This video examines the circumstances in which the Ministry of Defence (MOD) can take enforcement action under the regulatory framework related to qualifying sub-contracts and the different types of action it may take. Chapter 8 of the SSRO’s guidance on qualifying sub-contracts focuses on enforcement action by the MOD.
TRANSCRIPT AND SLIDES AS USED IN THE VIDEO:
SLIDE 1
This video examines the circumstances in which the Ministry of Defence can take enforcement action under the regulatory framework related to qualifying sub-contracts and the different types of action it may take.
SLIDE 2
The MOD may take enforcement action against a primary contractor under a qualifying defence contract or a sub-contractor under a qualifying sub-contract if that person fails to meet its statutory obligations under the regulatory framework.
The contraventions which may give rise to enforcement action are set out in section 31 of the Defence Reform Act 2014. We will look at these on the next slide.
The contracting authority and the sub-contractor under a QSC are independently responsible for their own compliance in respect of that contract.
There are two types of enforcement action the MOD can take. It may either:
- Issue a compliance notice – that’s a formal notice that a person has contravened section 31 of the Act, setting out the steps required to remedy the breach and the timetable for doing so; OR
- Issue a penalty notice– which imposes a requirement on the recipient to pay a financial penalty to the MOD within six months from the date of the notice. The maximum amount of a penalty is determined by the Single Source Contract Regulations 2014 with reference to the value of the contract.
A compliance notice may be issued where a person has contravened section 31 of the Act and the MOD believes there are steps that can be taken by the person to remedy the contravention
A penalty notice may be issue where a person has failed to take the steps specified in a compliance notice without a reasonable excuse OR a person has contravened section 31 of the Act but the MOD does not thinkthere are steps that can be taken by the person to remedy the contravention
The are certain time limits and other requirements for issuing compliance and penalty notices. The SSRO’s QSC guidance gives further information on those requirements. The SSRO also provides specific guidance for the MOD on determining the amount of a penalty, to which the MOD must have regard.
You should also note that a person in receipt of a penalty notice may apply to the SSRO for a determination on specified matters related to that notice. These include:
- whether the contravention occurred;
- whether the person had a reasonable excuse for the contravention; OR
- the amount of the penalty.
In response to such a referral the SSRO may vary the amount of the penalty or cancel the penalty notice.
SLIDE 3
The contraventions of section 31 of the Act which make a person susceptible to enforcement action by the MOD are shown here.
The first three of these are contraventions which relate to the record-keeping and reporting obligations of primary contractors under QDCs and sub-contractors under QSCs. They include:
- failing to comply with specified record-keeping and reporting requirements;
- knowingly and recklessly providing a report on a qualifying contract that is misleading in a material respect; AND
- failing to comply with the duty to notify the MOD of events and circumstances which are materially relevant to either:
- the costs or price payable under a qualifying contract to which they are a party; or
- their ability to perform a material obligation of a qualifying contract.
The remaining contraventions relate specifically to obligations that contracting authorities have in relation to QSC assessment and notification including:
- failing to undertake a QSC assessment in respect of a proposed sub-contract when required to do so
- in the MOD’s opinion, incorrectly assessing that a proposed sub-contract would not be a QSC if entered into AND
- failing to give the required notice of a positive QSC assessment in respect of a proposed sub-contract
Contractors and sub-contractors under qualifying contracts can minimize the risk of enforcement action by the MOD by ensuring they have a good understanding of the regulatory provisions, particularly those we discussed in the first and second videos in this series related to QSC assessment and notification.
SLIDE 4
Thank you for your interest in this video. Should you have any queries regarding the content covered, or require further assistance on applying the regulatory framework for single source defence contracts, you can contact the SSRO’s Helpdesk at helpdesk@ssro.gov.uk