Allowable Costs under the Single Source Contract Rules: Costs for work undertaken at risk before entering into a defence contract

By Dr Luke Butler, Lecturer in Law (University of Bristol Law School).

38611963In an earlier blog, I introduced the Defence Reform Act 2014 (DRA), the Single Source Contract Regulations (SSCR) and the Single Source Regulations Office.[1] Collectively, these regulate the pricing of defence contracts awarded by the Ministry of Defence to a single source contractor. It is recalled that contractors can recover certain “Allowable Costs” incurred under a Qualifying Defence Contract (QDC) if they are appropriate, attributable to the contract, and reasonable in the circumstances (the so-called “AAR test”).[2]

But what if, ahead of the agreement of the contract, work relating to the contract is undertaken at risk pursuant to an “intention to proceed” (ITP) arrangement?[3] Unless the ITP fulfills the requirements for a legally binding contract, it cannot itself constitute a QDC.[4] This leaves the question whether this kind of pre-contractual work can constitute an Allowable Cost recoverable under the QDC once the QDC is in place. (more…)

Singling Out Defence Procurement: Contract Pricing under the Single Source Contract Regulations

By Dr Luke Butler, Lecturer in Law (University of Bristol Law School).

38611963Whatever the fallout of Brexit, the UK will continue to take a leading role in the defence of Europe. In an age that will be defined by reduced defence budgets and increased security threats, the Government must ensure that the way it organises, procures and manages its defence capability delivers value for money. Historically, the legal aspects of defence acquisition have been largely underresearched. My latest monograph, UK Defence Acquisition: Organisation, Process and Management (Hart Oxford, forthcoming) will offer a first systematic analysis of an area currently undergoing unprecedented domestic legal reform. This blog focuses on efforts to regulate the escalating costs of defence contracts. (more…)

Legal implications of Brexit on UK Defence Procurement

By Dr Luke Butler, Lecturer in Law (University of Bristol Law School).*

38611963Defence procurement may not be at the top of the Brexit agenda but it has courted some controversy in the press.[1] It has also been considered as part of the broader arguments about the impact of Brexit on the UK’s defence and security posture. [2] This blog hones in on a more mundane but no less important issue: what, if any, are the implications of Brexit for the legal regulation of defence procurement? There are at least two good reasons why it is useful to consider the legal position. Firstly, defence procurement, like public procurement, is now firmly within the legal remit of EU public procurement Directives. There is already an emerging discourse on the implications of Brexit for public sector procurement regulation; a perspective on defence procurement adds a further contribution.[3] Secondly, as will be discussed, the UK’s defence acquisition as a whole is undergoing unprecedented domestic reform. My ongoing research examines defence procurement regulation as part of this systemic whole and which is likely to be impacted by any change to the regulatory environment. (more…)