Review of the single source regulatory framework 2020: Consultation
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Detail of outcome
The regulatory framework was introduced by the Defence Reform Act 2014 and the Single Source Contract Regulations 2014. It aims to strike a balance between achieving value for money on government expenditure and fair and reasonable prices for contractors, by subjecting qualifying contracts to price control and by requiring suppliers to provide an increased level of transparency.
The SSRO is required under section 39(1) of the Defence Reform Act 2014 to keep under review the provision of the regulatory framework for single source defence contracts established by:
- Part 2 of that Act; and
- the Single Source Contract Regulations 2014.
This document presents the SSRO’s findings after detailed reviews in the following areas:
- reporting requirements; and
- contract profit rates.
We are grateful to all stakeholders for the significant contribution they made to this work. We have identified possible changes to the legislation to improve its functioning, along with improvements that can be made to our statutory guidance and the Defence Contracts Analysis and Reporting System. Work on some of these matters is included in the SSRO’s 2020-2023 Corporate Plan.
By working closely with our stakeholders, the SSRO can take steps to improve the operation of the regulatory framework that do not require legislative change. We will also continue working with industry and the MOD as part of the MOD’s work to inform the Secretary of State’s second periodic review of the legislation. We hope our findings will inform that review.
Since we consulted on our proposals early in 2020, the coronavirus pandemic has brought with it significant challenges. We will continue to monitor the impact on the sector and the wider economy before finalising recommendations to the Secretary of State’s review. We look forward to receiving a new timetable for the Secretary of State’s planned review of the legislation, now that the conclusion of this has been deferred into 2021.
Feedback received
Original consultation
Consultation description
The regulatory framework was introduced by the Defence Reform Act 2014 and the Single Source Contract Regulations 2014. It aims to strike a balance between achieving value for money on government expenditure and fair and reasonable prices for contractors, by subjecting qualifying contracts to price control and by requiring suppliers to provide an increased level of transparency.
The SSRO is required under Section 39(1) of the Defence Reform Act 2014 to keep under review the provision of the regulatory framework for single source defence contracts established by:
- Part 2 of that Act; and
- the Single Source Contract Regulations 2014.
The Secretary of State for Defence is conducting a periodic review of the framework in December 2020 and the SSRO is providing recommendations in June 2020. Following feedback on working papers issued earlier in the year, and other targeted engagement with key stakeholders, the SSRO has now launched a consultation for the 2020 review of the regulatory framework for single source defence contracts. The SSRO has focused its review on two key areas, which are central to the legislative intent. These are:
- reporting requirements; and
- contract profit rates.
The SSRO is seeking views and evidence in relation to these matters to help it decide whether, in respect of each matter, it should:
- make any specific recommendations to the Secretary of State for Defence for changes to the regulatory framework, to inform the review expected to complete by December 2020;
- make any changes to the guidance it provides to the MOD and contractors in relation to the matters considered;
- make any changes to the reporting system which it maintains to enable contractors to meet their transparency obligations under the framework; or
- undertake any further work or engagement on these matters.
This is a public consultation, which is open to anyone with an interest in the SSRO’s two statutory aims of ensuring that good value for money is obtained in government expenditure on qualifying defence contracts and that parties to qualifying defence contracts (other than the Secretary of State) are paid a fair and reasonable price under those contracts. We also welcome comments from people or organisations with a particular interest in defence procurement. This is an important opportunity to contribute to the formation of the SSRO’s recommendations and to influence the future of regulation in this sector.
The consultation period runs for ten weeks until 5.00pm on Friday 28 February 2020. Written feedback and evidence should be sent by email to [email protected] (preferred), or by post to SSRO, Finlaison House, 15-17 Furnival Street, London, EC4A 1AB.
Should you have any queries, or wish to discuss the proposals, please contact Alan Brennan at [email protected] or 0203 771 4798, or Monika Kochanowska-Tym at [email protected] or 0203 589 4558.
Documents
Updates to this page
Published 20 December 2019Last updated 17 June 2020 + show all updates
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Consultation outcome published
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First published.