Public Procurement PART 1 Introductory provision Citation and commencement 1 These Regulations may be cited as the Single Source Contract (Amendment) Regulations 2019 and come into force on 1st September 2019. PART 2 Amendments to the Single Source Contract Regulations 2014 2 The Single Source Contract Regulations 2014 are amended in accordance with regulations 3 to 23 of these Regulations. Amendment of regulation 2 (interpretation) 3 In regulation 2, after paragraph (2), insert— 3 A reference to a report provided under Part 6 includes an estimated rates agreement pricing statement under regulation 38. . Amendment of regulation 5 (calculating the value of a contract) 4 1 Regulation 5 is amended as follows. 2 In paragraph (4)— a in sub-paragraph (b), for “the Secretary of State” substitute “the contracting authority”; b in sub-paragraph (c)— i omit “accounting”; ii after “policies” insert “or where no such policies exist, a rate of exchange derived on a just and reasonable basis”. 3 In paragraph (5)— a for “paragraphs (6) and (12)” substitute “paragraph (6)”; b in sub-paragraph (b), after “other contracts” insert “which are not the result of a competitive process”. 4 After paragraph (6)(b), insert— c the contracting authority must disregard a contract, or a proposed contract, which has a value of £250,000 or less where it is reasonably satisfied that the procurement has not been subdivided in order to avoid the requirements of the Act and these Regulations. . 5 In paragraph (7), after “has a value of” insert “more than £250,000 but”. 6 In paragraph (8)(b), after “has a value of” insert “more than £250,000 but”. 7 After paragraph (8), insert— 8A A contract which has a value of £1,000,000 or less shall not be treated as a qualifying defence contract by virtue of this regulation unless the contracting authority is reasonably satisfied that the procurement has been subdivided in order to avoid the requirements of the Act and these Regulations. . 8 Omit paragraphs (9) to (12). Amendment to regulation 9 (competitive process for contracts made under a framework agreement) 5 1 Regulation 9 is amended as follows. 2 In paragraph (1)(a)(i), for “framework contractor” substitute “framework supplier”. 3 In paragraph (3)(a)— a for “framework contractor” substitute “primary contractor”; b for “sub-paragraph (a)(i)” substitute “paragraph (1)(a)(i)”; c for “sub-paragraph (a)(ii)” substitute “paragraph (1)(a)(ii)”. 4 In paragraph (3)(b), for “framework contractor” substitute “primary contractor”. 5 In paragraphs (1)(b), (2)(b) and (4)(a), each time it appears, for “framework contractors” substitute “framework suppliers”. Amendment of regulation 16 (procedure for determining final price adjustment) 6 In regulation 16, after paragraph (2), insert— 2A Where the price payable under the contract includes one or more defined components which use a regulated pricing method other than the firm pricing method, fixed pricing method, or volume-driven pricing method, the value of such component or components shall be disregarded for the purposes of paragraph (2). . Amendment of regulation 17 (calculation of final price adjustment) 7 In regulation 17, after paragraph (6)(j), insert— k where the contract contains at least one component which is not a relevant defined component, references to the contract price, the contract profit, the contract profit rate, the loss level and the outturn costs relate only to the relevant defined component or components of the contract; l references to the relevant defined component or components of a contract are to the component or components of the contract with a price determined by the firm pricing method, the fixed pricing method or the volume-driven pricing method. . Amendment of regulation 24 (contract reporting plan) 8 In regulation 24, for paragraph (2)(a), substitute— a the price that the contracting authority is committed to paying for the contract; . Amendment of regulation 25 (contract notification report) 9 1 Regulation 25 is amended as follows. 2 In paragraph (2)(g), for “value” substitute “price”. 3 In paragraph (2)(k), for “value” substitute “contract price”. 4 In paragraph (2)(l), omit the words in brackets. 5 After paragraph (2)(l), insert— m 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 sub-contract. . Amendment of regulation 26 (quarterly contract report) 10 1 Regulation 26 is amended as follows. 2 In paragraph (6)(j), for “value” substitute “contract price”. 3 In paragraph (6)(k), omit the words in brackets. 4 After paragraph (6)(k), insert— l 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 sub-contract. . Amendment of regulation 27 (interim contract report) 11 1 Regulation 27 is amended as follows. 2 In paragraph (4)(j), for “value” substitute “price”. 3 In paragraph (5)(d), for “value of the qualifying defence contract” substitute “contract price”. 4 In paragraph (5)(e), omit the words in brackets. 5 After paragraph (5)(e), insert— 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 sub-contract. . Amendment of regulation 28 (contract completion report) 12 1 Regulation 28 is amended as follows. 2 In paragraph (2)(l), for “value” substitute “price”. 3 In paragraph (2)(p), omit the words in brackets. 4 After paragraph (2)(p), insert— q 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 sub-contract. . Amendment of regulation 35 (QBU actual costs analysis report) 13 In regulation 35, in paragraph (8)(b), after “any” insert “material”. Amendment of regulation 36 (estimated rates claim report) 14 In regulation 36, for paragraph (3)(d), substitute— d the QBU budgeted cost and budgeted volume data; . Amendment of regulation 37 (QBU estimated costs analysis report) 15 In regulation 37, in paragraph (8)(a), after “any” insert “material”. Amendment of regulation 42 (strategic industry capacity report: activities, people and infrastructure) 16 In regulation 42, in paragraph (1)(b), for “£1,000,000” substitute “£10,000,000”. Amendment of regulation 50 (maximum penalties) 17 1 Regulation 50 is amended as follows. 2 In paragraph (5)(a), for “value of all qualifying defence contracts and qualifying sub-contracts” substitute “of all the contract prices for each qualifying defence contract and qualifying sub-contract”. 3 In paragraph (5)(b), for “value” substitute “price”. Amendment of regulation 60 (competitive process for sub-contracts made under a framework agreement) 18 1 Regulation 60 is amended as follows. 2 Each time it appears, for “framework contractors” substitute “framework suppliers”. 3 In paragraph (1)(a), for “framework contractor” substitute “framework supplier”. 4 In paragraph (1)(c), for “framework contractor” substitute “sub-contractor”. 5 In paragraph (3)(a)(ii), for “sub-contractor or sub-contractors” substitute “person or persons”. Amendment of regulation 61 (assessing whether a contract would be a qualifying sub-contract) 19 In regulation 61, after paragraph (6), insert— 7 For the purposes of paragraphs (2) and (5), where the value of the proposed contract is not less than £15,000,000, the record of the assessment must contain an assessment of whether the proposed contract would be the result of a competitive process and any other reason relied upon to justify a negative assessment. 8 Where A, C or E (as the case may be) makes a record of assessment, A, C or E must give notice in writing to the Secretary of State and the SSRO that an assessment has been made. . Amendment of regulation 64 (modifications of Part 2 of the Defence Reform Act 2014) 20 In regulation 64, after paragraph (5), insert— 5A Section 21(1) has effect as if for “the Secretary of State” there were substituted “the contracting authority” . Amendment of regulation 65 (modifications of the Single Source Contract Regulations 2014) 21 1 Regulation 65 is amended as follows. 2 For paragraph (8)(a)(ii) substitute— ii for the words “an adjustment” to “(“final price adjustment”)” there were substituted “a payment of a specified amount (“a final price adjustment”) may be made to or by the Secretary of State”; . 3 After paragraph (9), insert— 9A Regulation 20(7)(a) has effect as if after the words “contract completion date” there were inserted “or the date on which it is determined that the contract is no longer a qualifying sub-contract”. . 22 After regulation 65, insert— Price adjustments for qualifying sub-contracts 66 Where the amount of an adjustment to the contract price of a qualifying sub-contract is determined by the SSRO under regulation 16(7) or calculated under regulation 17— a the contract price is not to be adjusted by that amount; and b a payment for that amount must be made by the Secretary of State to the sub-contractor or by the sub-contractor to the Secretary of State (whichever is appropriate). . Amendment to the Schedule 23 1 The Schedule to the 2014 Regulations is amended as follows. 2 In paragraph 2(1), omit the definition of “contract profit rate for an amendment”. PART 3 Amendment of the Single Source Contract (Amendment) (No. 2) Regulations 2018 24 1 Regulation 14 of the Single Source Contract (Amendment) (No. 2) Regulations 2018 is amended as follows. 2 In paragraph (2)— a in sub-paragraph (b), for “18(3)(a)” substitute “18(3)”; b in sub-paragraph (c), after “19(3)(a)” insert “and (b)”. Stuart Andrew Minister for Defence Procurement Ministry of Defence 10th July 2019