Commentary on Sections Part 2: Single Source Contracts Introduction
101.Defence contracts are often large and complex, and it is common for aspects of them to be sub-contracted, and there may be more than one level of sub-contract. These sub-contracts may themselves be of very substantial financial value. The cost of sub-contracts will be an allowable cost under a QDC. Since primary contractors are invariably private sector bodies, they are not subject to any legal obligation to advertise or compete their sub-contracts.
102.The purpose of these sections is to ensure that if sub-contracts are awarded on a non-competitive basis, they will be subject to the regulatory framework created in Part 2 in the same way as primary contracts (i.e. those between the Secretary of State and the primary contractor) are, with appropriate modifications to be set out in the SSCRs. In other words, the obligations to which a QDC is subject are intended to “flow down” to its sub-contracts if those sub-contracts are themselves not competed. Sub-contracts which are subject to Part 2 are called “qualifying sub-contracts”.
103.Part 2 and the SSCRs apply to qualifying sub-contracts (and sub-contractors) as they apply to QDCs (and primary contractors), subject to any modifications set out in the SSCRs (section 30(1) and (2)(a)).