the Defence Reform Act 2014 (c. 20) (“the Act”) requires regulations to make provision for the re-determination of the price payable under a qualifying defence contract (“QDC”) if the contract is amended in a way that would affect that price. That section requires that regulations make provision either for the price payable under the QDC as amended to be re-determined or for the price of the amendment to be determined.

This provision is currently made by regulation 14 of the 2014 Regulations. Regulation 14 provides for the method to be used for repricing a QDC to be determined by severability of costs.

These Regulations replace regulation 14 of the 2014 Regulations with a new Schedule which sets out how the price of a QDC is to be re-determined by reference to the type of amendment being made to the contract, the pricing method used and the number of amendments being made to the contract (see regulation 8 of and the Schedule to these Regulations). The new Schedule to the 2014 Regulations will also apply in relation to qualifying sub-contracts (see section 30(1) of the Act and the modifications made to regulation 65 of the 2014 Regulations (regulation 12(b) of these Regulations)).

These Regulations also make various consequential changes to the 2014 Regulations and transitional provisions in connection with contracts which were amended before 1st April 2019.

Regulation 52 of the 2014 Regulations specifies, for the purposes of section 35(1)(b) of the Act, the matters relating to a QDC on which the Single Source Regulations Office must make a determination. Regulation 52(2) currently provides that a person must make a reference in relation to the matters specified in regulation 52(1) no later than 6 months after the contract is entered into. These Regulations amend regulation 52(2) so that such a reference may also be made after a contract is amended to become a QDC, or if any amendments are made to a contract which affects the specified matters. Such a reference must be made within 6 months of the conversion to a QDC or the date of amendment (as the case may be) (regulation 4). Modifications are made to regulation 52, as it applies to qualifying sub-contracts, as a contract cannot become a qualifying sub-contract on amendment (regulation 5).

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sectors is foreseen.