Consultation outcome

Consultation on proposed changes

Updated 18 February 2020

1. Introduction

1.1 The Defence Reform Act 2014 (the “Act”) establishes the grounds on which, and the circumstances in which, the SRRO may be asked to:

• determine an appeal against assessment as a proposed qualifying sub-contract (QSC) (s.29(5)); and
• decide whether to overrule a notice given by a sub-contractor to the SSRO that the Act and regulations should cease to apply to a QSC (s.30(4)).

1.2 The Single Source Contract Regulations 2014 (the “Regulations”) supplement the Act and provide further detail on the grounds and circumstances for referral.

1.3 The SSRO has produced draft guidance on processes intended to assist parties who become involved with such requests. The guidance is contained in two documents, one dealing with appeals and one dealing with notices of cessation. The documents include guidance on:

• the statutory grounds for an appeal or notice of cessation;
• how to refer matters to the SSRO;
• timescales; and
• the procedure from acceptance to publication of a decision.

1.4 The SSRO undertook an extensive review of procedures for opinions and determinations prior to publishing revised guidance in April 2019. The SSRO has used the opinion guidance as the basis for producing the proposed appeals and notice. This consultation document explains the significant changes to the opinions guidance for both appeals and notices of cessation.

1.5 Should any party be considering a referral to the SSRO in respect of an appeal or notice of cessation in advance of the proposed publication dates, please contact the SSRO via [email protected] or through the SSRO’s Reporting Helpdesk via 020 3771 4785.

Consultation

1.6 The SSRO invites interested parties to comment on the proposed guidance, so that we can consider these views before publishing.

1.7 The SSRO invites stakeholder views, together with supporting evidence where appropriate, on the following consultation questions:

i. Is the proposed guidance clear?

ii. Is the proposed guidance helpful?

iii. Are there any other suggestions you have on how the guidance could be clearer or more helpful for parties?

iv. Do you have concerns regarding the proposed text in the guidance itself?

v. Are there any issues in the guidance that have not been adequately addressed?

vi. Do you have any concerns regarding the proposed publication and application dates of the guidance?

1.8 A consultation response form containing these questions has been published alongside this consultation document on the SSRO’s website.

1.9 We ask that submissions are made using the response form and that all written responses are returned:

a. by email to [email protected] (preferred); or

b. by post to SSRO, Finlaison House, 15-17 Furnival Street, London, EC4A 1AB.^

1.10 The deadline for submissions is 5.00pm on 6 December 2019. Responses received after this date will not be taken into account in finalising the guidance for 2020 but may inform subsequent consideration of guidance changes.

1.11 If you have any questions or would like to discuss the contents of this consultation document, please contact us at the earliest opportunity via [email protected].

1.12 In the interests of transparency for all stakeholders, the SSRO’s preferred practice is to publish responses to its consultations. Stakeholders are asked to specifically identify on all their communications if they do not wish their responses to be published. Due to the sensitive and confidential nature of opinions and determinations, we will be publishing all consultation responses in a summarised and anonymous form to ensure individual opinions or determinations cannot be identified.

1.13 Stakeholders’ attention is drawn to the following SSRO policy statements, available on its website setting out how it handles the confidential, commercially sensitive and personal information it receives and how it meets its obligations under the Defence Reform Act 2014, the Freedom of Information Act 2000, the General Data Protection Regulation and the Data Protection Act 2018.

a. The Single Source Regulations Office: Handling of Commercially Sensitive Information; and b. The Single Source Regulations Office: Our Personal Information Charter.

Timetable

1.14 The SSRO intends to publish a summary of consultation responses and any revised guidance in April 2020. The revised guidance would apply to all opinions or determinations accepted after 1 April 2020.

1.15 The proposed timetable for the review process is summarised below.

Activity	Date
Consultation commences	14 October 2019
Submission of responses to consultation	5pm 6 December 2019
Consider consultation responses and prepare final guidance	December 2019 to March 2020
SSRO Regulatory Committee reviews and approves final guidance	23 January 2020
Publication of consultation response summary and new guidance	By 1 April 2020
Application of new guidance	1 April 2020

1.16 The SSRO welcomes views on the proposed timetable for publication and application of the guidance on these topics as part of this consultation.

2. Appeals against assessment as a QSC

Section 29(5) of the Act provides that a party may appeal to the SSRO against a sub-contract being assessed as a qualifying sub-contract to a qualifying defence contract or a proposed qualifying defence. Regulation 62 provides further explanation on the procedures covering an appeal to the SSRO. Principally, the key features of the regulations:

• Require a party to submit a notice of appeal:
  • to the SSRO before entering into the proposed contract expected to become a qualifying sub-contract
  • to be received by the SSRO no later than six months after the person bringing the appeal has received the notice of assessment
• Prescribe the information which must be provided to the SSRO in and with a notice of appeal; and
• Require the SSRO to determine an appeal within 40 working days of receipt of a notice of appeal.

The SSRO considers that its determination of the appeal is likely to have legal consequences for the parties involved.

In developing the procedures for determining an appeal, the SSRO has used the existing SSRO opinions guidance as the basis. The SSRO has amended terminology used for giving an opinion to reflect determining an appeal and has not highlighted such changes in the text below. The key areas of difference between the opinions guidance and the appeals guidance are highlighted in the table below:

Appeals guidance	Reason for the difference
1.2 sets out the regulatory framework applying to appeals against assessment as a QSC	The framework is specific to appeals against assessment as a QSC.
2.3 specifically identifies the Secretary of State as a party who may make representations.	Under regulation 62(6), the Secretary of State may make written submissions to the SSRO on any matters to which they wish the SSRO to have regard in determining the appeal.
4.1 The SSRO has removed references to potential delays to the timescale for determining the appeal	As the 40 working days is a statutory deadline, the deadline must be achieved.
4.3 This sets out the information that parties should have to hand when contacting the SSRO regarding an appeal.	Parties are asked to have the date of receipt of the notice of assessment, confirmation of whether the proposed contract has been entered into, together with the grounds for appeal to hand. This information is specific to an appeal.
4.4 The SSRO has deleted the reference to a sole party making a referral and clarified that the MOD will be a party which the SSRO may contact.	An appeal can only be made by the party which has received the notice of assessment. The SSRO is required to consider representations from the MOD under regulation 62(6).
4.5 and 4.6 have been amended to list the information parties are asked to submit to the SSRO.	The list of information is specific to an appeal and is taken from regulations 62(4) and 62(5).
4.8 This paragraph has been amended to provide an example of a ground for appeal and the type of information which may be relevant to provide.	The example is specific to an appeal.
4.9 The paragraph amends “sufficient information to be provided” to information required under the regulations.	The change is due to the regulations providing greater specification of information requirements for an appeal.
5.1 The SSRO has deleted the reference to the timeline for the referral only commencing from the date of acceptance.	The regulations specify that the timeline for an appeal commences for the date of receipt by the SSRO of the notice of appeal.
Opinions paragraph 5.3 The SSRO has deleted the paragraph concerning the SSRO’s discretion to accept a referral.	Should a notice of appeal contain the requisite information and meet the conditions concerning timescale for submission to the SSRO, the SSRO must accept an appeal.
5.3 (opinions paragraph 5.4). The revisions set out the timescales required for submission of an appeal to the SSRO.	The requirements are specific to an appeal under regulation 62(5).
5.4 (opinions paragraph 5.5). This refers to the SSRO assessing whether the information provided in the notice of assessment meets the requirements of the regulations. It also adds that the date of receipt of a notice of appeal by the SSRO will be the date the SSRO is in receipt of all information required under the regulations.	The requirements are specific to an appeal under regulation 62(4).
5.5 (opinions paragraph 5.4). The paragraph refers to the SSRO notifying parties whether information provided meets the requirements of the regulations.	The requirements are specific to an appeal.
5.6 (opinions paragraph 5.5). The paragraph sets out that the timescale for the appeal will start on the date the SSRO receives a notice of appeal containing the requisite information.	The requirements are specific to an appeal.
5.8 (opinions paragraph 5.7). The paragraph removes reference to resetting or restarting the timeframe for the referral and replaces it with the referring party will need to resubmit a new notice of appeal and the timescale will be restarted from the date of receipt of the new notice.	As the regulations set a statutory requirement of determining the appeal within 40 working days, there is no possibility of resetting or restarting the appeal within 40 working days, unless the referring party withdraws the notice.
6.1 The paragraph sets out the deadline of determining the appeal within 40 working days of receiving the notice.	The requirements are specific to an appeal.
6.3 Text suggesting that submission of a jointly agreed statement of facts may shorten the investigation has been removed and replaced with “On receipt of the copy of the notice of appeal, the Secretary of State or the person which made the assessment may, within 20 working days of receipt make a written submission to the SSRO on any matters to which they wish the SSRO to have regard in determining the appeal.”	The change recognises that the other party or parties to the appeal are entitled statutorily to 20 working days to provide a response to the notice of appeal. Given the entitlement, the SSRO considers a joint statement is unlikely to significantly shorten the time period for determining an appeal.
Opinions paragraphs 6.4 and 6.5 Text concerning factors affecting the SSRO’s ability to meet the target timescale has been deleted	The SSRO is statutorily required to determine an appeal within 40 working days.
Opinions paragraphs 6.6, 6.7 and 6.8 Text concerning suspending the opinion timescale has been deleted.	As the SSRO is statutorily required to determine an appeal within 40 working days, there is no possibility of suspending the appeal process.
7.5 Additional text has been added covering the 20 working days allowed in the regulations for the Secretary of State or the person which made the assessment may make a written submission to the SSRO from receipt of the copy of the notice of appeal.	The 20 working days for a response to the notice is a statutory requirement.
7.7 Text has been added to recognise that whilst parties may notify the SSRO of any difficulties in meeting timescales to respond to requests for information, the SSRO is unlikely to have much flexibility in amending timescales.	This recognises that to meet the requirement to determine the appeal within the statutory 40 working days from receipt, the SSRO has limited opportunity to amend timescales to achieve the planned delivery.
7.9 Text concerning the SSRO’s circulation of the submission of a referral to the other party(ies) has been deleted and replaced with the requirement for the referring party to circulate the notice of appeal and the right of the other parties to respond within 20 working days.	This recognises the statutory requirements of the appeal process.
7.12 Text has been amended to state that the SSRO will issue a statement of facts to the parties prior to determining the appeal.	The SSRO does not consider it realistic to issue a provisional determination for comment prior to issuing a final determination within the statutory timescale of 40 working days from receipt of the notice of appeal. The SSRO will therefore issue a statement of facts gathered during the investigation for parties to comment on factual accuracy in advance of determining the appeal.
7.13 Text has been amended to provide an example of the circumstances in which a site visit may be beneficial.	The SSRO considered it could be beneficial to sub-contractors to understand how a site visit may be beneficial in the appeal process.
8.2 This sets out that an appeal may have legal consequences for parties, including the potential payment of costs. This paragraph combine text from paragraphs 8.2 and 8.3 from the opinions guidance.	Text is specific to an appeal.
9.2 Text relating to suspending the referral process has been deleted.	The statutory requirement to determine the appeal within 40 working days means the SSRO cannot choose the suspend the timescale.

3. Notice of cessation as a QSC

Section 30(4) of the Act provides that a sub-contractor may give notice to the SSRO that, in the sub-contractor’s opinion, Part 2 of the Act and the regulations should cease to apply to the qualifying sub-contract and that the SSRO may overrule such a notice. Regulation 63 provides further explanation on the procedures covering a notice of cessation. Principally, the key features of the regulations:

• Require a notice of cessation to be received by the SSRO no later than the contract completion date of the qualifying sub-contract:
• Prescribe that the grounds for a notice of cessation are that in the sub-contractor’s view, neither the condition in regulation 58(3) nor the condition in regulation 58(4) is now met in relation to the qualifying sub-contract, and therefore Part 2 of the Act, and the Regulations, should therefore cease to apply to that qualifying sub-contract;
• Set out the information which must be provided to the SSRO with a notice of cessation; and
• Require the SSRO to agree or overrule the notice.

The SSRO considers that its determination of the notice of cessation is likely to have legal consequences for the parties involved.

In developing the procedures for deciding a notice of cessation, the SSRO has used the existing SSRO opinions guidance as the basis. The SSRO has amended terminology used for giving an opinion to reflect deciding a notice of cessation and has not highlighted such changes in the text below. The key areas of difference between the opinions guidance and the notice of cessation guidance are highlighted in the table below:

Notice of cessation guidance	Reason for the difference
Para 1.2 sets out the regulatory framework applying to notices of cessation as a QSC.	The framework is specific to notices of cessation.
Para 2.3 specifically identifies the Secretary of State as a party who may make representations.	Under Regulation 63(4), the SSRO is required to have regard to any matters to which the MOD have advised that it should have regard.
4.3 This sets out the information that parties should have to hand when contacting the SSRO regarding a notice of cessation.	Parties are asked to have to hand the date at which the sub-contractor believes that neither the condition in regulation 58(3) nor the condition in regulation 58(4) were met in relation to the qualifying sub-contract; and an outline of the reasons for their view. This information is specific to a notice of cessation.
4.4 The SSRO has deleted the reference to a sole party making a referral and clarified that the MOD will be a party which the SSRO may contact.	A notice of cessation can only be submitted by a qualifying sub-contractor. The SSRO is required to consider representations from the MOD under regulation 63(4).
4.5 and 4.6 have been amended to list the information parties are asked to submit to the SSRO.	The list of information is specific to a notice of cessation and is taken from regulations 63(2).
4.8 This paragraph has been amended to provide an example of a reason for a notice of cessation and the type of information which may be relevant to provide.	The example is specific to notices of cessation.
4.9 The paragraph amends sufficient information to be provided to information required under the regulations.	The change is due to the regulations providing greater specification of information requirements for a notice of cessation.
Opinion paragraph 5.3 The SSRO has deleted the paragraph concerning the SSRO’s discretion to accept a referral.	Should a notice of cessation contain the requisite and meet the conditions concerning timescale for submission to the SSRO, the SSRO must accept the notice for consideration.
5.3 (opinion paragraph 5.4). This refers to the SSRO assessing whether the information provided in the notice of cessation meets the requirements of the regulations.	The requirements are specific to a notice of cessation under regulation 63(2).
5.5 (opinion paragraph 5.4). The paragraph refers to the SSRO notifying parties whether information provided meets the requirements of the regulations.	The requirements are specific to a notice of cessation.
6.3 Text added to reflect that the other party to the qualifying sub-contract or the Secretary of State may within 10 working days of receiving a copy of the notice make a written submission to the SSRO on any matters to which they consider the SSRO should have regard in deciding whether to overrule the notice.	The requirements are specific to a notice of cessation.
7.9 Text concerning the SSRO’s circulation of the submission of a referral to the other party(ies) has been deleted.	This recognises the statutory requirement of the notice of cessation process.
7.12 Text has been amended to state that the SSRO will issue a statement of facts to the parties prior to making a decision.	As the SSRO’s decision will have legal consequences for the sub-contractor, the SSRO will issue a statement of facts gathered during the investigation for parties to comment on factual accuracy in advance of making a decision.
7.13 Text has been amended to provide an example of the circumstances in which a site visit may be beneficial.	The SSRO considered it could be beneficial to sub-contractors to understand how a site visit may be beneficial in the notice of cessation process.
8.1 Text has been added stating that the SSRO’s decision may have legal consequences for the affected parties.	Text is specific to a notice of cessation.
Opinion paragraph 8.2 The paragraph concerning the legal status of opinions has been deleted.	The status of the SSRO’s decision may have legal consequences for the parties. This has been included in paragraph 8.1.
Opinion paragraph 8.3 The paragraph concerning award of costs has been deleted.	The statutory provisions concerning the potential award of costs do not apply to notices of cessation.