Awarding Qualifying Subcontracts under the Single Source Procurement Framework
The contracting authority has a number of obligations under the Act and Regulations relating to the process of subcontracting where a subcontract in question may be a qualifying subcontract. In broad terms these can be viewed as
(i) Establishing if any proposed subcontract is a qualifying subcontract and if this is the result of the assessment notifying the subcontractor accordingly
(ii) Agreeing which one or more of the six allowed pricing methods will apply to the qualifying subcontract
(iii) Agreeing the profit for any qualifying subcontract. In practice if the subcontractor will not provide supporting cost and risk information to his proposed price to the contracting authority (and that obligation does not appear to be present in the Act & Regulations) then the contracting authority can not adequately complete the process by which the profit adjustments to the baseline profit rate are assessed and calculated. The involvement of the UK MoD in the process of awarding subcontracts must therefore be established as part of the main contractor offer to the UK MoD. This needs to consider both qualifying and non qualifying single source subcontracts.
It is also not clear in the Act and Regulations how changes to the price of a lower level qualifying subcontract (at any level) will affect the price of the main contract including those changes that could result from the profit sharing mechanism of the Act for the sharing of excess profits/losses. A mechanism should be established to address this that is not inconsistent with the Act and Regulations.