The Compliance Bulletin examines how well defence contractors followed the reporting regulations for non-competitive (also known as single source) defence contracts.
Defence contractors must report information about their single-source defence contracts to the MOD and the Single Source Regulations Office (the SSRO). This is performed using the SSRO's Defence Contract Analysis and Reporting System (DefCARS).
This information is a key element of the regulatory framework, providing the MOD with ongoing information throughout the contract period to support informed purchasing decisions and effective contract management for vital defence equipment and services.
The Compliance Bulletin presents compliance data relating to reports expected to be submitted between 1 May 2024 and 30 April 2025. Data is also presented against historical compliance records going back to May 2018.
The bulletin indicates that while most expected reports are being made by contractors, there remains scope to improve the quality of initial data. Additionally, the MOD must ensure that the information received is effectively considered and used, by increasing the amount of reported information accessed and reviewed in DefCARS.
The bulletin finds that the majority of expected reports are eventually received, with timeliness (being delivered in line with the timescales set out in the legislation) improving for contract reports and remaining constant for supplier reports when compared to last year. The quality of reports (complying with the legislative requirements) remains similar to last year with 48% of contract and supplier reports meeting the quality threshold on the first attempt. Both timeliness and quality remain below the SSRO's Key Performance Indicator (KPI) of 75 per cent, but when allowing for additional time, beyond the expected submission date, most of the reports are eventually received and the proportion of all report types correct upon subsequent submission is 75% or greater showing that actions are taken by contractors when issues are raised.
Since 1 April 2024, the legislation has provided a definition of a component of the contract price, and components have their own reporting requirements. Examples of a component are where a contract uses a different contract pricing method to the contract pricing method used in any other part of the contract; has a different contract profit rate to the contract profit rate used in any other part of the contract; or has a price which has been re-determined.
Our review of data also showed that new reporting requirements related to components of contracts were not being followed, with three quarters not submitting the information in time.
The MOD was also only verifying around a quarter of the data submitted in contract reports. This is the lowest rate of MOD reviews since compliance data started to be collected in DefCARS and presents a challenge to data quality.
The SSRO will seek to improve compliance with the Single Source Contract Regulations 2014 (the "Regulations") by providing:
guidance on Regulations that may benefit from further interpretation;
regular engagement with industry through reporting workshops;
contractors who have many QDCs with monthly management information to assist in tracking required reports;
management information and analysis to the MOD to help prioritise compliance activities; and
an arbitration route for contractors and the MOD to settle compliance disagreements.
The SSRO's Head of Compliance, Reporting and IT, Akhlaq Shah, said:
"Beyond monitoring and reporting on compliance, the SSRO will continue to support contractors and the MOD in meeting their responsibilities. We will keep investing in efforts to clarify requirements, guide industry in meeting them, and help the MOD use the data effectively and consistently".
We continue to work with the MOD and industry so that the SSRO is best able to support compliance outcomes to help deliver value for money defence procurement while ensuring fair and reasonable prices are paid to industry.
Take a look at the Compliance Bulletin f
