Review of the single source regulatory framework 2020: Consultation

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:

1. 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;
2. make any changes to the guidance it provides to the MOD and contractors in relation to the matters considered;
3. make any changes to the reporting system which it maintains to enable contractors to meet their transparency obligations under the framework; or
4. 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 consultations@ssro.gov.uk (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 alan.brennan@ssro.gov.uk or 0203 771 4798, or Monika Kochanowska-Tym at monika.kochanowska-tym@ssro.gov.uk or 0203 589 4558.