New and updated reporting guidance to help contractors submit statutory reports

The guidance covers the reporting implications following the introduction of:

• Alternative pricing methods for contracts, which will see non-competitive defence contracts able to be priced in new ways. For example, an item could be priced by reference to competitive markets: simplifying and speeding up procurement.
• More flexibility and transparency through broadening the ability for a contract to be split into different components or parts, each with its own profit rate and price (known as componentisation). This will allow contract prices to better reflect the risk-sharing between the MOD and defence contractors.
• Rationalisation of how the contract profit rate is to be calculated, removing two steps from the existing six step process, and simplifying the agreement of contract profit rates.

The consultation issued today takes account of industry and MOD views shared in workshops and meetings, and in their responses to our working papers issued in 2023.

We will host a series of Teach Ins and Q&A sessions, to support contractors who are (or may be) subject to the regulatory framework to familiarise themselves with the key changes to pricing and reporting provisions; to understand which SSRO guidance to refer to when pricing and reporting contracts; and how to seek support from the SSRO for contract specific queries. Dates and registration details are below.

Akhlaq Shah, Head of Compliance and Reporting, said:

“The MOD is bringing considerable changes to the existing regulatory framework to increase transparency within the regime, including new provisions that update the information which contractors are required to report on.

We will support industry and the MOD in the implementation of these reporting changes and facilitate efficient reporting through our Defence Contract Analysis and Reporting System (DefCARS).

Our consultation on the reporting guidance will be ongoing while contractors make use of the guidance and as a result, we will be providing practical support as stakeholders navigate the updated legislation. You will see us on the ground working closely with our stakeholders to ensure that these reporting changes are understood and ensure that reports are provided in a timely manner. We are keen to hear your feedback, which will help us to better support you.”

The consultation seeks views on the following new and updated reporting guidance:

• Reporting guidance on the preparation and submission of contract reports
• Reporting guidance on the preparation and submission of supplier reports
• Reporting guidance on DefCARS functionality.

The consultation is open until 5pm, 28 June 2024 and we welcome your views. If you would like to discuss any aspect of the guidance, please contact Akhlaq Shah (Akhlaq.shah@ssro.gov.uk) or 020 3589 4550).

Later in 2024 we will update the guidance to incorporate feedback from this consultation which  will benefit from the early practical experience of the MOD and defence industry contractors as they apply the new guidance and the legislation.

Teach In and Q&A sessions

• Pricing Guidance Teach In and Q&A session 1: 20 February, 10:00 – 12:00.
  • What is in the new legislation?
  • The SSRO’s new and updated pricing guidance: what it covers and where to find it.
  • The new features of pricing contracts, including what componentisation means and the seven new alternative pricing methods.
  • Responding to questions from stakeholders (please do send these to us by 15 February).
• Reporting Guidance Teach In and Q&A session 1: 12 March, 0930 – 1230.
  • What is in the new legislation?
  • The SSRO’s new and updated reporting guidance: what it covers and where to find it.
  • Changes to the Defence Contract Analysis and Reporting System (DefCARS).
  • Responding to questions from stakeholders (please do send these to us by 5 March).
• Pricing Guidance Teach In and Q&A session 2: 10 April, 0930 – 1230.
  • The changes to existing features of pricing contracts, including the cost risk adjustment and POCO.
  • Responding to areas of interest raised in session 1 and subsequent feedback from stakeholders.
  • Clarification of any aspects of the guidance.
• Reporting Guidance Teach In and Q&A session 2: 8 May, 0930 – 1230.
  • Responding to areas of interest raised in session 1 and subsequent feedback from stakeholders.
  • Clarification of any aspects of the guidance.

The Teach Ins will be hybrid and held at a central London location and via Microsoft Teams. If you would like to attend, please send your name and which company your represent to helpdesk@ssro.gov.uk, stating which Teach In you would like to attend and whether in person or via Teams.

Notes to Editors:

(1) The guidance has been released following the changes introduced through Schedule 10 of the Procurement Act, which builds on the Secretary of State for Defence’s periodic review of the Defence Reform Act 2014. The guidance also draws on the draft Single Source Contract (Amendment) Regulations 2024, which were laid for consideration in Parliament on 22 January 2024.

(2) Implementation timeline:

24 January 2024 Consultation opened on new and updated pricing guidance. 19 February 2024 Consultation opens on changes in reporting requirements 20 February 2024 Pricing Guidance Teach In and Q&A session.

Topics include: the new feature of pricing contracts, including what componentisation means and the seven new alternative pricing methods. 12 March 2024 Stakeholder Teach In and Q&A session on reporting guidance consultation.

Topics include: a focus on the new legislation; SSRO’s new and updated reporting guidance; and changes to DefCARS. 25 March 2024 Details of reporting guidance changes issued 1 April 2024 New and updated pricing and reporting guidance comes into force 10 April 2024 Pricing Guidance Teach In and Q&A session.

Topics include: the changes to existing features of pricing contracts, including the cost risk adjustment and POCO; and responding to areas of interest raised at the 20 February Teach In / subsequent feedback from stakeholders. 17 April 2024 Consultation on new and updated pricing guidance closes 8 May 2024 Stakeholder Teach In and Q&A session on reporting guidance consultation.

Topics include: responding to areas of interest raised at 12 March Teach In / feedback from stakeholders; and clarification of any aspects of the guidance. 28 June 2024 Consultation on changes in reporting requirements closes Later in 2024 (currently forecast Oct 24) Updates to pricing and reporting guidance, incorporating consultation feedback and guidance user experience

Due to the short time period between the legislation being presented to Parliament and when it comes into force in April 2024, the guidance will take effect during the early part of the consultation period. Given the scale of the changes to the regulatory framework, we want to ensure stakeholders have a familiarisation period with the guidance.

After the close of the consultation, the SSRO will consider the responses it receives and make updates to the guidance later in 2024. This is to minimise disruption and ensure that the SSRO is doing all it can to make it easy for those who use the framework to familiarise themselves, to understand, comply with and realise the benefits from the changes.