Guidance

4. Reporting and DefCARS queries

Updated 6 February 2024

4.1 For the purposes of reporting sub-contracts within contract reports, is there a difference between a sub-contract and a purchase order?

Published April 2023

The Regulations require that contract reports contain certain information about sub-contracts. Where a sub-contract has a value of £1 million or greater, the QDC or QSC contractor must report information about those sub-contracts. Where sub-contracts have been assessed as having a value of £15 million or greater and have not been assessed as a QSC, information about the assessment must be provided. Table 19 in the contract reporting guidance explains these requirements in the context of the initial reports.

A purchase order (“PO”) can be a contract or sub-contract if the normal legal requirements of contract formation apply in the particular circumstances. As referred to in paragraph 3.13 of our contract reporting guidance, in order for a contract to be formed there must be an agreement which is reached by the process of offer and acceptance, an exchange of consideration (something of value); and an intention by the parties that the agreement be legally binding. In relation to a PO specifically, the contractor may wish to consider whether the PO is an offer to purchase, whether that PO has the been accepted by the relevant supplier, any terms which have been applied to the PO, and any other or related contractual terms which apply to the transaction.

The same legal requirements of contract formation apply to a sub-contract. Broadly, a contract will be considered a sub-contract where the sub-contractor is performing some of the primary contractor’s obligations under the primary contract. In the context of the regime we might, for example, expect to see a sub-contract being reported where a primary contractor under a QDC enters into a contract with another party (the sub-contractor) through which it is agreed that the sub-contractor will perform some of the primary contractor’s obligations under the QDC. Equally, a sub-contractor with a QSC may enter into a further sub-contract under which the further sub-contractor performs some of the sub-contractor’s obligations under the QSC. In principle, there is no reason a PO could not be a sub-contract.

This response is not to be taken as legal advice about contractual matters. Parties should seek their own legal advice where it proves difficult to determine whether a PO is a contract or sub-contract.

Link to the SSRO’s reporting guidance

4.2 Where a QDC or QSC is placed with a contractor whose functional currency is other than GBP how are contract costs to be converted into GBP?

Published July 2023

Regulation 5 provides that, in determining the contract value, the contracting authority must “convert any amounts payable under the contract in a foreign currency to sterling, using a rate consistent with the contracting authority’s policies or where no such policies exist, a rate of exchange derived on a just and reasonable basis”. For QDCs, the relevant contracting authority will be the MOD. For first-tier QSCs, the relevant contracting authority will be the primary contractor. Regulation 22(8) states that “Except where otherwise provided in this Part, any reference to money in a report must be expressed in sterling”. Contract reports on contracts priced in foreign currencies must apply the same conversion rate as was determined by the contracting authority.

Paragraph 3.8 of the SSRO’s contract reporting guidance confirms the approach explained above.

4.3 Should contract amendments between the end of a quarterly period and the Quarterly Contract Report (QCR) due date for that period be reflected in that report?

Published July 2023

No. A QCR should reflect the contractual position as at the end of the calendar quarter to which the report relates. Any contract amendments that occur after the end of the calendar quarter should be reflected in the following QCR or Contract Completion Report. For example, where the relevant calendar quarter ended on 30 June, and an amendment took place on 15 July, a QCR submitted on 31 July (in relation to the calendar quarter ending 30 June) would not reflect this amendment, but it would be reported in the next one submitted by 31 October.

4.4 Can the submission deadline for the initial reports be extended?

Published July 2023

The Single Source Contract Regulations 2014 require the first three reports to be submitted within one month of the contract being entered into (Regulation 22(10)(c)(ii)) or, for a QDC by amendment, within one month after the date of the amendment (Regulation 22(10)(c)(i)). The Regulations do not provide for the suspension of, or extension to, submission deadlines in relation to any contract reports.

4.5 Should more than one DPS template be used where a QDC or QSC provides for goods or services that is applicable to more than one DPS template category?

Published July 2023

Only one category of DPS template should be submitted per QDC or QSC. Where a contract provides for goods, works or services that can be reflected in more than one of the 16 DPS templates, the DPS template that covers the largest proportion of goods, works or services being provided under the QDC or QSC should be used. Any items not covered by the template should be reflected in the “other” sections of the DPS. The SSRO Helpdesk can provide guidance on selecting an appropriate DPS template for specific QDCs or QSCs.

4.6 Where a report requires information to be given based on ‘annual profiles’, does this mean the financial year of the contract entered into date or the financial year prior to the contract entered into date?

Published July 2023

Regulation 22(5) requires annual profiles to be “of financial years from that in which the contract was entered into until that in which the contract completion date falls or is expected to fall”. The annual profile therefore begins from the financial year in which the contract was entered into. For example, if the contract was entered into on 5 May 2020 and the contract completion date is 30 June 2023, an annual profile would be required for the years from 2020/21 to 2023/24.

Chapter 3 of the SSRO’s contract reporting guidance assists contractors in identifying the correct contract entered into date and contract completion date.

4.7 If a Target Cost Incentive Fee (TCIF) or final price adjustment (FPA) is not being applied is the contractor still required to submit a forecast of that adjustment as required in update reports?

Published February 2024

A TCIF adjustment or FPA may be applied to any qualifying contract that meets the relevant conditions in the Regulations. The requirement to report a forecast of any TCIF adjustment or FPA which the contractor expects will be made applies to the Quarterly Contract Report, lower value Interim Contract Report and the Contract Completion Report. The contractor should report a value of 0 in the relevant field if it does not anticipate that one of these adjustments will be applied to the price of the contract. Contractors may provide an explanation as to why no adjustment is anticipated to apply – this might include, for example, if certain profit or loss thresholds are not met, or if the pricing method is out of scope of the legislative provisions for that adjustment. If the forecast amount of either adjustment is not zero, such that the contractor anticipates the conditions will be met for an adjustment to be applied, then that forecast must be included in the reports set out above.

The SSRO will consider a review of its reporting guidance to better reflect this position.

4.8 Can I give DefCARS access to a temporary employee who is working for our contracting company?

Published February 2024

Contractors must ensure that they comply with the DefCARS Shared Service Security Policy v6 and DefCARS Security Operating Procedures v8 and that access is given only to those individuals who should have it - which may include temporary employees. Those individuals should be informed that they are subject to Schedule 5 of the Act, which imposes criminal liability for disclosure of certain information which is not permitted. All DefCARS Administration Users must review the accounts of those who have access to the system on a regular basis, ensuring that only authorised persons can access the data. 

Where a contractor is uncertain of whether they should grant access to someone working for them, they may instead consider downloading the information which they have drafted in DefCARS and sharing a copy with the individual. The usual protections around sharing information, and any applicable information security classification, should be considered when adopting this approach.

4.9 What is the QDC workbook and why do I have to complete it if I am providing data in DefCARS?

Published February 2024

As part of the tendering process for a single source contract, the MOD may issue a QDC workbook to contractors to complete as supporting documentation for the price which is agreed between the contractor and the contracting authority. The workbook will contain details of the Allowable Costs of the contract, the contract profit rate which is applied, as well as other pricing information which the MOD requires. The workbook is issued under the MOD’s Commercial Policy and does not form part of the reporting requirements set out in the Regulations or the SSRO’s reporting guidance. Some information contained in the workbook is also required in the initial set of reports which a contractor must submit and can be populated within DefCARS if it is consistent with the price payable under the contract. The contractor may wish to attach the agreed QDC workbook to the submission of their initial reports, although there will likely be information contained in the workbook which is not required.

4.10 If a sub-contract is enabling multiple QDCs do I report the full price of the sub-contract or the proportion of the price which relates to the QDC being reported?

Published February 2024

Regulation 26(6)(k)(viii) requires a contractor, in their Quarterly Contract Report, to provide the (actual or estimated) price payable under the relevant sub-contract to the QDC or QSC. Where the sub-contract enables the performance of more than one QDC or QSC, our reporting guidance provides that it should be reported in respect of each QDC or QSC that it enables.

The Regulations do not limit the information a contractor is to report only to the portion of the sub-contract which enables the performance of the QDC or QSC. That means that, where the contractor is required to report the “price payable under the sub-contract”, that is the entire price payable – notwithstanding that the same price payable under the sub-contract may be reported against the other QDCs or QSCs which are enabled by the sub-contract. The contractor may want to explain in their report what other QDCs or QSCs a particular sub-contract is providing goods, works or services for.

4.11 Can the MOD agree that some of my statutory reports are not required?

Published February 2024

The MOD cannot agree that the submission of mandated contract or supplier reports are not required. The contractor needs to determine which contract reports it is required to submit, which is based on the value and duration of the contract. The contractor also needs to determine whether they have met the £50 million on-going contract condition (OCC) and are therefore required to submit strategic supplier reports. Additionally, overhead reports will become due for any Qualifying Business Unit where the value of work being undertaken by that unit for any qualifying contract is at least £10 million. Although the MOD cannot agree that supplier reports are not required in circumstances where the legislation mandates them, it may exempt a contract from counting towards the OCC.

4.12 Do Interim Contract Report (ICR) requirements apply retrospectively if the duration of a contract is extended as a result of an amendment?

Published February 2024

ICR reporting obligations do not apply retrospectively in the event of a contract being amended. If, for example, a contract is extended and the duration of the extended contract affects what would have been past reporting requirements (had the contract originally been entered into for the extended duration), past ICRs which would have been due do not automatically become required at a new time of agreement. This is not the case, however, where a contractor fails to submit an ICR of which they were unaware owing to a failure to update their Contract Reporting Plan (CRP) to reflect a new time of agreement and a new contract completion date. The outstanding ICR must still be submitted with information as at the relevant due date, notwithstanding that the CPR has not been updated. The requirements are that, in the case of agreement with the Secretary of State, the first reporting date must be no more than five years following the ‘time of agreement’ for QDCs or QSCs with a value of less than £50 million and no more than three years for QDCs or QSCs with a value of £50 million or more. Subsequent dates for submission of ICRs before the expected contract completion date will be as agreed between the primary contractor and the Secretary of State and in any case no more than five years (<£50 million) or three years (≥£50 million) after the previous reporting date. Where there is no agreement, reports are more frequent as prescribed by the Regulations.

Regulation 2(1) defines the ‘time of agreement’ (for contracts other than QDCs by amendment) as either the date a QDC or QSC is entered into or, if the price is subsequently re-determined on amendment, the date of that re-determination. In this case the contract price has been re-determined and so the time of agreement has changed.