These changes will allow contractors to meet their reporting obligations in response to the new reporting requirements in the Single Source Contract Regulations, which come into force on 1 April 2024 (1).
We are consulting stakeholders, ahead of formally issuing the new reporting guidance for consideration in March.
The guidance covers the new reporting implications following the introduction of:
- Alternative pricing methods for contracts, which will see non-competitive defence contracts able to be priced in new ways. For example, an item could be priced by reference to competitive markets: simplifying and speeding up procurement.
- More flexibility and transparency through broadening the ability for a contract to be split into different components or parts, each with its own profit rate and price (known as componentisation). This will allow contract prices to better reflect the risk-sharing between the MOD and defence contractors.
- Rationalisation of how the contract profit rate is to be calculated, removing two steps from the existing six step process, and simplifying the agreement of contract profit rates.
The consultation issued today takes account of industry and MOD views shared in workshops and meetings, and in their responses to our working papers issued in 2023.
Akhlaq Shah, Head of Compliance and Reporting, said:
"The MOD is bringing considerable changes to the existing regulatory framework to increase transparency within the regime, including new provisions that update the information which contractors are required to report on.
We will support industry and the MOD in the implementation of these reporting changes and facilitate efficient reporting through our Defence Contract Analysis and Reporting System (DefCARS).
Our engagement on the reporting guidance will be ongoing while contractors make use of the guidance and as a result we will be providing practical support as stakeholders navigate the new legislation. You will see us on the ground working closely with our stakeholders to ensure that these reporting changes are understood and to support contractors so that reports are provided in a timely manner. We are keen to hear your feedback, which will help us to better support you."
The consultation
