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Detail of outcome
The SSRO received a high volume and quality of responses, providing us with constructive feedback. Our statement on the defined pricing structure, is attached to this page.
Statement on the defined pricing structure
Section 24(2)(d) of the Defence Reform Act (the “Act”) and Regulation 22(9) states that:
“In preparing a report, a contractor must have regard to any relevant guidance issued by the SSRO.”
The SSRO has issued the required reporting templates under the act and regulations. Three of the reports, “contract notification report”, “interim contract report” and the “contract completion report”, include a requirement for costs to be split by the defined pricing structure (DPS).
The DPS is a list of cost categories describing key components of the deliverables to be provided under the contract. The purpose of the DPS is to allow cost information to be collected, which will enable future analysis such as benchmarking, while assisting effective contract monitoring without being burdensome.
The SSRO’s objective in developing the DPS is to build a single, centrally available, comprehensive and robustly structured data set that records the estimated and outturn costs (alongside initial and final contract out parameters) for every qualifying defence contract and qualifying sub-contract.
The SSRO will develop the DPS over the course of the next 2 years, in line with the act and regulations and in consultation with industry and the MOD.
The SSRO has set out the following timetable for the development of the DPS:
issue the SSRO’s principles, in relation to the development and use of the DPS by 30 June 2015
conduct joint meetings with contractors and the MOD to determine the DPS for initial qualifying defence contracts as they arise over the next year
consult with wider industry when determining DPS for initial qualifying defence contracts to ensure industry wide suitability as they arise.
Develop the reporting templates through MOD and industry engagement, to be issued when available but within 12 months of the transitional period
The SSRO will continue to formulate and refine its reporting templates as a basis for the DPS. We will work with the MOD and industry during the formulation process to ensure that the templates are suitable for purpose.
Updates to the DPS will be captured in the interim contract report.
All qualifying defence contracts and qualifying sub-contracts, in the absence of a DPS, are required to provide level 1 data (total cost). We will work with early adopters and the MOD to develop further levels.
Until the SSRO finalises the DPS reporting procedures, DPSs for qualifying defence contracts will be determined through discussions between the SSRO, the contractor, and the MOD. It is expected that the MOD will initiate these discussions when they notify the SSRO of an impending qualifying defence contract.
Please contact us at email@example.com if you require any clarification, advice or further information.
Detail of feedback received
Feedback responses received.
Defined Pricing Structure (DPS) is the term used to define lists of cost categories used to capture data on the contract reports which are required, by the Defence Reform Act and the relevant regulations, to be submitted to the SSRO. The DPS in particular is mandated for the contract notification report, interim contract report and contract completion report. The objective for the DPS is to build up over time a single, centrally available, comprehensive and robustly structured data set that records the estimated and outturn costs, alongside initial and final contract out parameters, for every qualifying defence contract (QDC).
The SSRO propose basing the DPS on US Military Standard 881c. The benefits of using this approach is that 881c has been established and refined over many years of US experience, which has been tried, tested and proven on a much bigger scale. However we also recognise that the DPS will need to be developed over time in concert with the cefence contractors. To allow for this the immediate reporting requirements will be to include the DPS at Level 1 only thus relating to the total programme cost. We propose to develop Level 2 over the next 6 months, working with early adopters and the MOD. In the medium term we will develop levels 3 and 4 of the DPS to create a complete suite of agreed pricing structure.
An example of a worked DPS, based on a submarine system, is provided as an example to inform this consultation. This example describes the DPS at 4 levels. During our research we recognise and acknowledge that a single 4 level DPS may not be tailored to reflect different types of service contracts and we will consider how best to address these with the defence community in the coming months.
This consultation closes on 19 March 2015, after which the SSRO Board will consider the responses to the consultation.
Note: the example DPS used in the original consultation has been removed (27 April 2016).
Please email feedback to: firstname.lastname@example.org