Regulation 30 Amendment of regulation 26 (quarterly contract report)

in paragraph (6)—

after paragraph (6) insert—

“(6A)

Where the contract contains a component which was not priced in accordance with a contract pricing method under which costs are indistinguishable from profits, the report must also contain the relevant component information.

(6B)

Where a component mentioned in paragraph (6A) has a value of less than £50,000,000, the report need only contain the relevant component information——

(a)

on each of—

(i)

a date agreed between the primary contractor and the Secretary of State at the time of agreement which is no more than five years following the time of agreement; and

(ii)

such further dates before the expected contract completion date as may be agreed between them, each date to be no more than five years after the date agreed under paragraph (i); or

(b)

if no agreement is made under sub-paragraph (a)—

(i)

on the date which is three years after the last day of the calendar quarter during which the initial reporting date fell; and

(ii)

on the date which is each third anniversary of that date.

(6C)

In paragraphs (6A) and (6B), “relevant component information” means the following information in relation to the component so far as it is different from the information provided in relation to the contract in accordance with paragraph (6)—

(a)

an annual profile (or, if the contractor is of the view that it is not possible to express these matters in an annual profile, the total amount) of the following matters which have been, or are expected to be, taken into account in determining the contract price of the component—

(i)

any risk contingency element included in the allowable costs of the component;

(ii)

planned amounts of profit in respect of the component, excluding any amount resulting from an adjustment determined under step 3 of regulation 11; and

(iii)

the maximum amount of profit in respect of the component resulting from an adjustment determined under step 3 of regulation 11;

(b)

an annual profile of the estimated costs of the component (split by the contractor reporting structure) at the time of agreement;

(c)

an annual profile (or, if the contractor is of the view that it is not possible to express these matters in an annual profile, the total amount) of the following matters—

(i)

any risk contingency element in respect of the component;

(ii)

planned amounts of profit in respect of the component, excluding any amount resulting from an adjustment determined under step 3 of regulation 11; and

(iii)

the expected maximum amount of profit in respect of the component resulting from an adjustment determined under step 3 of regulation 11,

that reflect the costs already incurred in respect of the component and the forecast costs which are expected to be incurred in respect of the component, indicating for each year whether those costs have been incurred, are forecast, or a combination of both;

(d)

an annual profile of the costs already incurred in respect of the component and the forecast costs which are expected to be incurred in respect of the component, split by the contractor reporting structure and indicating for each year whether those costs have been incurred, are forecast, or a combination of both;

(e)

a breakdown of the costs already incurred in respect of the component and the forecast costs of the component by reference to the calendar quarters of each of—

(i)

the financial year in which the calendar quarter to which the report relates falls;

(ii)

the previous financial year; and

(iii)

the next financial year,

split by the contractor reporting structure;

(f)

a quantified analysis of the causes of variance (explaining not less than 90% of the total variance) between any estimated costs used to determine the contract price for the component and the total actual and forecast costs of the component;

(g)

a forecast of any TCIF adjustment or any final price adjustment (regulation 16) which the contractor expects will be made in respect of the component;

(h)

a description of any event that has occurred, or circumstances which have arisen, since the component was entered into, that have had or are likely to have a material effect in relation to the component, including—

(i)

the date on which the contractor became aware of the event or circumstances;

(ii)

whether the event or circumstances are covered by any contingency element of the contract price of the component;

(iii)

the effect that the event or circumstances have had on the costs already incurred in respect of the component; and

(iv)

the forecast effect that the event or circumstances will have on the forecast costs of the component which it is expected will be incurred; and

(i)

an explanation of whether, and if so how, each delivery milestone set out in the contract relates to the component.

(6D)

Where the price of the contract or a component of the contract is determined entirely in accordance with a contract pricing method under which costs are indistinguishable from profits, the report must contain the following information in relation to the contract or component—

(a)

the current estimate of the price; and

(b)

details of any variance between the current estimate of the price and previous estimates of the price, and the reasons for that variance.”;

in paragraph (7), after “contract” insert “or component”.