Defence Reform Act 2014

Defence Reform Act 2014

2014 CHAPTER 20

Commentary on Sections

Part 2: Single Source Contracts

Section 21: Final price adjustment

75. Subsection (1) allows for the SSCRs to make provision for adjustment to the price of QDCs. It is intended that this will only be used for certain types of contract (“fixed” and “firm” price contracts – described under section 15 above), in reliance on subsection (4)(a).

76. The procedure for determining the amount of this adjustment will be set out in the SSCRs (subsection (2)). In most cases the determination of any adjustment under this section is expected to be made by agreement between the Secretary of State (or an authorised person) and the contractor (under subsection (3)(a)), but subsection (3)(b) enables one of the parties to refer the matter to the SSRO for determination, in which case enforcement is provided for by section 22.

77. Subsection (5) gives the Secretary of State a power, on a case by case basis, to direct that this adjustment does not apply to a QDC, so long as the value of that QDC is within a range to be specified in the SSCRs. Subsection (6) provides that, in exercising this power of exemption, the Secretary of State must have regard to matters specified in the SSCRs.