Single Source Pricing Framework (SSPF) Overview

The Single Source Pricing Framework comprises the Defence Reform Act 2014 (Part 2) plus the Single Source Contract Regulations 2014 as supplemented by any Statutory Guidance issued by the Single Source Regulations Office (SSRO). Adopting the order in that the topics are broadly addressed within the DRA the framework addresses the following major topics:

Determining if the SSPF applies to the single source contract or sub-contract in question.

The framework sets out the following:

(i) The tests that determine if a contract is a competitive contract (the contract is a single source qualifying defence contract if these tests are not meet subject to certain exclusions and exemptions. A similar approach is adopted for qualifying subcontracts.

(ii) The exclusions and exemptions that exclude an otherwise qualifying defence contract from being covered by the SSPF

Pricing of Single Source Contracts 

The framework sets out the following:

(i) The permitted pricing methods

(ii) The formula(s) used to price single source contracts

(iii) The process for establishing the profit rate to apply to the contract

(iv) The definition of the allowable costs that can be assigned to the contract

(v)  A process to allow excess profits or losses on fixed price single source contracts to be adjusted

Reporting & Record Keeping Requirements

The framework sets out the following:

(i) The “standard” reporting required under the single source contract

(ii) The overhead and forward planning (industrial capacity) reporting of business units undertaking work on single source contracts

(iii) The reporting of events and circumstances that may influence the outcome of the single source contract

(Iv) The records required principally in support of the reporting required under item (i)-(iii) of this section.

Compliance and Penalty Regime

The framework sets out the following:

(i) The action(s) or lack of action(s) that can lead to a non-compliance against the SSPF

(ii) The process for the UK MoD to issue a (non) compliance notice

(iii) The pre-determined penalty levels associated with each category of non-compliance and in certain circumstances additional damages at law.

The roles and powers of the SSPF regulator

The framework sets out the following:

(i) The role of the regulator in:

(a) the issuing of opinions and determinations to clarify aspects of the SSPF:

(b) making recommending to the Secretary of State for Defence on key rates to be used for pricing including the contract profit rate.

(c) keeping the SSPF under review

(ii) The other roles and responsibilities of the regulator

The protection of confidential information disclosed under the SSPF

The framework sets out the following:

(i) The duties of the receiving party to protect confidential information received under the SSPF (subject to certain allowed uses) and making the unauthorised release of confidential information a criminal offence.