3(1)Section 15 (pricing of qualifying defence contracts) is amended as follows.
(2)In subsection (1), after “qualifying defence contract” insert “, and, where the contract is divided into components, each component of that contract,”.
(3)For subsection (2) substitute—
“(2)The regulations must provide for the price payable under the contract, or any component, to be determined—
(a)in accordance with the formula in subsection (4), or
(b)in such circumstances as may be specified in the regulations, in accordance with another method.
(2A)The regulations must only specify circumstances for the purposes of subsection (2)(b) if the Secretary of State is satisfied that the factors referred to in section 13(2) may be ensured in those circumstances if another method is used.
(2B)The regulations may also make provision requiring a particular method specified in the regulations to be used in certain of the circumstances specified for the purposes of subsection (2)(b).”
(4)In subsection (3)(a)—
(a)after “contract” insert “or each amended component of that contract,”;
(b)for “the formula in subsection (4)” substitute “the method applicable by virtue of subsection (2)”.
(5)In subsection (3)(b) for “formula” substitute “method”.
(6)In subsection (4)—
(a)after “for the contract” insert “or component”;
(b)after “under the contract” insert “or component”.
(7)In subsection (5), after “contract” insert “or component”.
(8)After subsection (5) insert—
“(6)In this Part, “component”, in relation to a contract, means a part of the contract that is to be treated distinctly from other such parts in determining the price payable under the contract.
(7)For the purposes of subsection (6), a part of a contract is to be treated distinctly if—
(a)single source contract regulations contain provision to that effect, or
(b)the parties to the contract agree that it should.
(8)Single source contract regulations may make provision about when parts of a qualifying defence contract are or are not to be treated distinctly from other parts of the same contract.”