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Defence Reform Act 2014

Section 29: Determining whether a contract is a qualifying sub-contract

106.The primary contractor must assess whether a prospective sub-contract would be a qualifying sub-contract, and give the prospective sub-contractor notice of that fact, before that sub-contract is entered into. This is to allow the prospective sub-contractor to consider the implications of being subject to Part 2 and whether they are willing to be party to a qualifying sub-contract before finally committing to the contract.

107.Subsection (1) allows the SSCRs to require a primary contractor of a QDC, who is proposing to enter into a sub-contract, to make an assessment of that prospective sub-contract and (subsection (2)(a)) to keep a record of that assessment. When the contractor makes a positive assessment (i.e. that the prospective sub-contract meets the conditions of section 28) then, under subsection (2)(b), the contractor must notify the Secretary of State, an authorised person and the prospective sub-contractor of that assessment.

108.One possible way a contractor could deliberately avoid flowing down the obligations to a sub-contractor that would otherwise be subject to them would be to enter into a conditional sub-contract or similar arrangement prior to the signing of the primary QDC. Subsections (3) and (4) are designed to address this possibility, and provide equivalent provision to subsections (1) and (2).

109.The SSCRs will contain provision allowing a prospective sub-contractor, where they have been informed that their contract would be a qualifying one, to appeal this decision to the SSRO who may determine whether or not it qualifies (subsection (5)). The process the SSRO should follow in making this assessment will be set out in the SSCRs (subsection (6)).

110.There are three potential compliance failures under this section which may be subject to a civil penalty. These are:


failure to make an assessment under subsection (1) or (3) (section 31(3)(d));


failure to give notice of a positive assessment under subsection (2)(b) or (4)(b) (section 31(3)(f)); or


making a negative assessment under subsection (1) or (3) which the Secretary of State considers should have been positive (section 31(3)(e)).

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