Section 20 Allowable costsI1I2

The SSRO must issue guidance about determining whether costs are allowable costs under qualifying defence contracts.

In determining whether a particular cost is an allowable cost under a qualifying defence contract F1, or, where the contract is divided into components, a component of that contract, the Secretary of State or an authorised person, and the primary contractor, must be satisfied that the cost is—

Single source contract regulations may provide that the requirements set out in subsection (2)(a) to (c) are not met in relation to a cost where the cost arises from profits made by a person connected with the primary contractor.

The regulations may specify the circumstances in which a person is connected with the primary contractor.

In determining whether the requirements set out in subsection (2)(a) to (c) are met in relation to a particular cost, the Secretary of State or an authorised person, and the primary contractor, must have regard to guidance issued under subsection (1).

The Secretary of State or an authorised person may at any time require a primary contractor to show (whether by reference to guidance issued under subsection (1) or otherwise) that the requirements set out in subsection (2)(a) to (c) are met in relation to a particular cost claimed by the primary contractor as an allowable cost under a qualifying defence contract F4, or where the contract is divided into components, a component of that contract.

Where a person within subsection (5A) applies to the SSRO for such a determination, the SSRO must determine—

The following persons are within this subsection—

The SSRO may determine that the price payable under F6a qualifying defence contract is to be adjusted by an amount specified by the SSRO in consequence of a determination under subsection (5), having regard to the extent to which the cost in question was treated as an allowable cost when the price payable under the contract was determined (or last determined) in accordance with section 15.