The defence single source regulatory framework under review

Single source procurement is when contracts are placed without competition with a selected contractor. Historically the Ministry of Defence (MOD) has awarded a significant proportion of contracts without an open competition for a variety of reasons, most commonly for reasons of national security or because there is only one specialist supplier available. Over the next few years the armed forces will take delivery of a raft of new equipment procured from a single prime contractor including submarines, maritime patrol aircraft and attack helicopters.

The Government reformed the framework for single source procurement in 2014, introducing new regulations and creating a new oversight body. The MOD conducted a periodic review of the legislation in 2017, as required by the Defence Reform Act 2014, which resulted in amendments to the regulations.

The Secretary of State for Defence will conduct a further periodic review of the framework in 2021. The Single Source Regulations Office consulted on its proposed recommendations for the review in early 2020. The review was to have been completed in December 2020, but the Defence Sectretary has said it will be delayed because of the coronavirus pandemic.

The Defence and Public Accounts Committees and the National Audit Office have examined single source procurement in recent years. They have raised concerns about the number of single source contracts that are excluded from the regulatory framework, questioned the anticipated savings expected to be generated by the new regulations and discussed whether the powers of the Single Source Regulations Office should be expanded. absence of competition may mean the MOD is not getting value for money for the contracts and may lack leverage when costs escalate or delays occur.

The Defence and Public Accounts Committees are holding inquiries into defence procurement during the 2019-2021 Parliament:

• Defence Committee - Defence industrial policy: procurement and prosperity
• Public Accounts Committee – Defence capability and the equipment plan 2019-29

This paper focuses solely on single source procurement and the review of single source contract regulations. For an overview of how the Ministry of Defence buys equipment and a more detailed discussion of the concepts mentioned here, please see Library briefing paper an introduction to Defence procurement, from which some of this briefing is drawn.