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
for more information on contractors are doing in timeliness and
quality of their reporting.
