The Single Source Contract Regulations 2014

Interim contract report U.K.

27.—(1) The primary contractor must provide an interim contract report for the qualifying defence contract within two months after each reporting date.

(2) If the value of the qualifying defence contract is less than £50,000,000, the reporting dates are—

(a) either—

(i) a date agreed between the primary contractor and the Secretary of State at the time of agreement which is no more than five years following the time of agreement; and

(ii) such further dates before the expected contract completion date as may be agreed between them, each date to be no more than five years after the previous reporting date; or

(b) if no agreement is made under sub-paragraph (a)—

(i) the date which is three years after the last day of the calendar quarter during which the initial reporting date fell; and

(ii) the date which is each third anniversary of that date.

(3) Otherwise, the reporting dates are—

(a) either—

(i) a date agreed between the primary contractor and the Secretary of State at the time of agreement which is no more than three years following the time of agreement; and

(ii) such further dates before the expected contract completion date as may be agreed between them, each date to be no more than three years after the previous reporting date; or

(b) if no agreement is made under sub-paragraph (a)—

(i) the date which is 12 months after the last day of the calendar quarter during which the initial reporting date fell; and

(ii) the date which is each anniversary of that date.

[F1 (3A) Where the contract contains components—

(a) the primary contractor and the Secretary of State may agree different reporting dates for each component in accordance with whichever of paragraph (2)(a) or (3)(a) applies to the contract;

(b) where no different reporting dates are agreed in accordance with sub-paragraph (a) in relation to a component, the reporting dates for that component are the same as the reporting dates for the contract under paragraph (2) or (3) (as the case may be).]

(4) [F2 Subject to paragraphs (4B) to (4E), the report] must contain the following information—

(a) a list of the key deliverables specified in the contract, with a brief description of each;

(b) the estimated quantum of those deliverables, expressed using the output metrics set out in the contract reporting plan;

(c) an annual profile (or, if the contractor is of the view that it is not possible to express these matters in an annual profile, the total amount) of the following matters which have been, or are expected to be, taken into account in determining the contract price—

(i) any risk contingency element included in the allowable costs;

(ii) planned amounts of profit, excluding any amount resulting from an adjustment determined under step [F3 3] of regulation 11; and

(iii) the maximum amount of profit resulting from an adjustment determined under step [F4 3] of regulation 11;

(d) an annual profile of any estimated costs (split by the defined pricing structure) at the time of agreement;

[F5 (e) except where the component is priced using a contract pricing method under which costs are indistinguishable from profits, the total amount of non-recurring costs at the time of agreement (split by defined pricing structure);]

(f) an annual profile of the estimated amount of each cost recovery base set out in the contract reporting plan;

(g) an annual profile (or, if the contractor is of the view that it is not possible to express these matters in an annual profile, the total amount) of the following matters—

(i) any risk contingency element,

(ii) planned amounts of profit, excluding any amount resulting from an adjustment determined under step [F6 3] of regulation 11, and

(iii) the expected amount of profit resulting from an adjustment determined under step [F7 3] of regulation 11,

that reflect the costs already incurred and the forecast costs which are expected to be incurred, indicating for each year whether those costs have been incurred, are forecast, or a combination of both;

(h) an annual profile of the costs already incurred and the forecast costs which are expected to be incurred, split by the defined pricing structure and indicating for each year—

(i) whether the costs have been incurred, are forecast, or a combination of both; and

(ii) the amount of each cost recovery base set out in the contract reporting plan;

(i) a quantified analysis of the causes of variance (explaining not less than 90% of the total variance) between any estimated costs used to determine the contract price and the total actual and forecast costs;

(j) a list of all payments exceeding £100,000 or 1% of the contract [F8 price] (whichever is the greater) that have been or are expected to be made by the Secretary of State under the contract, including—

(i) the amount, or expected amount, of each payment;

(ii) the date on which each payment did or is expected to fall due; and

(iii) if the contract requires the payment to be made in any currency other than sterling, the currency in which the payment was or is to be made;

(k) if the contract requires payment to be made in sterling, an annual profile of all such payments made, or which the contractor expects the Secretary of State will make; F9 ...

(l) if the contract requires payment to be made in any currency other than sterling, an annual profile for each such currency of all payments made, or which the contractor expects the Secretary of State will [F10 make; and]

[F11 (m) where the report is provided on a reporting date for a component of the contract, the relevant component information in relation to that component.]

[F12 (4A) In paragraph (4)(m), “relevant component information” means the following information in relation to the component so far as it is different from the information provided in relation to the contract in accordance with paragraph (4)—

(a) an explanation of which of the key deliverables specified in the contract relate to the component;

(b) an annual profile (or, if the contractor is of the view that it is not possible to express these matters in an annual profile, the total amount) of the following matters which have been, or are expected to be, taken into account in determining the contract price of the component—

(i) any risk contingency element included in the allowable costs of the component;

(ii) planned amounts of profit in respect of the component, excluding any amount resulting from an adjustment determined under step 3 of regulation 11; and

(iii) the maximum amount of profit in respect of the component resulting from an adjustment determined under step 3 of regulation 11;

(c) an annual profile of the estimated costs of the component (split by the defined pricing structure) at the time of agreement;

(d) except where the component is priced using a contract pricing method under which costs are indistinguishable from profits, the total amount of non-recurring costs for the component at the time of agreement (split by defined pricing structure);

(e) an annual profile of the estimated amount of each cost recovery base set out in the contract reporting plan in respect of the component;

(f) an annual profile (or, if the contractor is of the view that it is not possible to express these matters in an annual profile, the total amount) of the following matters—

(i) any risk contingency element in respect of the component;

(ii) planned amounts of profit in respect of the component, excluding any amount resulting from an adjustment determined under step 3 of regulation 11; and

(iii) the expected maximum amount of profit in respect of the component resulting from an adjustment determined under step 3 of regulation 11,

that reflect the costs already incurred in respect of the component and the forecast costs which are expected to be incurred in respect of the component, indicating for each year whether those costs have been incurred, are forecast, or a combination of both;

(g) an annual profile of the costs already incurred in respect of the component and the forecast costs which are expected to be incurred in respect of the component (split by the defined pricing structure) and indicating for each year—

(i) whether those costs have been incurred, are forecast, or a combination of both; and

(ii) the amount of each cost recovery base set out in the contract reporting plan in respect of the component; and

(h) a quantified analysis of the causes of variance (explaining not less than 90% of the total variance) between any estimated costs used to determine the contract price of the component and the total actual and forecast costs of the component.

(4B) If the contract price for a contract or component is determined entirely in accordance with regulation 19A (commercial pricing)—

(a) the requirements in paragraph (4) are modified as follows in relation to a contract—

(i) the estimated quantum of deliverables required by paragraph (4)(b) need not be expressed using the output metrics set out in the contract reporting plan;

(ii) the report need not contain the information specified in paragraphs (4)(c)(i) and (ii), (d) to (f), (g)(i) and (h);

(iii) paragraph (4)(i) has effect as if for the words from “any estimated costs” to the end there were substituted “the estimated price of the contract determined in accordance with regulation 19A(5) (method of determining commercial price) and the current estimated price”;

(b) the requirements in paragraph (4A) are modified as follows in relation to a component—

(i) the report need not contain the information specified in paragraphs (4A)(b)(i) and (ii), (c) to (e), (f)(i) and (g);

(ii) paragraph (4A)(h) has effect as if for the words from “any estimated costs” to the end there were substituted “the estimated price of the component determined in accordance with regulation 19A(5) (method of determining commercial price) and the current estimated price”.

(4C) If the contract price for a contract or component is determined entirely in accordance with regulation 19B(3) (prices determined in accordance with law)—

(a) the requirements in paragraph (4) are modified as follows in relation to a contract—

(i) the estimated quantum of deliverables required by paragraph (4)(b) need not be expressed using the output metrics set out in the contract reporting plan;

(ii) the report need not contain the information specified in paragraphs (4)(c) to (h);

(iii) paragraph (4)(i) has effect as if for the words from “any estimated costs” to the end there were substituted “the estimated price of the contract determined in accordance with regulation 19B(3) (method of determining price determined in accordance with law) and the current estimated price”;

(b) the requirements of paragraph (4A) are modified as follows in relation to a component—

(i) the report need not contain the information specified in paragraphs (4A)(b) to (g);

(ii) paragraph (4A)(h) has effect as if for the words from “any estimated costs” to the end there were substituted “the estimated price of the component determined in accordance with regulation 19B(3) (method of determining price determined in accordance with law) and the current estimated price”.

(4D) If the contract price for a contract or component is determined entirely in accordance with regulation 19C (previously agreed price) the report need not contain the information specified in paragraph (4) (in relation to a contract) or (4A) (in relation to a component), and must instead contain the following information in relation to the contract or component—

(a) the current estimate of the price; and

(b) details of any variance between the current estimate of the price and previous estimates of the price, and the reasons for that variance.

(4E) If the contract price for a contract or component is determined entirely in accordance with regulation 19E (competed rates applied to uncompeted volumes), paragraphs (4)(f) and (h)(ii) (in relation to a contract) and (4B)(e) and (g)(ii) (in relation to a component) have effect as if references to “cost recovery base” were references to “competed rates”.]

(5) [F13 Subject to paragraphs (7) to (9), if] the value of the qualifying defence contract is less than £50,000,000, the report must also contain the following information—

(a) a forecast of any TCIF adjustment or any final price adjustment (regulation 16) which the contractor expects will be made;

(b) a description of any event that has occurred, or circumstances which have arisen, since the contract was entered into, that have had or are likely to have a material effect in relation to the contract, including—

(i) the date on which the contractor became aware of the event or circumstances;

(ii) whether the event or circumstances are covered by any contingency element of the contract price;

(iii) the effect that the event or circumstances have had on the costs already incurred (paragraph (4)(h)); and

(iv) the forecast effect that the event or circumstances will have on the forecast costs which it is expected will be incurred (paragraph (4)(h));

(c) a list of—

(i) all delivery milestones set out in the contract;

(ii) where the contract sets an expected date for a delivery milestone to be completed, that date; and

(iii) the actual or expected delivery date for each delivery milestone;

(d) a description of any actual or intended sub-contracts which the primary contractor has entered into, or intends to enter into, for the purposes of enabling it to perform its obligations under the qualifying defence contract (including the total proportion of the [F14 contract price] which the primary contractor expects to sub-contract); and

(e) in relation to each such sub-contract which has or is expected to have a value of not less than £1,000,000 F15 ...—

(i) if the sub-contractor is a registered company, its registered name and company number, and the address of its registered office;

(ii) if the sub-contractor is not a registered company, its name;

(iii) whether the sub-contractor is associated with the primary contractor;

(iv) whether the sub-contractor is an SME;

(v) a brief description of the goods, works or services that will be provided under the sub-contract;

(vi) the date on which the sub-contract was, or is expected to be, entered into;

(vii) the contract completion date (or, if that date is not known, the expected contract completion date);

(viii) the (actual or estimated) price payable under the sub-contract; and

(ix) if an assessment has been made under regulation 61(1) or (4), the outcome of that assessment.

[F16 (f) in relation to each sub-contract which the primary contractor has entered into, or intends to enter into, and which has or is expected to have a value of not less than £15,000,000, if the primary contractor has made an assessment that the contract would not be a qualifying sub-contract—

(i) the outcome of the negative assessment;

(ii) confirmation of whether the award of the contract is not, or would not be, the result of a competitive process; and

(iii) confirmation of whether the contract enables the performance of contracts other than a qualifying defence contract or qualifying [F17 sub-contract; and]]

[F18 (g) where the report is provided on a reporting date for a component of the contract, the relevant component information in relation to that component.]

[F19 (6) In paragraph (5)(g), “the relevant component information” means, subject to paragraphs (7) to (9), the following information in relation to the component so far as it is different from the information provided in relation to the contract in accordance with paragraph (5)—

(a) a forecast of any TCIF adjustment or final price adjustment (regulation 16) which the contractor expects will be made in relation to the component;

(b) a description of any event that has occurred, or circumstances which have arisen, since the component was entered into, that have had or are likely to have a material effect in relation to the component, including—

(i) the date on which the contractor became aware of the event or circumstances;

(ii) whether the event or circumstances are covered by any contingency element of the contract price for the component;

(iii) the effect that the event or circumstances have had on the costs already incurred in respect of the component (paragraph (4A)(g)); and

(iv) the forecast effect that the event or circumstances will have on the forecast costs which it is expected will be incurred in respect of the component (paragraph (4A)(g)); and

(c) an explanation of which delivery milestones set out in the contract relate to the component.

(7) If the contract price for a contract or component is determined entirely in accordance with regulation 19A (commercial pricing)—

(a) the requirements in paragraph (5) are modified as follows in relation to a contract—

(i) the report need not contain the information specified in paragraph (5)(a) and (d) to (f);

(ii) paragraph (5)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable”;

(iii) paragraph (5)(b)(iv) has effect as if for “costs which it is expected will be incurred” there were substituted “price payable”;

(b) the requirements in paragraph (6) are modified as follows in relation to a component—

(i) the report need not contain the information specified in (6)(a);

(ii) paragraph (6)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable”;

(iii) paragraph (6)(b)(iv) has effect as if for “costs which it is expected will be incurred” there were substituted “price payable”.

(8) If the contract price for a contract or component is determined entirely in accordance with regulation 19B(3), (prices determined in accordance with law)—

(a) the requirements in paragraph (5) are modified as follows in relation to a contract—

(i) the report need not contain the information specified in paragraph (5)(a) and (d) to (f);

(ii) paragraph (5)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable”;

(b) the requirements in paragraph (6) are modified as follows in relation to a component—

(i) the report need not contain the information specified in paragraph (6)(a);

(ii) paragraph (6)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable”.

(9) If the contract price for the contract or component is determined in accordance with regulation 19C (previously agreed price)—

(a) the requirements in paragraph (5) are modified as follows in relation to a contract—

(i) paragraph (5)(b)(iii) has effect as if for “costs already incurred” there were substituted “price payable after the contract has become a qualifying defence contract”;

(ii) paragraph (5)(c)(i) has effect as if at the end there were inserted “after it became a qualifying defence contract”;

(iii) the report need not contain the information specified in paragraph (5)(d) to (f);

(b) paragraph (6)(b)(iii) has effect in relation to a component as if for “costs already incurred” there were substituted “price payable after the contract has become a qualifying defence contract”.]

Textual Amendments

F1 Reg. 27(3A) inserted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(a)

F2 Words in reg. 27(4) substituted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(b)(i)

F3 Word in reg. 27(4)(c)(ii) substituted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(b)(ii)

F4 Word in reg. 27(4)(c)(iii) substituted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(b)(ii)

F5 Reg. 27(4)(e) substituted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(b)(iii)

F6 Word in reg. 27(4)(g)(ii) substituted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(b)(ii)

F7 Word in reg. 27(4)(g)(iii) substituted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(b)(ii)

F8 Word in reg. 27(4)(j) substituted (1.9.2019) by The Single Source Contract (Amendment) Regulations 2019 (S.I. 2019/1106), regs. 1, 11(2)

F9 Word in reg. 27(4)(k) omitted (1.4.2024) by virtue of The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(b)(iv)

F10 Words in reg. 27(4)(l) substituted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(b)(v)

F11 Reg. 27(4)(m) inserted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(b)(vi)

F12 Reg. 27(4A)-(4E) inserted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(c) (with reg. 44(3))

F13 Words in reg. 27(5) substituted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(d)

F14 Words in reg. 27(5)(d) substituted (1.9.2019) by The Single Source Contract (Amendment) Regulations 2019 (S.I. 2019/1106), regs. 1, 11(3)

F15 Words in reg. 27(5)(e) omitted (1.9.2019) by virtue of The Single Source Contract (Amendment) Regulations 2019 (S.I. 2019/1106), regs. 1, 11(4)

F16 Reg. 27(5)(f) inserted (1.9.2019) by The Single Source Contract (Amendment) Regulations 2019 (S.I. 2019/1106), regs. 1, 11(5)

F17 Words in reg. 27(5)(f)(iii) substituted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(f)

F18 Reg. 27(5)(g) inserted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(g)

F19 Reg. 27(6)-(9) inserted (1.4.2024) by The Single Source Contract (Amendment) Regulations 2024 (S.I. 2024/420), regs. 1(2), 31(h)