Regulation 10 Default pricing of contractsF11

The price payable under a qualifying defence contract F1or component of such a contract to the primary contractor must be determined in accordance with the formula—

where—

1. a

   “CPR” is the contract profit rate for the contract F2or component, determined in accordance with regulation 11; and

2. b

   “AC” means the primary contractor's allowable costs (see section 20), determined in accordance with one of the six F3default pricing methods described in paragraphs (4) to (11) below.

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Under the firm pricing method, the allowable costs are the allowable costs as estimated at the time of agreement.

Under the fixed pricing method, the allowable costs are the allowable costs as—

Under the cost-plus pricing method, the allowable costs are the actual allowable costs determined during the contract or after the contract completion date F6or component completion date.

Under the estimate-based fee pricing method, the allowable costs by which the CPR is multiplied are the allowable costs as—

The allowable costs which are added to the product of the CPR and the allowable costs determined in accordance with paragraph (7) are the actual allowable costs determined during the contract or after the contract completion date F8or component completion date.

Under the volume-driven pricing method, the allowable costs are the allowable costs per unit of volume multiplied by the actual volume of output of the contract F9or component.

The allowable costs—

Under the target pricing method, the allowable costs—

In this regulation, “specified” means specified in the contract at the time of agreement.